Live in the Philippines

Live in the Philippines helps expats with visas, moving and other services regarding the Philippines.

Having business here in the Philippines while living abroad!

Business, Money Matters / by

I was asked by a reader here with questions “If is is good for her to put up business here in the Philippines while she’s still living abroad?”.  I answered her back that I will not recommend that. You know why? If the owner is not around the workers will not do what the owner want them to do with the business. I know of some friends who owned businesses here and letting the family members run the business while they are still living abroad. Really lots of them end up closing in no time.

The lady wants a small eatery place with karaoke and they want to serve beer. In short it’s like karenderia with karoake bar. She wants to start to have business here before her retiring time abroad. She works as a nurse if I remember. She earned pretty descent money. She already had some other properties here and she wants to add more income. She told me that she will have her family manage the place before her retiring time. So she’s asking my opinion about it.

I don’t recommend to people to have business here but you know what I don’t know the people that she entrusted her money with. It’s really up to her. She should study hard and read a lot online about people here putting up business if it succeed or if it fails. She should study the pros and cons to it. I’ve know people that put up business for the family and fails.

We had a friend, before he and his wife put up a pretty nice business for the family. They also want the money (income from the business) to be saved for their future retirement here in the Philippines. They put up a nice internet cafe business with 15 seat cafe complete with printer, scanners and all those stuff that’s good for the cafe. It was good at first. Then later it was mismanaged by the family members. Later on almost all the customers that’s occupying the seats in the internet were family members. So no revenue was generating with the business. Year or so later the business folded. So it’s really sad.

My really close friend bought like 3 jeepneys and farms for her family and to save some money when time for her to come back here for good. Well, her contract abroad was not over yet and her jeepneys were already starting to deteriorate. It cost her a big amount of money at the end. The farm starts to make money but family’s relationship starts to fail. Comes with the fighting  and not talking.

A family member of mine sent money for her family to start a small business. Instead the family bought a billiard table and because it’s not their hard earned money they just left the pool table outside without cover in just a few months after buying it, it was nothing but trash. The big investment just rotted out in-front of them.

So if thinking of investing while not here to manage it? I hardly recommend putting up businesses here.

Reader Interactions

Comments

  2. I think most small businesses fail there.
    I can’t count how many I saw fail.
    My general Advice is be rite thereon top of it Daily if needed.
    If your not there even a trusted family member or friend can get cheated by no fault of there own.

    • Never mind just the PH, 80% of new start up business fail within the first 3yrs in the UK. I guess it’s similar in other Western countries too.

      It is also a fact that the vast majority of self made millionaires had 2 to 3 failures before they hit on the right idea.

  3. The richest man in babylon says, if you want to invest money in a particular business one must get advice from others who are successful in that particular business.

    My wife and I have a store building that is not being used, next to our house that we own in the PI. My wife’s sister and brother in law live in the house. We live in the US. Yesterday my wife told me that she was interested in having her nephew use the store for a business. At first I did not like the idea. But am warming up to it. The nephew is a responsible, hard working electrician. He spends 6 months out of the year as an OFW. The other six months he could be working out of the store next door to his mama and papa, who live in my wife’s house. Others in the area have asked about renting out the store as a sari sari store, but we don’t want to rent it out. No further investment on our part. Sounds like it might work out. But sending money to the PI, and counting on it to provid a revenue stream sounds dangerous. One is much better off placing any excess earnings in some type of retirement fund, i.e., stock market. Choose wisely.

    • Hi Jamie – You have a good start up there. Hope everything will work out for you and your wife as plan.

      Thank you so much for sharing your thoughts here.

      Have a great day!

  5. I have owned several ventures, best advice leave family out. If you are to be an absentee owner hire a competent, experienced manager. Then set reporting and inventory to be done daily, sometimes twice or more, have an independent agent check inventory weekly. Monitor deposits and expenditures with weekly reports, and check on the business personally once a quarter, much more often at first. Hire an agency to secret shop your business and be prepared to step in and run it yourself on no notice whatsoever. Or just start it yourself, run it until it is going well then take short absences until you are comfortable with the staff. Sell the business and take a royalty, start in another location and if it works franchise the enterprise, oversee and take your 5%, life is short and the young turks are better than us.

    • Hi gerald glatt – Good advice there. Thank you for sharing your thoughts here. Hopefully the lady will see you guys comments and think it over and over before shedding her hard earned money.

      Have a great day!

    • Hi Maryrose Casupanan Rollins – Thank you so much for enlightening us. Hopefully the lady will get the message.

      Have a pleasant day!

  10. I completely agree with your advice, and others who have responded. There are cultural factors that make this an almost impossible situation. If you have enough money to won a business, then you are ‘richer’ than whoever is left to run it, and therefore, you should ‘help’ them whenever there is a need. Since you are gone, they will help themselves. They will plan to pay you back, but that usually doesn’t happen because life is rough.

    Second, maintenance is not a high cultural value. Things get fixed if they break IF they are essential. Have you noticed buildings and even resorts? They are painted at the beginning, but never again, plumbing repairs after construction done with rubber strips… Spending or setting aside money for something that still works is a foreign concept for the most part. Most Filipinos consider a business like a milk cow; feed them little and drain them dry. If they did not make the initial investment, all the more so! This is just cultural, people are not taught how to think wisely about money, to plan ahead, or consider the consequences of debt.

    I have noticed that the Chinese have a very different business model, and they stay in business for years. Even if the kids work in the store, a parent or grandparent is on site every hour the store is open, usually at the cash register. The Chinese owner of the restaurant we like best is always there. She oversees the food and service. It is never left to a manger, even though she lives nearby! Therefore the quality of food and service has never lapsed, in 10 years! The Chinese also live above the store, scrimp and save, and reinvest in their investment until there is enough money to buy a home for the owners.

    • Hi Americanlola,

      Thank you for confirming something I always notice on my visits, lack of maintenance and upkeep. Being involved in one way or another in the maintenance and repair business for many decades, this is the kind of thing I would notice just about anyplace. Many times when I am in The Philippines I just have to remind myself that I am in a different part of the world so of course don’t expect it to be like where I have always lived in the USA.

    • Spot on Americanlola. I could not agree you more.

      Thank you so much for enlightening a lot of our readers here. I really appreciate your thoughts and advice.

      Have a good weekend!

    • Well said Americanlola.
      The Chinese are very astute, maybe more Filipinos should watch and learn.

  12. I totally agree.

    We did start some business before we moved here, but since we came to live in Philippines it has improved a lot.

    Business culture is very much different from our “western style”, but those cultures can be combined to a very positive business and give very good conditions for employees, when implementing the more western ways to do things, combined with the “Filipino style”.

    If you want to help family to manage themself, it’s fine, in fact it is often better than just sending money to support.But if you want to have something to give extra cash, when you live here, you just have to be here and manage things.

  13. I think it would be more practical for the person who wrote in to save up as much money as possible before retiring and returning to The Philippines and then start up a business if she still desires. There seem to be lots of small eateries such as the one you have described so it must be very competitive and you never know how much additional competition is going to open up even right next door to you if your business even has the slightest appearance of being profitable. From my own experience on my visits, I have read and seen pictures of new businesses opening up, and with a lot of good press and grand opening fanfare. Business booms at first, some of these places I even patronize when I come to visit. One or two more visits and those businesses are gone.

    Speaking for myself, I don’t think I would be interested in having a business there even if , as a foreigner, I could, and even if I was there to oversee it 100% of the time. For a returning OFW it may have a better chance of becoming something profitable but as an absentee owner the chances would be greatly diminished.

    Good topic and a good article Feyma.

  14. One of the biggest problems is lack of a budget/farecast process. A lot of retirees ask about setting up a sari sari store to help generate a little extra income, say 1000 pesos in profit a day. I just say do the math first. You only sell in small quantities (sachets, beer, cigarettes) and will make less than 5 pesos each if lucky. So how many sachets, beer, cigarettes, etc do you need to sell? 200 items? Now watch that store across the street and see how many people visit in a given hour. 4-5 persons on average. Now you have to be open 16 hours a day, forget about having someone else sit there as will have lossage. If you go through the numbers and hours, they will quickly see how pointless it is.

  15. The consensus among commenters appears to be unanimous in that running a business from afar is not recommended, especially when relatives are involved. I learned the hard way, and never again will I make the same mistake twice.

  16. My wife and I have sent the capitol for a piggery, a rice farm, a rubber plantation and a sari sari store, as far as I know none of them generated any revenue other than the capitol we sent. (And oh yes, a couple of educations which only benefited the institutes of higher learning and the life style of the student as long as we were sending money.) Of course some small businesses make it and some people just need the chance to make it. Just make sure you look at the capitol as a gift rather than an investment then there will be no hard feelings when you get no return and much joy if you do. A good article.

    PS I am not saying it can’t be done — it just isn’t easy.

  18. Hi Feyma and very good stories…….Never go into business with your family!! There are just too many bad things that can and will go wrong. If you need to fire someone there will be hard feelings. If someone takes more money, than they should, out for their self… There will be fights and arguments. I have personally lost hundreds of thousands of USD in the USA in family businesses. Even a family 10 hectare farm cannot work for long….We are now living that in Davao Philippines today. Everyone wants a bigger and bigger cut of the money, they even barrow money from future crops before the crops are harvested without prior knowledge??? Better to just keep your money in the bank in money accounts.

  19. very true, never entrust your business to anyone especially as an entrepreneur- both husband and wife we manage the business personally (buy & sell) if you fail to monitor your accounts receivables and stocks inventory you will end up losing your business very soon.trust no one!

  22. Great article Feyma ! Lots of good responses too. I’ve been reading “Live in The Philippines” off and on since Bob started it. I think American Lola’s response is one of the best and most accurate posts I’ve ever read on this site.Absolutely spot on .I’m a big proponent of money remittances sent from abroad to be used for creating small businesses in The Philippines.Unfortunately, in far too many cases, the end result is exactly how American Lola described.

    There is a huge amount of people in The Philippines who have become accustomed/dependent on receiving regular or semi regular remittances from their OFW family members and those who have immigrated abroad. In our shopping center here in SoCal there is a remittance business that does quite well.I’ve seen lots of the same people send money for more than 10 years.We have many customers who complain to us about always having to send money back “home” for one thing or another. It’s never ending and it’s never enough ! Why put in 80-100 hours a week building a business when Ate or Kuya are earning big Dollars,Pounds,Euros,Yen,Won etc. They will send us money either way !

    It doesn’t have to be this way.

    My wife’s family started their garments business in the late 80’s just before we got married. In 1994 my wife and I decided to invest in the family business.We bought a brand new L-300 to help deliver the finished products to Baclaran and to use for other business purposes.We also invested in a screen printing business that a brother started.We earned a small percentage from each business and the money was deposited in a separate bank account. At the time, these investments were crucial in order to expand the business.Over the years, both of these businesses have experienced tremendous growth.In fact,multiple garment business have been started by cousins who cut their teeth working for my wife’s parents,brothers,and sisters.They are building their own businesses,earning a good living, employing people,and providing for their family.This is how it should be 🙂

    It’s not easy owning a business. It requires many many hours and lots of sacrifice.I know from experience and it does not matter if you are in Manila or San Diego.You are either all in or not,I’ve seen lots of businesses fail in San Diego.Often times the owners were not prepared for the time commitment it takes to grow a business.

    We have a customer who is in the same situation as the woman in the OP.He recently came back after spending 6 months in Pangasinan.He’s a double dipper, retired from the Navy and Post Office.He has NO business experience at all.While he was in Pangasinan, his cousin and friends who also have no prior business experience,convinced him to invest in a karaoke bar/eatery.They will run it until he moves there permanently in a few years.Of course, ALL of the money invested was his since they don’t have any money to invest.While he was telling me about this venture he mentioned that while he was “home”, he spent a lot of money supplying a good time for all of his family members and friends.Incredible ! This will end badly that I’m sure of.