How to Start a Hardware Business in the Philippines
Are you wanting to venture into a profitable business? Look no further! This article will guide you on how to start a hardware business in the Philippines. This type of business is ideal for those who want to start their own business for its profitability: as long as you know what you are doing.
Hardware stores are basically retail shops (usually brick-and-mortar) that sell tools and construction materials needed to build, renovate, or maintain any structure such as a house, building, and even automobiles.
The merchandise includes: building materials, power tools, electrical supplies, automotive equipment, lawn care, house ware, paint, plumbing equipment and more.
If you are wondering if it’s worth the risk, you can be rest assured that the demand has been increasing ever since the trend of do-it-yourself.
Interested? Continue reading what you need to know before starting your own!
Location, location, location!
Before diving in to establishing a hardware store, you must know where you are going to “plant” it. Just as a plant needs its nutrients from the surrounding area, the more plants nearby (competitors), the less likely your business will flourish!
Consider the growth factor of the neighborhood, their income class, and the amount of competition in the area. Don’t stay in a place where there is already an established business.
Accessibility is also another factor that you should consider. Places where there are construction sites for houses are suitable areas of development and likely to flourish with your business. However, since these are temporary, consider the amount of traffic that you could gain.
Know your target market
Your business surrounds a local community. It is important to know your neighborhood since they are your main source of customers. Knowing your customers include their needs and preferences; what they usually look for in hardware stores.
Additionally, provide after-sales service by giving satisfactory customer care / customer service such as free delivery or free installation of furniture.
Be updated with the price of materials
Profitability from the hardware is considerably higher than that of construction materials. The reason being is that construction materials are canvassed by customers all the time to find the most affordable one possible. This sets up a potential for competition between businesses that offer cheaper products.
While they may be sold cheaply, you may find that your location to be at your advantage. For example, you may be able to mark-up the materials you have at stock if you are the only hardware store nearby.
Have the capital needed
The money you need to start a hardware business in the Philippines
At this day and age, you need a large amount of capital to run a business, especially for hardware stores. You’ll find you need at least P300,000 to get yourself suit-up with the most basic of stores.
Surely, at first, you won’t be able to generate enough revenue to rely on it to maintain your business. Consider the rent, cabinets, salary, bills, warehouse, and the delivery trucks you will have to take care of.
Source your materials
The stock you will be selling can usually come from three sources: direct manufacturer, wholesaler, and secondary distributors. The usual route taken by new hardware stores choose is the wholesaler. They give an advantage of marketing and advertising your business.
Usually, suppliers give stocks in terms. This means that hardware items have a term of 120 days. On the other hand, construction items have a shorter term of 15 to 30 days only. This all depends on what you will negotiate with the supplier, so it is especially important for you to develop a long-term relationship with them!
Register your business
For sole proprietorship, head to the Department of Trade and Industry (DTI) to register your business. Partnerships and corporations are required to register with the Security and Exchange Commissions (SEC).
Fear not the giant!
One last tip when starting a hardware business in the Philippines
Hardware business in the Philippines is mostly played out by big companies. However, that is hardly a negative for anyone wanting to start their own and make a profit. Retail stores may dominate the country all the cities over, there is no denying that they do not have the control as people might think.
As one could observe, there are long running hardware stores in the Philippines that survive despite the numerous outlets of corporate chains seen at every mall in the country. In fact, independently owned hardware businesses are able to gain an edge over their large counterparts.
This means that you can own a slice of the market share in the hardware industry. What customers prefer traditional non-corporate owned stores is the ability to personalize their own purchases compared to the normalized marketing that big giants use as an approach over its consumers.
Satisfying customer service means that you are able to provide staff that can give personal service and support their choice for home renovation and improvement.