Registering a business: Soon to be a walk in the park?

By: Myrna Rodriguez Co

Philippine Daily Inquirer

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MANILA, Philippines—How easy is it for an entrepreneur to register his or her business in these islands?

The answer to this will determine in part how many of the million new entrepreneurs we want to emerge will actually come forward and deliver the income and jobs our country direly needs for economic self-reliance.

At first look, registration is a trivial step—actually only a paper chase—among the many stages of the business lifecycle. But it is a crucial first step that, going awry, can nip a promising business in the bud.

If the government cannot pave the way for a hassle-free registration of a newbie enterprise, how can it facilitate the delivery of financial, marketing, technical and other services an enterprise needs in its growth and expansion stage?

Securing licenses

Apparently, the more industrialized a country is the easier it is for its entrepreneurs to secure business licenses.

Businessmen in Australia register their businesses in two steps, taking two days max.

In Singapore, it takes an average of 30 minutes to complete the registration process online.

In the Philippines, alas, a registrant—until lately—used to go through 18 steps, which could stretch through a processing and waiting period of 58 days!

Small wonder many businessmen prefer to operate “underground” and out of government’s line of vision. True, the obvious “benefit” for some may be “exemption” from taxes. Unfortunately, this also implies being excluded from many government incentives and support services, including low-interest loans.

In a forum on “MSME burning issues and concerns: pole-vaulting with the Philippine MSME Development Plan” held on August 4 at UP Institute for Small-Scale Industries, reforms in the business registration process were among various improvements in business environment reported by Usec Merly Cruz of the Department of Trade and Industry.

Business environment

An enabling business environment—in terms of supportive policies, laws, regulations and systems—is basic to a vibrant entrepreneurship culture.  It does not only encourage more new businesses to emerge but helps ensure sustainability and growth of existing ones. This is why fostering a business-friendly environment enjoys top priority in the national “Micro, Small and Medium Enterprise Development Plan, 2011-2016.”

In recent years, the DTI in cooperation with LGUs, was able to streamline the issuance of mayor’s permit in many cities and municipalities and to install internal monitoring systems to allow LGUs to implement streamlined business processes.

Muntinlupa City is exemplary of an LGU that has successfully eliminated cumbersome registration procedures and requirements. The two-time “Most Business-Friendly City” awardee of the Philippine Chamber of Commerce and Industry reduced its 14-step business renewal process to 12 steps in 2003 and down further to six steps in 2006.

It did this by deleting from the process those agencies that merely noted down the applicant business’ basic data. These include the Zoning Office, City Health Office, Fire Department, Lake Management Office, and the Public Employment Service Office.

The City’s Business Licensing Office simply forwards to these offices with the data required.

Ormoc City pulled a similar feat. In 2005, it conducted a time and motion study which led to the streamlining of its business licensing and registration system in 2006. This resulted in the reduction of the cycle from 14 to 5 steps for business renewal and 17 to 10 for first-time business registration. Short cuts were made possible by merging the Fire Department’s assessment of fees with that of the Business Permits and Licensing Office. Clearances for land tax and water sections were no longer a requirement.

Pre-registration and early certification were implemented in Ormoc as well. Businesses were allowed to secure clearances from local government and national government units prior to the business renewal period. All this resulted in the cutting down of the process from 17 to 2 days.

The effects

These measures did not go unrewarded for the two cities.

In Muntinlupa City, there was a steady increase of businesses registered from the time the simplified rules were enforced. A corresponding rise in revenues from business registration and business taxes was another reward.

The salutary outcome for Ormoc City: business renewals increased from 2,475 in 2005 to 2,779 in 2006. There was also an 86-percent increase in income from business permits in roughly the same periods.

In Quezon City and Makati City, approval of an application for business permit is automatic. Right then and there, an applicant gets his temporary license. All he has to do is to wait in his office for representatives from various government units to come around and inspect his workplace.

Another boon to businesses seeking renewal of their licenses is the business one-stop shop where all signatories representing different departments and offices involved in registration gather together in one location. Usually mounted during the annual business renewal period from January 2 to 20, the event enables registrants to be done in 15 minutes to an hour.

In Cabuyao, General Santos, Ormoc and Iligan, the desks of signatories are arranged sequentially, following the movement of the papers.  Veritably a walk in the park for businessmen!

‘Recipe book’

These and other improvements of business registration at local level have been documented in a handbook published by DTI in 2006. “Streamlining Business Registration in LGUs: Six Good practices” is a “recipe book” to motivate local governments to streamline their respective business permit and licensing systems. A newer version of the publication was released in 2008 entitled “Simplifying Business Permit and Licensing Process of Local Governments,” which provides step-by-step procedures for improving registration and licensing procedures.

The model streamlined process being prescribed consists of five steps and can be completed within the day.

Needless to say, if other LGUs adopted these prescriptions, they would be on their way to being another business-friendly city or municipality.  And they would have begun to spread the sunshine all around. A thriving business community means more jobs for their constituency, more income to pump into the local market economy, and more tax revenues for the local and national coffers.

Improvements in the business registration process is only one among a number of opportunities expected to stimulate growth of the micro, small and medium enterprise sector, as discussed during the UP ISSI forum.

Various speakers presented inroads accomplished and planned from other major areas for development laid out in the MSME Development Plan, namely: access to financing, access to markets, and productivity and efficiency.

Specific small enterprise promotion programs discussed during the forum were: Philippine Center for Entrepreneurship’s Go Negosyo program, the DTI’s One-Town-One-Product program, Small Business Corporation’s SME Unified Lending Opportunities for National Growth (Sulong) program, DTI’s Rural Micro-Enterprise Promotion Program, DoST’s Small Enterprise Technology Upgrading and Manufacturing Productivity Extension Programs, the UP ISSI and Serdef’s Human Capability Building Programs, the National Wages & Productivity Commission’s Productivity through Workplace Values program. The Legislative agenda for MSMEs was also discussed.

For more small business features, case stories, business primers, and other articles, check out the Serdef website at www.serdef.org.

P500 and a dream were all it took for startup couple

By: Delfin T. Mallari Jr.

Inquirer Southern Luzon

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LUCENA City—Determined to put up a business of their own, couple Angelo and Lorelyn Dimaano gambled their last P500 in 1999 in the purchase of basic materials to announce their entry into local ads streamer business.

“It was the last of our savings, but we still decided to try our luck once more and ventured into streamer ads business. Thank God, we’re not wrong in our decision,” Angelo, 37, tells the Inquirer.

He and his wife, Lorelyn, 34, narrate the ups and downs of their experience as a couple wanting to start a business of their own after several failed ventures.

When he met Lorelyn, Angelo was working as an all-around helper in the arts and advertisement section of a mall here. One of his tasks was to assist in the design and production of streamers.

“But I vowed that after five years with the mall and I’m not getting anywhere, I might as well resign and try my luck as an entrepreneur. I have a family to secure a better future for,” Angelo says as he recalls his decision to leave the mall in 1999.

With their small savings as capital, the aspiring businessman and his wife, both high school graduates, ventured into the sale of fresh fish, pork barbeque and other street food fare in their neighborhood in Lucena City only to realize that their meager profit was just enough for their daily needs.

Angelo also worked as a part-time construction worker and eventually found himself working in a local graphic designs and streamer production shop to help augment the small earnings from their small food business, which they eventually closed after two years.

With the remaining P500 in their pockets, Angelo convinced his wife that they should better make use of the techniques and styles that he learned from his former work at the mall and at the local art shop.

“I also learned from the art shop owner that there is money in the streamer making business. Earning good money a day is quite easy, especially when one has been able to establish regular clients,” he says.

Inspired by the bright prospects of his newfound trade, Angelo bought iron sheets and, with some pieces of wood and leftover paint from the construction site he once worked, he designed an advertising poster for his venture which he christened “Letratext.”

Angelo posted his own ads design with his business name, phone number and shop location on the corner of the main road leading to the subdivision where his parents live.

“My neighbor allowed me to use their phone for call-in queries,” Angelo says.

His first job order was for a streamer lettering which he priced much lower than his established competitors in the city’s downtown area.

“I vowed to myself that if I want to succeed in this field, I must offer my service at the lowest price possible. I’m more than willing to offer my service for free at that time just to be able to secure a deal,” he says with a big laugh.

With the remaining money, Angelo bought textile, small cans of paint and an ordinary Chinese brush to fulfill his first job order.

Over the next four years, his streamer advertisement business grew, according to wife and business partner Lorelyn.

In 2007, the couple acquired modern advertising equipment and ventured into computer design and tarpaulin printing.

For the second time, the couple once more gambled their hard-earned savings from their art shop and purchased a second-hand tarpaulin printer in Manila for a whooping P470,000.

Lorelyn says the money was supposed to be her placement fee for a job in Italy.

“But I backed out at the last minute because I don’t want to leave behind our two growing children. Besides, I have strong belief that the tarpaulin printing business would also turn out well if I stay and help my husband,” she says.

After acquiring the machine capable of printing tarpaulin measuring five feet, and a high-end computer, the couple rented a small space near the Lucena City hall and again started from scratch to make a name in the highly competitive tarpaulin printing business.

To promote their new shop, the operator printed their business name on several tarpaulin sheets which they distributed for free to tricycle drivers plying the city streets to serve as protection from the rain.

With no hired hands, the couple started the tarpaulin printing business on their own.

“My knowledge of computer designing is limited, but I persevered and found ways through the Internet on how to improve my craft,” Lorelyn says.

After an uphill climb, the couple was able to grow their income expand their business. They now maintain several computer units and five tarpaulin printing machines, including a brand-new one that costs P1 million which the couple is now paying on installment.

Letratext maintains three branches in Lucena and another one in Lucban town.

Angelo and Lorelyn attribute their modest success to the quality of their relationship with clients and shop workers.

Also, the couple stresses the importance of dedication and a single-minded focus on one’s goal.

“There should be no distractions. Every minute should be focused on how to achieve the target without prejudice to the interest and welfare of the family and co-workers. Of course, don’t forget to pray for God’s guidance,” Angelo explains.