What Must an Entrepreneur Assume When Starting a Business?

Starting a business is never just about having a great idea. In the Philippines, the path to entrepreneurship comes with unique realities shaped by geography, culture, consumer behavior, and regulatory systems. If you’re launching a venture in this market and wondering what must an entrepreneur assume when starting a business?, success requires more than optimism—it demands clear-eyed assumptions about the challenges and conditions you will face.

Below are the 10 strategic assumptions every entrepreneur must accept and plan for when starting a business in the Philippines. Internalizing these early will dramatically improve your chances of long-term success.

10 Things an Entrepreneur Must Assume When Starting a Business

1. Assume Business Registration Will Take 3–4 Months

Entrepreneurs should expect that setting up a legally compliant business is a slow, bureaucratic process. Registration moves through several government agencies—SEC, LGU, BIR, SSS, PhilHealth, and Pag-IBIG—and each step is sequential.

Even with complete documents, processing typically takes:

• SEC: 2–3 weeks
• Business Permit (LGU): 2–4 weeks
• BIR: 2–6 weeks
• Employee registrations: 1–2 weeks

This adds up to 3–4 months before full operational legality.

What this means:
You must budget for several months of expenses before earning revenue and potentially hire legal/accounting support to avoid delays.

2. Assume Tax Compliance Is Constant, Strict, and Non-Negotiable

Once registered, expect to enter a system of ongoing tax obligations with strict deadlines. Annual, quarterly, and monthly filings become part of your operational routine.

Missing even small requirements—like failure to display notices or register receipts—can result in penalties ranging from ₱1,000 to ₱50,000, surprise tax mapping visits, or even business closure for severe violations.

What this means:
Entrepreneurs must assume tax compliance is a continuous operational cost. Hiring a competent accountant is not optional—it is business survival.

3. Assume You Need More Working Capital Than Your Forecast Suggests

Most small businesses fail not because of lack of sales, but because of poor cash flow planning. Entrepreneurs should assume:

• Initial capital will run out faster than expected
• Sales forecasts will be overly optimistic
• Hidden costs will appear
• Cash will move slower than planned

The smart move is to secure working capital buffers, including government-backed financing (e.g., SB Corp loans offering 0% interest for 12 months).

What this means:
Plan conservatively. Secure funding early. Expect delays in revenue.

4. Assume Logistics Will Take a Large Cut of Your Revenue

Philippine geography—7,000+ islands—makes logistics inherently expensive. Local businesses spend an average of 27% of sales on logistics, more than double that of neighboring countries.

Expect:

• Slow deliveries
• High shipping fees
• Unstable supply chains
• Inter-island transport inconsistencies

What this means:
Your pricing, margins, and product strategy must account for logistics as a major cost center. Digital or low-logistics products have a competitive advantage.

5. Assume You Must Offer Cash-on-Delivery (COD)

Even with digitalization, 85–86% of online customers still prefer COD due to trust issues, being unbanked, or simply wanting to check the item first.

But COD increases risks:

• Returned parcels
• Fake orders
• Cash-handling burdens
• Higher courier fees

What this means:
If you’re entering e-commerce, assume COD is non-negotiable for market penetration—but prepare an efficient strategy for handling returns and cash flow.

6. Assume a Mobile-First, Social Commerce–Driven Market

The Filipino market is internet-savvy, mobile-first, and highly influenced by social media:

• Mobile drives 57% of e-commerce purchases
• Digital wallets (especially GCash) dominate
• Social media is the #1 driver of online buying decisions

What this means:
Entrepreneurs must assume success depends on mobile-friendly platforms, social media marketing, and seamless digital payments—not just traditional websites or physical stores.

7. Assume Labor Is Affordable but Requires Investment in Training

While labor costs are relatively low and English proficiency is high, there is a skills mismatch—especially for technical or specialized roles.

You must provide:

• Skills training
• Digital literacy development
• Continuous upskilling

Additionally, mandatory benefits (SSS, PhilHealth, Pag-IBIG, 13th month pay, leave benefits) must be factored into compensation costs.

What this means:
Assume people are willing but not always job-ready—and you must invest in building their capabilities.

8. Assume Business Success Requires Pakikisama and Personal Trust

In the Philippines, business is deeply relationship-based. Deals, partnerships, and even internal management rely heavily on:

• Pakikisama (harmony and camaraderie)
• Avoiding “hiya” (embarrassment)
• Private correction, public praise
• Building long-term trust before significant transactions

What this means:
Strong interpersonal skills are a competitive advantage. Business here runs on relationships as much as on strategy.

9. Assume Employees Will Prioritize Family Obligations

Filipino workplace culture places the family at the center of life decisions. This can lead to:

• Sudden absences
• Emergency leaves
• Schedule adjustments due to family events or caregiving

This is not a weakness—it’s a cultural norm.

What this means:
Build flexibility into staffing, create empathetic policies, and expect occasional disruptions. A supportive culture leads to strong loyalty and lower turnover.

10. Assume Natural Disasters Will Disrupt Operations Regularly

The Philippines is one of the most disaster-prone countries in the world. Typhoons, floods, and earthquakes can disrupt:

• Power supply
• Internet connectivity
• Deliveries
• Inventory
• Employee attendance
• Store operations

What this means:
Invest in resilience—backup power, insurance, business continuity plans (BCP), disaster preparedness training, and flexible logistics.

Conclusion: The Entrepreneur’s Mindset Must Be Realistic, Not Just Ambitious

To succeed in the Philippines, an entrepreneur must assume that:

• Bureaucracy is slow
• Compliance is constant
• Costs are higher than expected
• Logistics are challenging
• Culture shapes business deeply
• Disasters will come
• Digital transformation is essential
• Trust and relationships matter

These assumptions aren’t obstacles—they are realities that, when planned for, become competitive advantages. Entrepreneurs who anticipate these constraints can design smarter strategies, move faster than competitors, and build businesses that truly thrive in the Philippine market.