PH Finance

Whenever I go to FB Finance groups, I tend to see common themes and advice. Most of these advices are helpful or at worst, harmless so I let them be. However, one thing I find that is consistently touted as the truth yet is not true is this phrase:

Kung gusto mong yumaman, pumunta ka sa business

It can go through different ways even. Some of them include:

1. Mag business ka nalang para magkapera ka
2. Sayang at bumili ka ng iPhone. Kung nagbusiness ka sana lumaki pa yan
3. Bakit hindi ka magbusiness sa free time mo?

Here I am to be a devil's advocate. Basically, why you should NOT start a business. I will first acknowledge that there are many good reasons to start a business but a lot of times, people simply focus on these reasons without regard to what they have to sacrifice.

So let's begin.

A lot of businesses fail. A. Lot.

I cannot emphasize this point. A lot of businesses fail. Before the pandemic, 20% of businesses failed during their first year. 20%. That might seem like a low number but imagine how much higher it is compared to a stable corporate job.

And this is only for the first year. I have seen figures as high as 90% that do not make it to their third year with the rest usually struggling to make an income. With a failure rate this high, you really should think twice on whether or not to quit your job for this venture.

Businesses require a lot of sacrifice - especially at the start

Businesses are stressful. In the beginning, you won't control your schedule at all. It's very funny to see people hear that they are tired of the common workday so they'll start a business - only to get hit hard by reality. A lot of business owners at the beginning have to work 24/7 in order to make it work. Are you ready to do it?

Not only that, but financial resources as well. Your first paycheck will likely be small once you factor in expenses needed by the business. It will likely be much smaller than your counterparts in your corporate job.

And even if you have the financial resources and time, you could still very much fail. How many businesses do you think died down due to the Covid pandemic? As in, they have a viable market, a perfect plan, etc. but because of Covid, they have to close shop? I know of a restaurant near my old school that closed down as well as many 7-11 stores. These used to be filled with students but now they are replaced.

If you still want to start a business, there are many ways you can minimize the risk:

1. Start it as a sideline first. Do not quit your job to simply focus on your business - that is a disaster. Rather, check if your idea actually has merit rather than going all in.
2. Have a business plan. A lot of business owners do not plan and they are basically going about it blind. If you're starting a business, have a plan. It doesn't have to be very robust and foolproof - no such thing exists. However, even a general path to profitability is much better than figuring out things along the way.
3. Focus on what you know. If you have to ask, "What business should I start?" you need to stop. When you start a business, you must realize that you will be running it. If you don't know how to run your business, you will be the only person to blame. You don't have to know everything about an industry, but you should know enough about it to be able to make proper decisions.

In summary, businesses aren't for everyone. If you like stability, it is much better if you go the employee route rather than a business. It isn't foolproof - the Covid pandemic layoffs showed us that but it's much better than having to figure out if you'll get funded.