A Capital Idea: Getting Your Startup to Start

Wendy’s founder, Dave Thomas once said: “What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.”

All valid necessities in any successful business, except there’s one crucial item missing in that list: money.

Starting a Business Isn’t Free

It’s true that you might not need a substantial amount of money for a startup in the Philippines. A sari-sari store (our version of a convenience store), for example, is a startup that requires a minimum capital of P1,000 for some.

Consider how young people don’t even need to spend much to make money these days. Some of the more enterprising and creative ones are developing themselves as brands by producing content and making money off of their videos and posts.

So, it’s relatively cheaper to become an entrepreneur today than it was in previous decades. But you’d still need money to fund your startup. How much capital you need will depend on the nature and scale of your business and your financial goals.

You may consider the following ventures:

  • Home-based food business (selling pastries and specialty desserts)
  • Retail online shop
  • Professional services (e.g., bookkeeping and accounting services, web design, translation, etc.)
  • Laundromat
  • Spa/Skincare

When you’re considering more of a micro business, like a sari-sari store, cellphone loading station, and the like, you can obtain funding from family and friends. You might even have sufficient income to cover some of the startup costs. But when you’re looking at a more complex operation, you’ll need the resources of more established financial organizations.

The Road to Small Business Loans

Banks might top your list of funding sources because these traditional financial institutions do offer multiple programs for businesses. You can choose from term loans, secured loans, and credit line. Applications in banks, however, tend to come with a long list of paperwork and collateral.

Some banks also offer personal loans for starting a business. BPI, for example, has the Family Ka-Negosyo with a minimum of P500,000 loan amount for applicants with a household income of P50,000. Interest rates will vary on the term of your payment. You might not need to provide collateral, but the interest is steep at 10 percent for the first year in comparison to loans with collateral at 5.50 percent.

You can also obtain an SSS loan to finance your business. You could borrow up to P500,000, provided you meet all the requirements. Eligibility includes registration with the Barangay Micro Business Enterprises, SSS membership in good standing, single proprietorship or partnership or corporation with at 60 percent Filipino ownership.

Another nontraditional financing option is crowdfunding. You don’t need to do paperwork the way you would for bank loans, but you would need a stellar idea and a business plan to pitch to people.

Some of the more successful ventures on crowdfunding platforms, like Kickstarter, have been concentrated in tech. Card game Exploding Kittens has raised $8.8 million and Apple accessories provider Elevation lab raised $1.6 million. Locally, there is Indiegogo, a platform that has raised about P4.8 million for Filipino projects.

You have multiple opportunities for funding your startup. But before you choose one, make sure you’ve dotted the i’s and crossed your t’s when it comes to your business plan. And don’t forget Dave Thomas’ wise words.

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