CHAPTER 9

START-UP OPERATIONS,
GETTING STARTED IN THE
BUSINESS
Introduction

■ Starting up a business or operation is the most

difficult, yet a challenging stage in entrepreneurial
ventures. There is no shortcut to gearing up or
operationalizing the business. It is proper to
commence the business by preparing the business
plan no matter how simple or complex it is. A well
developed business plan means achieving at least
half of the business objectives even before doing the
business itself. Putting the contents of the business
plan into concrete action means starting up the
business.
 OBJECTIVES
■ Apply the guidelines in starting up business.
■ Determine how to comply with government
clearances
■ Identify the process on how to register a business
name without legal complications.
■ Identify sources of capital and minimize costs and
expenses at start-up stage
■ Apply basic guidelines in getting started in the
business.
Registering before start up
Before the “business of doing or working on the real
business” or actually operating the business itself,
certain governmental regulations has to be complied
with- and efforts related to this matter is by itself the
commencement of the real business. This aspects
constitutes the preliminary and preparatory task of
establishing documentary requirements to operate the
business as a legal entity. The entrepreneur has to
comply with the legal requirements as not doing so
means an illegitimate business operation. To be in the
business, Therefore, means necessarily doing it legally
and the following tasks have to be undertaken.
■ Registration of the business name with the Department of Trade and Industry, in the
case of single or sole proprietorship
■ Registration of the Article of Incorporation And By-laws with the Securities and
Exchange Commission, in the case of partnerships or corporations.
■ Application of necessary permit at the level of specific location (e.g., village,
subdivision, or barangay)
■ Filling/application of Municipal or City permits where the base of operation of the
business (e.g., Mayor’s permit, Sanitary permit, building permit as necessary)
■ Compliance with certain specific permits or clearances may have to be applied for
with some specific agencies of the government before local government agencies
can allow the full swing operationalization of the business (e.g, environmental
clearance certificates)
■ Registration with the Bureau of Internal Revenue (BIR) for the tax identification
number (TIN) and other requirements under internal revenue laws and rules.
■ Printing of receipts/ Invoices of the company (after having applied for a permit to
print receipts with the BIR)
■ Registration of the business organization with the Social Security System (SSS),
Philippine health Care Corporation, Home mutual Development Fund, Inc. (Pag-IBIG
Fund),and other government agencies.
 Major Government Institutions
AGENCY FUNCTION
Department of Trade and Regulation of trade
Industry (DTI) names Business name
registration
Securities And Exchange Verification/reservation of
Commission (SEC) corporate name
Registration of
Incorporation Documents:
-Articles of Incorporation
-Constitution of By-laws
Bureau of Internal Receipts printing permit
Revenue (BIR) Collection of Taxes
Regulation/Examination
Business records/books
ADDRESS
DTI Building , Makati
Avenue corner Sen. Gil
Puyat Avenue, Makati City
(For thru Regional
Provincial branches of
DTI)
SEC Building, Ortigas
corner E. Delos Santos
Avenue, Mandaluyong
City(or through Regional
Offices of SEC)
BIR Road, Diliman,
Quezon City or through
the revenue District office
where the actual
business operation is
made)
Social Security System (SSS)
Board of Investment (BOI)
Intellectual Property Office (IPO)
Department of Labor and
Employment (DOLE)
Department of Environment and
Natural Resources (DENR)
Administration of Social Security SSS Building, East Avenue,
for private sector, Employees and Diliman Quezon City
self-employed individuals
Registration of business under BOI Building, Makati Avenue
the Omnibus Investment code Makati City
(the business organization must
first register either with DTI Or
SEC)
Regulation of trade names DTI Building, Makati Avenue
Registration of Invention corner Sen. Gil Puyat Avenue
Trademarks, Trade Names, Makati City (or through Regional
Patents Provincial branches of DTI)
Implementation of labor laws Dole Building, Juan Luna St,
Intramuros, Manila
Implementation of forestry and DENR building, Visayas Avenue
environmental laws (e,g., Diliman, Quezon City
environment clearance permits
concessions)
Department of Education Regulation and Implementation DECS complex, University of Life
Culture and Sports secondary education Sector laws/orders or elementary/Ortigas
(DECS) Center, Pasig City

Commission On Higher Regulation/Registration of DAP Building, San Miguel Avenue

Education (CHED) higher/tertiary education Laws Ortigas Complex, Pasig City
Schematic diagram in registering with the government business organization

For single proprietorship Decide on the For Partnership/Corporation

business name and
Register the organizational
business name with structure
the Department of
Trade and Industry
Apply business permits and
clearances with the local
government units and/ or national
government agencies (if necessary)
Register with the
government agencies
Verify the proposed business
name with the securities and
exchange Commission, Make
reservation of confirmed
File/register
incorporation papers
(articles of
incorporation and by
laws with SEC

OPEN LAUNCH
AND START THE
BUSINESS
Choices of Business Name
Business name refers to the registered business identity (or name) of the business
organization. The business name may or may not reflect the nature business of the
business itself. As a matter of practice, the business name is usually represented by an
acronym representing a shortcut version of a long business name, and this is done for
retail advantage.

For a single proprietorship type of business organization, this can be verified either with
the DTI OR SEC. Prospective entrepreneurs have to file verification and reservation slips
for the business name or the corporate name of the business organization that will be
registered. In the case of Partnership or corporation, choosing a name could be a
beginning of debates or conflicts as incorporator or investor has his or her own
preference- and this can be resolved among themselves before a final choice can be
made and verified or reserved with the records division of SEC. A Corporate name that
is considered on reserved status with the SEC has 30 days to file the registration
papers after which, the reservation lapses and the corporate name can be issued or
reserved by the SEC records office for someone else.
Money Saving Options and Start UP
Starting on a shoestring budget is common to every entrepreneur venturing into a new
business. Hence, it is a must that all options to save money must be explored to the
fullest. The following should be of great help.

A) Organize or register a small business group at the minimum capital requirement

required by law.
B) Initially, use your home as an office or explore sharing an office of shop space with
another company.
C) Do some works like light carpentry, electrical, delivery jobs, or any forms of tasks
within your capability to do or deliver.
D) Purchase used office equipment and machinery
E) Use part-time specialist or skilled workers
F) Rather than hiring full time and salaried personnels, begin sales efforts by hiring
representatives or agents.
G) Explore the concepts of subcontracting.
H) If possible, make sure of family labor and other resources within your households.
I) Make use of free public relations instead of paid advertising.
J) Push your customers hard for prompt payment. After selling your products or
services on credit basis, convince them that it is better and divine to pay you on
time.
K) Make full use of technology where necessity for application demands.

THE INSTANT OFFICE

Early teaching in doing business looks at structured

center approach, where entrepreneurs have to be
concerned first about where to establish an office and
buying those necessary provisions including support
staff normally needed in doing business. Quiet often,
business or entrepreneurs commence with having an
office or workplace and other amenities.
How to Raise Capital . . .

First of all, money can come from your own

pocket. This may be in the form of savings or
proceeds from sales of personal belongings, like
a car, a house, and jewelry. This money coming
from the owner’s personal resources is called
the capital or owner’s capital.
External Sources of Capital
1) Pawnshop – you can get quick cash by pawning your jewelry and
other valuables.
2) Credit cooperatives – These are popular and easy sources of credits
especially in the rural areas. Usually, it tends an amount up to three
or five times bigger than the money a member has deposited in the
cooperative.
3) Money Lenders- These are people who lend quick money without
collateral, but charge exorbitant interest rates.
4) Lending Investors- These are business enterprise engaged in money-
lending operations. Considered a cross between money-lenders and
banks, lending investors extend short term loans quickly to
individuals and business with or without collateral.
5) Formal Sources of Credit- These include banks, Financial institutions,
as well as certain government development agencies and
development-oriented, non-government organizations.
 Various Types of Credit available from lending
institutions.
Short term loans
- Payable on one year or less.
- These are normally self liquidating, meaning, that the loans are used
to buy raw materials and supplies, labor and other requirements that
will generate funds for the business and in turn, be used for paying
back the loan.
- It may come in the form of revolving credit line- an agreement by the
bank to extend a loan.
- Commercial banks are those most commonly used sources of short-
term loans.
 Intermediate Loan
- Term loans provide capital repayable in one to three years.
- These are available from banks and other financing institutions.
- A term loan is backed by collateral securities and is paid back in
installments over the life of the loan agreement.
Long-term Loans
- These are loans extended to enterprises assured to exist over the
long-term period of the loans – up to ten years.
- Extended by private and government banks.
 Development Bank of the Philippines’ Omnibus Financing Program for Entrepreneus
 Development Bank of the Philippines’ Industrial Guarantee and Loan fund
 Land Bank of the Philippines’ Easy Pondong Pang-asenso
 Land Bank of the Philippines’ Easy term loan for Exporters
 Philippines National Bank’s Overseas contract Workers Livelihood Loan Program
 Philippine National Bank’s Pangkabuhayan loan Program
 Small business Guarantee and Finance Corporation’s Small Enterprise Financing
Facility
 Technology and Livelihood Resource Center’s Agro Industrial Technology Transfer
Program
 Technology and Livelihood Resource Center’s Export Industry Modernization
Program
 Technology and Livelihood Resource Center’s Technology Utilization Financing
Program.
Some guidelines in Borrowing
1) Evaluate yourself whether you are in a good postion to borrow.
2) Estimate accurately the amount you need to borrow.
3) Choose the bank to borrow.
4) The choice of banks must also be determined by the size and
purpose of the loan, as well as the size and status of the business.
5) In comparing banks, find out about the following terms conditions
 Repayment period, including grace period
 Interest rate and processing charges;
 Mode of release of funds, whether monthly, quarterly, semi annual or
annual installments;
 Collateral and Equity requirements; and
 Other restrictions.
Deciding where to locate
There are three crucial factors in the success of a business enterprise- the first is
location, the second is location and the third is location. But it is nonetheless true that
where a business will locate can spell the difference between success and failure-
especially to a trading or service enterprise (Dr. Orcullo, Jr 2000)
- It should be one that should enable you to manufacture your products and sell them
at the lowest possible cost.
- Consider carefully which city or town will be the best for your business.
- One of the first considerations regarding location is whether the prospective site is a
residential, commercial, or industrial area. Not only would you need a barangay
clearance for the business, you would also need the tacit approval of the residents
or homeowner’s association in a residential area.
Important considerations in deciding where to
locate
1) Raw materials
2) Customers
3) Transportation facilities
4) Labor
5) Power and other utilities
6) Waste disposal facilities
7) Community
8) The decision to own or to rent
Equipping Your Business
Before you start acquiring machines and equipment for your
manufacturing or service business, you should first determine the
manufacturing methods to use.
1) What level of technology I will use?
2) Considering the level of technology I have chosen, what activities are
required to convert the inputs. These activities are called operations.
3) How can each of these operations be done?

ACQUIRING MACHINES AND EQUIPMENT

- The kinds of machines and equipment's you need to acquire will
depend on the level of technology you have decided to use in your
manufacturing operations.
Guidelines in acquiring machinery may be
useful
1) Before buying equipment, identify exactly what you need it for.
2) Generally speaking. If your volume of production is low and your
product designs are expected to change from season to season, get a
multi purpose machine.
3) Use of a specialized machine is indicated where a product with a
special design is to be manufactured in big quantities.
4) Consider the price
5) Another consideration, aside from cost, is engineering features
(power requirements, maintenance, safety features and flexibility.
6) Consider too other terms of the purchase. Such as after sales service,
assistance in installation, maintenance and repair, warranty, training
assistance, as well as promptness of delivery
7) Buy your equipment from a reliable supplier.
8) Consult other manufactures who have experience in using the same
equipment.
9) Consider also the option of having machines fabricated by local
machine shops.

HIRING AND TRAINING PERSONNEL

-Before starting to hire employees, it is important to know your manpower
requirements first.
Recruiting Personnel
- Hiring process
• Place “help wanted” advertisements in the newspapers
and/ or the radio
• Display “help wanted” signs prominently outside your
factory or office and in other public places.
• Check with placement units of schools and personnel
offices of other companies.
• Check with employees agencies.
• Ask employees, customers and suppliers for people they
know who might qualify.
Selecting Personnel

■ Application form
■ The interview
■ Written tests
■ Practical tests
■ Reference checks
■ Medical examination
Training Personnel
Once you have hired a person for
employment, you may still need to train
him. You must not overlook the importance
of training. You cannot expect even an
experienced worker to do a job exactly they
way they want it done.