How to start a hardware business in the Philippines is a popular and great question to ask as there are many moving components to this business. Today we have broken down the process of starting a hardware business into 7 important stages.
Even though each stage is important, due to your circumstances, you may find that starting a stage earlier or postponing the stage to a later date is more appropriate for your situation.
Nonetheless, there are several stages with any business; however, most businesses that succeed in the Philippines have a strong foundation so let’s take a look into how you can start a hardware business in the Philippines today.
How To Start A Hardware Business Philippines
1. Build Your Hardware Plan
As you most likely know, hardware can take many different forms, some hardware businesses in the Philippines target specific items, whereas others are general hardware businesses. We will be speaking more on research in the following step but at this stage, building your foundations of what you want to sell and how much is essential.
Hardware businesses can also develop and expand as your business grows, so a plan is not set in stone but instead a rough guideline of what you would like to achieve and how you will achieve it. You can download your free business plan template for more information on starting a small hardware business in the Philippines.
Nonetheless, here are some areas to focus on at the very beginning stages of launching your new business
- Are There Similar Businesses Nearby?
- Are There Other Ways A Hardware Business Can Make More Money?
- How Long Will It Take My Business To Be Profitable?
- How Much Will A Hardware Business In The Philippines Cost Me?
- What Is The Profit Margin?
- What Items Will I Be Selling?
- What Would Give My Business The Competitive Edge?
- Who Will Manage The Hardware Store If I’m Not Available?
- Why Will Customers Buy From My Store And Not Anyone Else?
These questions may seem basic to some entrepreneurs who have had experience building multiple businesses, but if you are looking at how to start a hardware business in the Philippines, asking yourself these difficult questions can be very valuable.
In addition, you may wish to ask yourself some internal questions about starting a hardware business in the Philippines. Asking difficult questions often shows potential risks and problems which are best tackled at the beginning stages of a business instead of postponing risks until a later date.
2. Focus On Researching Hardware Businesses In Your Area
The next stage is a stage that you may wish to complete at the same time as your overall business plan as researching and creating a plan are closely tied together. In other words, you will often need one to complete the other.
One of the most important tasks, if you are targeting a local audience, is potential competition. This includes competition by traditional businesses and also online competitor providers such as Shopee, Lazada, etc.
Spending time on market research will also allow you, as an entrepreneur, to look into different opportunities to innovate your business. For example, how can your business be different from every other hardware business in the Philippines? What kind of offer could you give customers that would be profitable for you and irresistible for them?
If your time is limited, but you have available funds, you may wish to outsource this work to a full-time researcher. Fiverr is a great platform to find freelancers to help you at the beginning stages of a business. Researching is one task that can be outsourced, but there are many possible options for entrepreneurs who have limited time.
3. Find A Suitable Location
As a hardware business in the Philippines is a traditional business type, you will need a physical location to sell your items to the public. Therefore, at this stage, you will need to find a suitable location for your customers as well as a location that is beneficial for your business idea.
This means that you will need to find a location that is highly accessible but also offers everything that you need to start your business successfully.
Many businesses across the Philippines have spent a large amount of time streamlining their businesses. This includes both online and offline businesses, but why do they do this? Because the more difficult it is for a customer, the less likely it is for a customer to buy a product or service. This will then result in less profit and potentially stunted growth.
As an entrepreneur and a business owner of a hardware store, you will need to decide between accessibility and price, and this balance is not always easy.
You may also need to consider the local competition. If your hardware store is selling hardware that’s completely different from another hardware store, then there are no problems finding a location nearby but if you plan to sell similar items, then finding the location that is better than your competition could give you the competitive edge.
4. Source Funds (If Applicable)
The next stage when looking at how to start a hardware business in the Philippines is to find the capital. In fact, one of the most popular questions is how much does it cost to start a hardware store in the Philippines?
The total capital you will need to start a hardware business in the Philippines is 250,000 Pesos. However, this figure can slightly increase all decrease depending on your stock levels and location.
You may be able to negotiate with suppliers who can include a discount for multiple purchases or an “order now pay later agreement.” But whatever agreement is made, there is often a large amount of capital that is needed when starting a hardware business in the Philippines as some hardware stock can be relatively expensive.
Therefore how can you find the capital to start a hardware business in the Philippines? There are several options available to raise capital. The first way is through Angel investing, where others invest in your business in return for ownership of your business/profit, the second is through bank loans or private loans, and another option is through crowdfunding.
There are different pros and cons to each type of funding. It’s recommended to speak to an independent financial advisor and a business analyst at this stage. You will need to make sure that your business has enough money to become profitable and pay back any business loans.
5. Register Your Hardware Business In The Philippines
Registering a business in the Philippines is a process that will need to be initiated at some point in the journey. Registering the business name, obtaining mayor permits, and SSS are a few areas you will need to consider when registering a business.
We have spoken about the complete registration of a hardware business in the Philippines previously, so we will not go into too much detail today but MPM has a great article on the entire process of registering a business legally in the Philippines, which I have attached above for your reference.
6. Start Marketing Your Business & Build Awareness
Marketing is a big part of any business, especially a hardware business. As an entrepreneur, you will have to convince members of the public to shop in your store. Not only will you need to convince them to shop, but you will also need to build the groundwork so that you can generate repeat business for the years to come.
Marketing is a great way to build awareness of your business and your products. Marketing awareness is a larger umbrella of marketing that is often used when a business launches a product or starts a brand new company.
Similar to many areas of starting a hardware business, you will need to balance your financial investment in marketing and the return of that investment.
One benefit of starting a small hardware business in the Philippines is that competition is often lower due to the smaller market. Therefore, local search engine optimization can be part of your strategy to reach a larger market at a much lower price.
7. Reinvest Your Profits And Grow Your Hardware Business
You will have a registered business, product stock, marketing, and hopefully a small customer base at this point of your entrepreneurial journey, so what’s next? The final stage on how to start a hardware business in the Philippines is to reinvest your profits to grow your business.
One of the disadvantages of starting a traditional business is that profits can take a little longer than online businesses. This is because, with traditional businesses, you often need to pay for a location, physical stock, etc., but what you do with any business profits in the early days will significantly impact your hardware business in the future.
There is no golden ratio for profits and reinvestment. Some business owners prefer to withdraw profits from their business into their own bank account if this is the only source of income they have. But if you do not need the additional income, then it may be wise to reinvest your profits back into the business to help it grow much faster.
Reinvestment can take many forms. For example, you may wish to reinvest Into your products, staff, business operations, delivery services, marketing, work more with professional traders, or anything else that you feel would be a wise investment.
As someone who has spent many years building businesses and helping others develop their business, I have noticed that one of the key elements to growing a successful business is reinvesting profits in the right area.
Tips To Start A Hardware Business Philippines
Now that we have covered some essential stages on how to start a hardware business in the Philippines, the next important area is independent tips and tricks to help you in your new business venture.
1. Start Small. If you cannot start a large hardware business, then focus on building a small business in a great location. If you can sell a good level of stock and your location price is low, you should start to see profit very shortly.
2. Focus On The Essential Stock. During the research stage, you may come into several products that are selling exceptionally well. It may be a good idea to invest first into these popular items that you think will sell quicker. This will give you some much-needed income in the early days of business. If you can find an item in high demand but low supply, this is even better!
3. Seek Additional Assistance. Starting any business in the Philippines is not the easiest, but each business has its risks and also opportunities. Therefore you may benefit significantly by seeking advice from those who have had experience in the industry or have previously owned a hardware business.
4. Always Negotiate. As a business owner, your entrepreneurial mindset is critical. Negotiating with suppliers, balancing risk and reward will also be key. In today’s modern world, the most sophisticated and strategic businesses are the ones that often perform exceptionally well.
Is Starting A Hardware Business Right For You?
The last area to consider is whether starting a hardware business in the Philippines is the right decision for you or not? Unfortunately, even though this is one of the most important areas, it’s ironically one of the areas nobody can answer for you. Nonetheless, there are a few questions to answer to find the answer quickly.
You most likely have had experience building, fixing, and creating DIY projects, which is a great start but do you have the right entrepreneurial vision to create a successful hardware business in the Philippines? Also, do you have the right connections to build networks with traders in your area?
If the answer is yes, the next area to focus on is the daily activities of a hardware business owner. Do you have time to run a hardware business as well as all your other priorities in your life right now?
These kinds of questions are not to demotivate you from starting a hardware business in the Philippines. Instead, aim to encourage you to seek the answers to all business areas before taking a physical and/or financial action.