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Chapter 1: Starting A Small Enterprise (DTI MSME Guidebook)

Are you one of those thinking hard of going into business for reasons of your own?

v You are a young person who wants a job but rejection after rejection of your job application has given you no hope of landing a job in the near future,
v An employee, who is tired of the 8 a.m. to 5 p.m. work routine, and looking forward to the day when you would be able to work according to your own time, be your own boss, and enjoy all the money earned from your own efforts,
v A young housewife, who needs to help your husband earn in order to add to the family earnings for the sake of your children’s future,
v A not-so-young wife, who wants a means to escape from boredom and to find an outlet for your skills and creativity,
v A retiree, who is still full of ideas and energy and wise from years of experience, yet still looking for a second career, or
v A returning overseas contract worker, who is determined to find some ways of making the most out of the dollars you have earned abroad.

If you are, then you are on the right track. A small business for a start might just be what you are thinking of!

Before you rush in, however, pause for a while and ask yourself, “Do I know where I’m going to?” In the first place, you must have all the information you need so that whatever decision you will make later will be made on the basis of the right information.

Such so-called “informed decision-making” will help you a lot especially in starting a small business, an area where you have not tried before. Going into business can be likened to taking a risk because you are venturing into something whose outcome still remains uncertain.

In this chapter, therefore, you will learn the basics of the unknown territory you wish to go into. What is a small business? Why should you go into it? Do you have what it takes to start a small business? What are the rewards versus the risks? What help can you expect if you decide to set up one?
These are just some of the more important questions you need to ask before you start a small


After working overseas for 10 years, Orly Villa decided to start a business of breeding ornamental plants in September 2004. He bought the 500 square meter lot adjacent to his house in Los Banos in Laguna province, south of Manila. The garden is one of four gardens that lie along the stretch of the highway. A small signboard, “Ricky’s Garden,” stands directly in front. Three men help him prepare the soil, plant, transfer seedlings, water the plants, and do other garden maintenance tasks. Part of their job includes putting up trellises when needed, keeping the bags of fertilizer, garden soil, sawdust, compost, and other materials, taking care of the tools, and assisting buyers. Orly holds office inside a bahay kubo that stands in the middle of the garden. A permit from the town mayor hangs in one of the walls. He uses notebooks to list down the money that come in from buyers and the money that he spends for the seedlings, fertilizers, plastic bags, and other materials, including the salaries of the three helpers.

We can see from the illustration that Orly is a small businessman. Being the owner of the business, he alone decided, and continues to decide for the business. It was he who thought of putting up the business; chose the type of business – ornamental plant breeding – and form – single proprietorship (organization aspect); amount of money to put in and keep notebooks (financial aspect); system of breeding the plants and maintaining the garden, including choosing suppliers of the materials, number of sacks to keep in stock, tools and equipment to use, etc. (production or technical aspect); where to set up the business, how to attract buyers, how much he will charge, etc. (marketing aspect); and whom to hire, what they do, their number, and their pay (organization aspect).

Some Definitions 
Broadly speaking, a small business is one wherein most functions of a business enterprise – production, marketing, finance, and management – are essentially organized around the owner-manager who makes most of the major decisions and runs the day-to-day affairs of the enterprise. The small business owner has very few or no specialized staff or managers helping him in marketing, production, finance, and personnel management decisions. Rather, he tries to do most of these tasks himself.

There are other characteristics commonly associated with a small business. These are:

Ø  single proprietorships and family-based operation,
Ø  single product line or very limited product range, usually light consumer products (for example, food, beverage, and clothing),
Ø  small-volume production,
Ø  limited markets, usually local,
Ø  labor-intensive production methods,
Ø  few employees, other than family members, many on part-time basis,
Ø  “patriarchal” management style where employees are often treated as extended family members,
Ø  low level use of technology, and
Ø  marginal capital assets, mainly sourced from the owner-manager’s savings and those of the immediate household members.

Click here for the Table of Contents of Your Guide to Starting a Small Enterprise

Asian Development Bank. The Role of Small and Medium-Scale
Manufacturing Industries in Industrial DevelopmentThe Experience of Selected Asian Countries. Metro Manila, Philippines: Asian Development Bank, 1990.
Department of Trade and Industry. SME Development Plan 2004-2010. Metro Manila: Philippines: Department of Trade and Industry and Japan International Cooperation Agency, 2004.
Leaño, Rhodora. “SMEs in the Philippines: a development agenda to sustain their growth.” Tech Monitor, September-October 2004.
Management Systems International. Entrepreneurship Training Program – A Trainer’s Guide. Washington, D.C.: MSI, 1988.
Small Enterprises Research and Development Foundation. You, Too, Can Start Your Own Business. Quezon City, Philippines: SERDEF, 1997.
UP Institute for Small-Scale Industries. Overview of Small and Medium Enterprises in the Philippines. Quezon City, Philippines: UP ISSI, 1999.


The information contained in this article is for general information purposes only. We would like to extend our thanks to DTI and the people behind in realizing this guidebook. There efforts are greatly appreciated. Now we have this information FREE for us to use and eventually be one of the best guide in starting your own small enterprise in the Philippines.
Again, if you would like to receive a soft copy of “Your Guide to Starting a Small Enterprise“, please send us a private message on our RICHDADph FACEBOOK page. And we will be glad to answer your queries and request. Looking forward to your comments and suggestions.

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