How To Start A Thrift Shop Business In The Philippines: Recently we received an email asking us how to start a thrift shop business in the Philippines as an entrepreneur. Thrift stores in the Philippines can take many different forms. Therefore there are several areas to investigate when setting up a thrift business.
Today, we will be exploring the full process from start to finish on how to start a thrift shop business in the Philippines. We will also answer if a thrift business in the Philippines is profitable and the pros and cons.
How To Start A Thrift Shop Business Philippines
1. Create Your Business Plan & Selling Strategy
The most foundational step in starting a thrift shop business in the Philippines is creating a plan about your business objectives and financial targets. However, one common part of the business plan often missed is the strategy. In other words, how will you achieve your business goals?
There are many different thrift business plans available; check out a few sources we have found here. Alternatively, here at Filipino wealth, we have a free downloadable business plan and financial plan template, which is available on the business plan tab at the top of this page.
There are several important areas of a business plan, and remember, this is not something that has to be completed independently. Some outsource this work, work with experts or even friends and family to better understand their business vision and strategy.
2. Choose Your Store Location
After your business plan on how to start a thrift shop business in the Philippines, the next stage is choosing the best location for your business. With these types of businesses, location is a very significant factor, and you may wish to spend a good amount of time considering your options.
You may find some locations with high foot traffic but are expensive, while others sometimes have much less foot traffic but are more reasonable in price. As an entrepreneur starting a thrift store business in the Philippines, you will need to negotiate and research to find the best location for your business and budget.
The common question is, are thrift store businesses profitable in the Philippines? This is something we have mentioned below. But to summarise, it can be profitable. Still, maintenance costs (such as location, etc.) need to be budgeted accordingly as high expenses can lead to a significant drop in profit margins.
An ideal location is publicly available but where you can sell for a reduced fee. If you are opening a small thrift store business in the Philippines as a beginner, you may wish to start small and look into alternative options such as opening a business at home.
3. Find Your Stock And Set The New Prices
So what exactly will you be selling and why? These are important questions because business is only as strong as its products and the products are only as strong as the demand.
In other words, carefully choosing exactly what you will be selling and who to is an important stage when looking at how to start a thrift shop business in the Philippines.
There are many different types of thrift store businesses. For example, some rely on donations while others buy and sell their stock. Some thrift store businesses combine both concepts and accept donations while also selling their products. This is the decision that you will need to make as an entrepreneur.
If you are looking to purchase items in bulk, you may wish to check out Alibaba, as they have many Filipino wholesale companies (and overseas factories) that have several stock options. In addition, you will also find many accessory products, which may be a great added product for your targeted audience.
When starting a thrift shop business in the Philippines, you may wish to speak to other businesses and the community when looking for donations. In addition, social media is a great option for many new business owners.
4. Registration And Legal Matters
Unless your business is a non-profit business, you will need to register your business and pay the relevant taxes depending on what type of business you are registering.
The process to register a business is fairly simple, and there are essentially 4 main areas that you need to focus on. Security bank has a fantastic post that explores the whole process of registration. If you are a foreign visitor (or your business partner is from overseas), you may wish to visit our latest article on the process of starting a business in the Philippines for foreigners.
5. Start Selling Online (Optional)
Due to the recent pandemic, online selling has become the norm for many businesses, including thrift shops. As a result, a common question is how to start a thrift shop business on Instagram, and essentially, the process is the same on other social media and as a physical store.
Previously we covered how to start selling on Lazada and explored the process behind how to turn a product into a profitable business online. Nevertheless, there are fees involved, and entrepreneurs will need to ensure that the added fees do not significantly reduce the profit margin of your product.
High fees for selling online is one of the main reasons business owners choose to sell on social media and their websites. However, these are also very viable other options when starting a thrift shop business in the Philippines.
6. Hire Staff For Your New Thrift Shop
Depending on the size of your thrift business, you may wish to hire additional staff to help with the busy demand. But, again, several options are available for business owners, which carry their pros and cons.
If you are a charity / non-profit business, you could ask for volunteers to help you, saving significantly on costs. Alternatively, you could ask friends or family to assist or offer this position as work experience for younger workers.
However, if you are looking for this business to grow and be profitable, hiring staff at one point is an essential part of business growth. This is also an optional step similar to selling online and may not be necessary when starting a thrift store business in the Philippines.
7. Market Your Thrift Store And Open
It was once said that a business is only as strong as its marketing. Whether this is true or not is still a debatable topic in business but what is true is that awareness is essential for growth.
If you build awareness (another marketing word) for free, that is fantastic! PR stunts are all about getting people talking about a person or a business without spending a great deal of money. So if you can build awareness of your products or new business without spending any money, that is a great step.
Marketing is awareness but is often something businesses do for cash in the hopes of a greater reward. For example, I have a new product, and I advertise my product to 10,000 people. Each product has a profit margin of 500 pesos, and I sold 10 in total resulting in 5000 Pesos. My marketing cost 3500 Pesos. Therefore, my total profit made was 1500 pesos.
This is a simplistic example of marketing, and it is likely you already know how marketing works, but I say this because profit margins were high in the example above. Still, when starting a thrift shop business in the Philippines, profit margins can sometimes be very low, and this is why paid marketing may not be the best option if you are looking to build awareness on a budget.
8. Reinvestment & Growth
So now that we have explored the process of starting a thrift store business in the Philippines, the next question is, what is next? The answer is re-investment and growth of your business.
To grow a thrift shop, you will need to either sell more, open up more stores, hire more staff, or other general growth achievements. Most of these are achieved when entrepreneurs reinvest their profits back into growing the business.
There is no set rule on how much you should invest. Some entrepreneurs choose 25/50%, while others who aim to grow aggressively reinvest 90-100% of the business profits.
How To Start A Thrift Store With No Money
Starting a thrift store business in the Philippines or any other country will be challenging as there are often startup fees and maintenance fees. Nevertheless, an entrepreneur can do things to reduce the overall costs for this business.
One of the highest expenses is, of course, the stock itself. Therefore an entrepreneur could negotiate with businesses or the community to gain donations that can be sold for a profit.
Another option if you want to start a thrift store business in the Philippines with no money is to create the items yourself. Then, if the materials you need are free, your time is the only thing being spent.
Another option if you are trying to start a thrift store business in the Philippines cheaply would be to purchase for free today and pay later (you pay once the items have been sold). This is common in business, but this carries risk, and collateral may be required, but this will depend on what type of thrift store business you are opening.
How To Start A Thrift Store Online
Opening a thrift store online is very similar to any other type of business. However, thrift stores can work very well on social media as new items are common in thrift stores. Additionally, a thrift store in the Philippines can work well with certain communities. If you team this up with free marketing on Facebook, you have a winning combination.
Setting up an online thrift store is very similar to what we have mentioned above. However, profits can be lower with a thrift store business, so it is recommended to target free marketing on social media platforms if you are aiming to keep the spending budget low.
Pros And Cons Of Opening A Thrift Store
The pros of opening a thrift store business in the Philippines include low maintenance fees, several stock options, and growth opportunities. On the other hand, the cons of starting a thrift store business in the Philippines include low-profit margin, time-consuming, and limited customer base.
In summary, there are several pros and cons to opening a thrift business, but this will depend on your business model and location. Unfortunately, a thrift business is not always the most profitable, which tends to be one of the biggest disadvantages for business owners.
Is A Thrift Business Profitable In The Philippines
Thrift Businesses are cheap, and therefore the profit margin is often low. But this does not mean that they are always unprofitable. On the contrary, most businesses will need to sell many items. For example, 10 Pesos profit per item is not the best; however, if you sell 10,000 a week, those 10 pesos soon add up. Therefore, selling in bulk is one common strategy to make a thrift store business in the Philippines profitable.