Updated at 1:28 PM PHT, Published at 7:27 AM PHT,
by
Dennis Cabrera
What MSMEs Can Sell to be Profitable and Successful by 2026
A. Planning a more profitable & successful MSME startup?
With the advent of AI in the country, Philippine MSMEs can find success by pivoting to digital services and solutions that are enhanced by AI. If they focus on AI-powered B2B solutions like lead generation and automation of communication, or digital productivity tools for remote work, success is certain. AI-assisted online content creation and marketing services also offer significant potential for MSME profitability by year .
What do the statistics say online?
The Philippine economy is showing a natural resilience and is projected by the International Monetary Fund (IMF) to grow by
5.9% in . This is a slight upward revision from previous forecasts. It is this positive forecast, coupled with significant technological shifts, that presents unique opportunities for MSMEs. As "old world of work is ending and a new world of work is being born" in highly developed economies, so also with the Philippines, as it now invests in systems that are largely driven by AI advancements. For the MSMEs of the country aiming for success by next year, , understanding where to pivot one's business strategy in this scenario is one key to success, revenue, and a better long-term ROI.
There is another report from ASEAN Innovation Business Platform (AIBP) that further supports this positive forecast by noting the "growing recognition of AI's transformative potential" in the PH and revealing that
79.3% of enterprises intend to invest in AI & Machine Learning" within the next 2-4 years [1][2][3].
B. Beyond Traditional Retail: Unlocking MSME Profitability
This blog post will present specific retail service industries where MSMEs can pivot to be profitable and successful by . While traditional retail in food and consumer goods connected with the education sector are always a necessity, focusing on the digital services industry can unlock better MSME profitability. Many articles online strongly suggest a move to engage new MSME startups towards services involving digital transformation, rather than the traditional sale of retail goods. Any service in the Services sector that are able to apply AI technology will augur better and faster in sustaining their investments and maximize their gains.
C. Why AI-Powered Digital Services are Poised for Growth
1. Strong Performance of the Services Sector
According to the Philippine Statistics Authority (PSA), the Gross Value Added (GVA) growth rate in the Services sector has been impressive, averaging 6.7% in the year and reaching its target range of 6.4% percent to 7.9 percent [4][5].
All indicators within the Services sector showed a high likelihood of achieving their end-of-plan targets by year . This indicates a robust and growing market.
The Philippine Development Plan (PDP) 2023-2028 also specifies digital transformation as one of its underlying themes" to make the country "globally competitive". It states that "Philippine micro, small, and medium enterprises (MSMEs) are likewise highly encouraged and supported by the government to embrace digitalization and innovation [6]."
2. Advancing Digitalization and Connectivity
The International Monetary Fund (IMF) highlights "promoting digitalization" as a key reform area for the Philippine economy [7].
This is backed by a Philippine Statistics Authority (PSA) study that reports notable gains in the proportion of public schools with internet access and a positive trajectory for the affordability of mobile and fixed broadband services, with mobile broadband already meeting its target. This widespread and affordable connectivity creates a fertile ground for digital businesses in the rural areas, servicing the education sector and improving the quality of life in the provinces. In addition, the Konektadong Pinoy Act (a.k.a. Open Access in Data Transmission Act), which lapsed into law last , will make internet connectivity not only more affordable, but more inclusive - "leaving no Filipino behind" in work and life [8].
3. AI as an Enabler for MSMEs
AI is not just disrupting but producing new ways of thinking and doing; it enables MSMEs to innovate and produce new business ideas.
With the thrust of the PH government to increase employment and decrease unemployment, MSME startups can produce various services for job hunters and ambulant vendors in the informal sector. This innovative direction can produce not only novel services but also help grow the employment statistics of the country to meet global standards. Both MSME-owners and those employed by them can easily upskill and expand their technological abilities in AI and contribute to increasing the local intellectual pool of the country's workforce for the future.
D. Specific AI-Powered Digital Service Niches for MSMEs
Based on the intersection of strong service sector performance, digitalization, and AI's capabilities, MSMEs can additionally explore these other areas:
1. AI-Enhanced Business-to-Business Solutions & Consulting
The core challenge in B2B (business-to-business) is the efficient information exchange between both parties that leads to successful and profitable transactions. Filipino B2B businesses in Facebook, the nation's go-to social media platform for their marketing and advertising activities, can do well to professionalize their services. They can level up from an "unscaled" or "de-scaled" individualized approach and engagement, to one that is professionalized with AI. This avoids all misleading communication that can embarrass parties concerned and produce seamless B2B solutions and consulting.
AI excels at solving these problems for MSME startups through
- professionally-generated communication and messaging,
- data analysis of trends,
- pattern recognition,
- automation,
- personalization at scale,
- and predictive analytics.
On the other hand, MSMEs with higher capitalization strength, can also offer services that leverage AI to implement all listed above with more highly sophisticated use of AI to serve large businesses or corporations with:
- Data-driven lead generation and qualification: Using AI to sift through data, identify potential buyers, and qualify their interest more efficiently.
- Personalized communication and marketing: Generating highly relevant and individualized responses or content for clients, optimizing outreach.
- Automated process improvements: Implementing AI tools to automate repetitive tasks like initial outreach, follow-ups, or data entry for other businesses.
2. Digital Productivity Tools & Training for MSMEs
The "Work From Home Revolution" (WFH) has become even more pronounced after COVID-19 and by the yearly disruptions brought about by calamities in the Philippines. WFH has continued to be relevant alongside the rush of AI into the country from the highly advanced Western countries. This situation of work can introduce Filipino MSMEs to focus on:
- designing Productive & Ergonomic Workspaces for WFH professionals,
- selling complete WFH Computer accessories & polywork Gear,
- providing content on Expert AI Productivity Strategies & Solutions
- giving Consulting or training services on integrating AI tools for improved time management and efficiency
Symbolic GEN AI image of MSME-startup owners given opportunity to earn well for a digital and financially-inclusive Philippine economy
3. Online AI-Content Creation & Digital Marketing Services
With improved internet access and its progressive inroads into the provinces, PH businesses increasingly need strong online presences. AI can significantly enhance copywriting and content creation by suggesting data-driven topics, assisting in personalized content drafts, and optimizing for search engines (SEO). MSME startups can offer these services through: [9]
- AI-assisted blog content creation and management for other MSMEs (B2B), focusing on data-driven insights and personalized messaging.
- Digital marketing strategies that leverage AI for A/B testing, audience analysis, and optimizing campaign performance.
- A pool of highly qualified human copywriters, which remain irreplaceable for empathy, brand voice, storytelling, and strategic direction, creating a powerful synergy with AI
E. Less Promising Sectors (for a new entry by )
It's also insightful to note areas that, based on current data, show a lower likelihood of meeting their development targets, suggesting they might be more challenging areas for new entries of MSME startups without significant innovation in AI:
- The Agriculture and Agribusiness sector, where most indicators (12 out of 13 major commodities) show a low likelihood of achieving their yield goals by .
- The Industry sector, where most indicators (16 out of 23) also have a low likelihood of achieving their respective targets, especially regarding GVA growth rates [10].
F. Conclusion: What can be done now?
For MSMEs looking to be profitable and successful by , and up to , the strategic direction points strongly towards leveraging investments of time and resources in the growing Services sector through digitalization and the integration of AI.
If Filipino MSME startups focus well on
- AI-powered B2B solutions,
- digital productivity services,
- and AI-assisted online content/marketing
then they will be able to reach their full potential, seamlessly moving beyond just traditional retail models to embrace the "new world of work" proferred by the new AI technologies.
Success for an MSME startup project in this new AI-enabled environment will therefore require
- decisiveness based on real-time data and information,
- discipline in applying resources for new investments and for scaling up,
- and determination to work things through with strategic planning, well-timed execution, and a complete evaluation to ensure sustained profitability.
