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Five Questions to Ask Before Expanding Your Business in the Philippines

May 11, 2015 | Sharon Cheong

Expansion of your business can be exciting, as well as scary. Business owners want to reach out to new markets but there are always inherent risks associated with any type of business. During the economic crunch of 2008, numerous businesses went belly-up and thousands of home owners lost their homes. One definite consideration with any type of venture is timing. There are others to consider as well. Below are our top five questions to ask before expanding your business in the Philippines. 

  1. Is the income from your business consistent and stable? Unless you have at least 12 months' worth of steady income that is very dependable, you may not be ready for a big move. Seasonal income doesn't count. Almost all retailers and ecommerce sites see a big surge during Christmas and other holidays.
     
  2. Do you have sufficient cash reserves for a new start-up overseas? Basically, establishing an offshore office in the Philippines is like forming a new start-up. You'll have to lease space, hire employees and buy equipment. When working in a foreign country such as the Philippines, there are also business permits, licenses and fees to pay. The amount of cash reserves will depend upon many variables such as the type of business and equipment you'll need to purchase.
     
  3. Should you take out a bank loan to finance the expansion? There are pros and cons to doing this. The interest rates are low in the Philippines but if you do not have a financial presence in this region, then you may be turned down for loans. On the other hand, if you decide to try and borrow money in your home country, the lender might see the overseas expansion as “risky”.
     
  4. Is it time to move to the next level? Often, timing is crucial. Though no one can see the future, there are certain economic indicators that can signal trouble. Be sure to do thorough research into the economic status in the Philippines within your specific business sector. If you're working with financial experts, ask them whether the timing is right for expansion.
     
  5. How risky would an expansion be for your specific brand at this time? Some business types simply do better in the Philippines than others. The import export market is always strong and there are many success stories. Manufacturing can be very profitable as well. Many companies across America and the UK outsource their manufacturing to the Philippines to cut costs. If you know for sure that you will have customers for the new office, then why not take the plunge? 

Tips for Success 

Many manufacturing businesses in the Philippines run three shifts to increase output of goods. This can increase production and lower costs per item. This might make it more feasible to do an expansion. Look for other things like this that can increase profits and lower costs so that your expansion makes more sense. You might also check into buying a business in the Philippines that is already established. This can help you get your foot in the door for a much lower investment and reduced risks. Once you get sufficient knowledge into how things work in the Philippines, you can move forward with expanding your company. 

Serviced Offices 

One area where business owners have discovered significant savings is in leasing a serviced office in the Philippines. You can get a prestigious address and all the amenities of a luxurious office for a much smaller monthly cost. This can free up your capital to spend in other areas. Servcorp Serviced Offices provide upscale furnishings, state of the art equipment and fully trained people to make your life a lot easier.