More and more Filipinos today are starting their own businesses. These new entrepreneurs come from diverse backgrounds and a wide range of ages – from college students to retirees, and everyone in between.
No matter their background or the kind of business they put up, new entrepreneurs are likely to face similar challenges. If you’re about to start your own venture, you need to be prepared for these challenges and create a plan to address them.
These are some of the hurdles you need to watch out for and our suggested solutions for each.
- Lack of funding
You know you have a great business idea with much potential for success. However, you’re hindered by a lack of capital to fund your needs, especially during the initial stages of your venture. You may be able to get your business off the ground, but you could run into cash flow problems that can make it hard to continue operating.
What you can do:
Before starting your business, plan your finances carefully. Make a thorough study on the amount of capital you’ll need, and account for potential cash flow deficits. If your savings are not enough to cover the amount you need, look into getting funding from other sources, such as a loan from a bank or from friends and family.
To limit your debts and keep them manageable, consider tailoring your initial operations to match the amount of capital you can comfortably raise. Starting big may not be necessary or ideal – a humble beginning may be the key to your future success.
- Cash flow concerns
Managing your cash flow can prove to be more difficult than you anticipate. In many industries in the Philippines, a 30-day payment term is the norm. To add to this, delays in payments are also quite common. Meantime, while waiting for the checks to come in, you have to pay for business expenses like your suppliers’ products and services, employees’ salaries, rent, and others. On top of these, you also need to account for your personal expenses.
What you can do:
It goes without saying that proper budgeting is needed at all times. Avoid spending more than necessary. Anticipate large expenses and look for funding way in advance.
Wherever possible, ask for a down payment from your customers so you can cover the costs of your products or services, and perhaps, make some profit as well for your personal expenses. Additionally, try negotiating for shorter terms from your clients, such as 15 days instead of 30 days, or even immediate payment upon the fulfillment of their orders. At the same time, see if you can get longer terms from your suppliers, especially when you’ve established good relationships with them.
Try to accelerate the payment process and make it more convenient through solutions like electronic check payments, online bank transfers, and so on.
- Lack of management skills
You may have the perfect business idea, but turning this into a successful realty can only happen with effective management. If you start out as a one-person team, you might initially find success, but as your business grows, your needs will also grow more complex. You have to hire employees, expand your operations, rent a bigger space, and so on.
A common problem among new entrepreneurs in the Philippines is the lack of skills to manage a growing business. Many new business owners are reluctant to delegate important tasks, preferring to keep the reins all to themselves. Time management is also a widespread concern. If you try to do many things at the same time, you’re bound to make mistakes or not allot enough time to the more important aspects of your business.
Lack of experience in important business components, such as finance, accounting, human resources, and IT, can lead to bigger problems.
What you can do:
Hire competent employees that you can entrust with some of the more crucial aspects of your business, such as finance or manufacturing. You can keep your employee count more manageable by outsourcing certain activities, such as accounting and IT.
Spell out expectations clearly from the start. Give detailed instructions on how you want things to be done, and put policies and procedures in writing. When confusion sets in, you and your employees should be able to refer to these documents to put things back on track.
To make tasks more manageable, break down your business goals into yearly, monthly, and daily sub-goals. Work only on goals that are necessary to achieve the results that you want.
Find training opportunities whenever you can. Keep yourself abreast with new management trends and techniques, and remember that it’s never too late to learn new skills.
Our team can provide the guidance you need in various aspects of starting a business in the Philippines. Get in touch with us today.