You are on page 1of 3

Many business owners run in the other direction when they hear the word debt.

But debt can help a business


thrive. If you take away the stigma, you can see how it can be used to your advantage — if you know how to
manage it. Here are four tips for using debt to help grow your business....

Here is a quick guide to properly differentiate a micro business from other types of businesses:

Category Assets No. of Employees

Micro ₱3 million and below 9 employees or less

Small ₱3-15 million 10-99 employees

Medium ₱15-100 million 100-199 employees

Large ₱100 million and above 200 employees and up

MSMEs businesses are driven by profitability and stable long-term value.


A startup business’ objectives are focused on top-end revenue and growth potential. As defined by Steve
Banks : “Start-up entrepreneurs have a more idealistic mentality, being more socialist, vs. the SME
entrepreneurs, which are more financially driven. It is a “temporary organization designed to search for a
repeatable and scalable business model.” A startup is searching for answers to the product it will sell, the
customer it will serve and the way it will make money from delivering value to its customers.

ABSTRACT

This paper is a two-part study of small-scale business enterprises in the Philippines:


survey and empirical analysis, both of which are combined in an attempt to
understand what determines entrepreneurial motivations and success in the
Philippines. The survey was conducted in order to study entrepreneurship
development and motivations in the Philippines and also to understand the challenges
and sacrifices faced by Filipino entrepreneurs. In particular, this survey is quite
comprehensive in scope and comprised 202 questions. Aside from data on the general
characteristics of the business enterprise and the entrepreneur, the survey also asks
questions about important issues in the study of entrepreneurship such as
entrepreneurial intensity, sacrifice, motivation, business plans, the business' effect on
the entrepreneur's quality of life, the entrepreneur's personal beliefs and attitudes, and
difficulties and problems that the entrepreneur encountered at different stages of
operating the business enterprise. This study also presents an empirical analysis of the
determinants of success by Filipino small businesses. This analysis made use of the
survey data and is based on the estimation of a regression model using Ordinary Least
Squares technique.

INTRODUCTION

Since the 1990s, there has been a resurgence of interest on the role of small-scaled
business enterprises or small and medium enterprises (both will be referred to as
"SMEs" hereafter) in national and international economic and social development.
This is consistent with the overall shift of development strategies in many countries
toward a more decentralized, even localized, approach. As such, many scholars,
practitioners, and institutions involved in economic development have begun to
recognize the important roles that smaller-scale business entities play in the economy
and society. More and more people are becoming convinced that these entities can be
a very effective means of achieving, not only economic progress, but social goals
(e.g., a more equal income and a greater appreciation for diversity in gender and race)
as well. All of these suggest a greater need to increase our understanding of the nature
and capabilities of family businesses and SMEs and the kinds of policies and
incentive systems that would be appropriate, necessary, and effective in encouraging
and strengthening them.

REVIEW OF ISSUES AND RELATED STUDIES

Like those in other countries, SMEs in the Philippines make significant contributions
to the overall economy and the country's pursuit of economic development. Data show
Filipino SMEs to make up more than 99% of all businesses in the country, provide
more than two-thirds of the country's employment, and is responsible for almost one-
third of the country's income (Philippine Department of Trade and Industry, 2003).
Given their economic importance (others also highlight their social significance),
Filipino SMEs are an interesting subject of study. Consequently, one would expect to
find numerous studies on them. This, however, is not the case, most probably because
of a number of issues that complicate their study.

One of these issues has to do with the different perspectives on different aspects
related to SMEs. Depending on which perspective the researcher uses as the primary
source of insight and information, one gets a very different picture. In the study of
Filipino SMEs, at least 3 different perspectives could be identified: that of
policymakers, SME owners, academician and scholars.

Policymakers' Perspective
In Philippines, government support to SME looks very good on paper. Specific
legislation (Republic Act 6977: Magna Carta for Small Enterprises, signed in 1991;
amended as Republic Act 8289 in 1996), institutions (such at the Department of Trade
and Industry/Bureau of Small and Medium Business Development, University of the
Philippines-Institute for Small-Scale Industries, and institutions that provide credit or
credit guarantee to SMEs); publications give the impression that the government pays
careful attention and takes sufficient action to encourage SMEs. …
The Truth in Lending Act (TILA) of 1968 is a United States federal law designed to promote the informed use
of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs
associated with borrowing are calculated and disclosed.[1]
TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's
principal dwelling, regulates certain credit cardpractices, and provides a means for fair and timely resolution of
credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the
charges that may be imposed for consumer credit. Rather, it requires uniform or standardized disclosure of
costs and charges so that consumers can shop. It also imposes limitations on home equity plans that are
subject to the requirements of 12 C.F.R.1026.40 and certain "higher-priced" mortgage loans (HPMLs) that are
subject to the requirements of 12 C.F.R. 1026.35. The regulation prohibits certain acts or practices in
connection with credit secured by a consumer's principal dwelling.