How to Start a Small Business in Vietnam (Step by Step)

Learning how to start a small business in Vietnam can be an exciting opportunity, thanks to the country’s growing economy and friendly business environment. With a young population and increasing consumer demand, Vietnam is becoming a great place for entrepreneurs.

However, getting started can feel overwhelming. You’ll need to understand the legal requirements and cultural differences, which can be tricky for newcomers. But don’t worry—this guide will help you navigate these challenges.

We’ll walk you through the essentials step-by-step, from registering your business to practical tips for success. Each section will provide straightforward advice to help you get ready for your journey.

Whether you’re a local or coming from abroad, this guide will give you the tools you need to turn your business idea into reality in Vietnam.

Vietnam’s Exciting Business Scene

Vietnam is quickly becoming a top choice for businesses looking to expand, thanks to its unique advantages and a thriving economy. 

Economic Growth and Strategic Location

Vietnam’s economy is one of the fastest-growing in Southeast Asia. In 2023, the country saw a GDP growth rate of 5.05% and a 5.66% increase in the first quarter of 2024. 

Remarkably, Vietnam was one of the few countries that managed to grow during the COVID-19 pandemic, bouncing back quickly in 2023.

Geographically, Vietnam is perfectly situated in Southeast Asia, making it a great hub for connecting with major markets like the US and Europe. The government has signed 17 Free Trade Agreements (FTAs), which make it easier for businesses to trade and invest.

Young and Energetic Workforce

One of Vietnam’s biggest assets is its young population. The median age is just 32.5 years, and over 62% of people are between 15 and 59 years old. This means there’s a large, energetic workforce ready to take on new challenges.

Every year, Vietnam produces around 50,000 IT graduates, contributing to a tech-savvy labor pool. Plus, 97% of the working-age population is literate, making it an attractive place for companies looking for skilled and affordable labor. Setting up an offshore IT team in Vietnam can cost about 15-50% less than in countries like Thailand and Malaysia.

Supportive Government Policies

The Vietnamese government is committed to making it easier for businesses to operate and invest in the country. Some key reforms include:

• Simplifying the business registration process, which can now often be completed in just one to four months, depending on the type of business.
• Tax reforms that help reduce the burden on businesses, including a move toward electronic tax declarations and simplified tax obligations.

A recent survey found that 62% of European companies consider Vietnam one of their top 10 investment destinations, with 17% naming it their number one choice. This shows growing confidence in Vietnam’s business environment and its potential for future growth.

Infrastructure Improvements

Vietnam is also making significant investments in infrastructure, which is crucial for supporting its growing economy. The government is working on improving transportation networks, including roads, airports, and shipping ports, to enhance connectivity and logistics. These upgrades are essential for facilitating trade and attracting foreign investment.

How to Start a Small Business in Vietnam (Step by Step)

Step 1: Research and Choose Your Business Idea

The first step in starting a small business in Vietnam is to do your homework and pick an idea that fits the market and your own interests. 

Here are some questions to think about as you explore your options:

• What industries are really taking off in Vietnam right now?
• What are Vietnamese consumers buying and looking for?
• Who exactly do you want to sell to, and what do they need?
• How much competition is there in the area you want to get into?
• What skills, connections, and money do you have to work with?
• Are there any special legal or government rules for your business idea?

Once you’ve considered those, here are some promising business ideas to explore further:

1. Fashion: Start an online clothing store or become a supplier to the booming textile export market.
2. Food: Open a restaurant, bakery, or food delivery service to feed the growing appetite for diverse cuisine.
3. Tourism: Launch a travel agency or tour company to show off Vietnam’s amazing culture and landscapes.
4. E-commerce: Sell popular Vietnamese products like coffee, handicrafts, or electronics to international buyers online.
5. Health: Start a gym, yoga studio, or wellness coaching service to cater to rising health consciousness.
6. Beauty: Open a salon or retail store for natural and premium beauty products.

By carefully researching and weighing your options, you can find a business idea with real potential.

Step 2: Choosing Business Model 

Choosing the right business model is crucial when starting a small business in Vietnam. The country’s diverse and rapidly growing economy offers many opportunities, but selecting the right model can make or break your success.

There are several business models to consider:

1. Selling directly to customers (B2C): This is great for retail businesses like online stores or restaurants where customer interaction is key. With Vietnamese consumers spending more, B2C can be very profitable.
2. Selling to other businesses (B2B): If you sell products or services to other companies, this is for you. It works well in Vietnam as more small and medium businesses need support.
3. Franchising: You buy the rights to open a branch of an established business. This reduces risk as you get an existing brand and model. Popular franchise sectors include food, retail, and education.
4. Selling online (E-commerce): With digital tech, an online business can be a low-cost way to start. It’s flexible, scalable, and reaches more customers without a physical store.

When deciding on a business model, consider the following:

• What do local customers want, and how do they prefer to shop?
• How much money and resources do you have to invest?
• What skills and interests do you bring to the table?
• Are you aware of Vietnamese laws regarding foreign businesses?

Choose a model that aligns with your vision and gives you the best chance of thriving in Vietnam’s dynamic market.

However, keep in mind that foreign investors need to follow the rules set out in the Law on Investment (2020). 

Some activities are off-limits for foreign entities, including:

• Dealing with narcotics and toxic chemicals
• Prostitution and human trafficking
• Debt collection

For a complete list of restrictions, it’s a good idea to check the Law on Investment or consult with a professional service provider.

Step 3: Register Your Business

When starting a business in Vietnam, you need to register it properly, which involves a few important steps and some paperwork.

The first official step is to get an Investment Registration Certificate (IRC). This certificate is crucial because it gives you the legal right to invest in Vietnam. You can apply for the IRC at the Department of Planning and Investment (DPI) in the province where you plan to operate your business.

What you’ll need for the IRC application:

• A detailed proposal for your investment project
• Legal documents for the investors, like passports and business licenses
• Lease agreements or documents showing your land use needs

The processing time for the IRC is usually about 15 working days.

Once you have your IRC, the next step is to apply for the Enterprise Registration Certificate (ERC), which officially registers your business. You’ll submit your ERC application at the same DPI where you applied for your IRC.

For the ERC, you’ll need:

• A completed application form for enterprise registration
• A company charter
• A list of board members and legal representatives

This process typically takes around three working days.

Step 4: Complete Tax and Financial Setup

After obtaining your IRC and ERC, there are several additional steps to finalize your business setup.

First things first – you’ll need to register your business with the local tax office. This is a must for all businesses in Vietnam to ensure you’re operating legally. Here’s how to handle that:

• Gather the required documents, which usually include your business license, ID, and any other relevant paperwork.
• Visit the local tax office to apply for your Tax Identification Number (TIN). This number is essential for all your tax-related activities.
• Register for the relevant taxes based on your business activities:
  • Value Added Tax (VAT): If your business is subject to VAT, make sure you register for it. Get familiar with the VAT rate that applies to your industry.
  • Corporate Income Tax (CIT): Register for CIT based on your projected income. Understand the tax rates and regulations that apply to your specific business type.
  • Other taxes: Depending on your activities, you may need to register for additional taxes like special consumption tax or environmental tax.

Next, it’s smart to open a business bank account to keep your finances organized. Having a separate account for your business transactions is also required by law in Vietnam and makes it easier to manage your finances, pay taxes, and keep accurate records. Here’s how to set that up:

• Research local banks to find one that offers services tailored to businesses. Consider factors like fees, online banking options, and customer service.
• Prepare the required documentation, which typically includes your business license, TIN, and identification. 
• Once your account is open, set up online banking. This will make it easier to manage transactions, make payments, and monitor the financial health of your business.

Step 5: Compliance and Getting Your Operations Set Up

Getting your business off the ground involves several important steps to make sure you’re following the rules and regulations. Depending on what industry you’re in, you might need specific permits or licenses to operate legally. For example: 

• Food and Beverage: Health and safety permits are essential.
• Manufacturing: You might require environmental permits.

Once you know what you need, visit the appropriate government offices to submit your applications. Make sure you have all the required documents ready to avoid any delays. 

Next, make sure your employment contracts and workplace practices comply with Vietnamese labor laws. This includes:

• Following local minimum wage standards.
• Adhering to rules about maximum working hours and overtime.
• Providing mandatory benefits like health insurance, paid leave, maternity leave, and severance pay.
• Implementing safety measures and training to protect your employees.

And finally, to stay transparent and legal, you’ll need to publicly announce your business registration. You can do this by publishing a notice in a local newspaper or through the National Business Registration Portal. Include important details like your business name, registration number, and address, and follow any specific format they require.

After your announcement is published, keep a copy for your records. This can come in handy for future compliance checks or other official needs.

Step 6: Choose a Business Location

Picking the right place for your office can make a big difference in how your business runs, how much it costs, and how well it does overall. Here’s a quick look at the main types of offices and their pros and cons to help you decide what’s best for you.

When choosing a location, think about:

• How much you can spend on rent and other costs
• The space you need for your work, meetings, and storage
• Making it easy for customers to get to you
• Picking a place that fits your brand’s image and values
• If the location can grow with your business

By weighing these factors and the pros and cons of each office type, you can find the perfect place for your business to thrive. Coworking spaces, in particular, offer a fantastic blend of flexibility, community, and resources that can really help your business succeed!

Step 7: Marketing and Promotion

Now that your business is up and running, it’s time to turn your attention to marketing and promotion to attract customers. In today’s digital world, having a good marketing strategy is really important. 

According to Forbes, small businesses should work on building a strong online presence using different channels like social media, email marketing, and search engine optimization (SEO). Therefore, selecting the right marketing channels can significantly impact your reach and engagement. 

Here are some suitable channels and tips for small-scale businesses:

1. Social Media Marketing: Platforms like Facebook and Instagram are invaluable for small businesses. They offer free business pages and targeted advertising options, allowing you to reach specific demographics effectively.
2. Email Marketing: This channel remains one of the most cost-effective strategies. Building a quality email list enables you to send personalized messages, promotions, and updates directly to your customers. 
3. Search Engine Optimization (SEO): Improving your website’s SEO helps increase visibility in search engine results. Utilizing relevant keywords, creating quality content, and optimizing your site structure can draw organic traffic to your business.
4. Content Marketing: Providing valuable content, such as blog posts or articles, can establish your authority in the industry. Studies indicate that 70% of consumers prefer learning about a company through articles rather than ads, making this a powerful strategy for engagement.
5. Networking and Local Marketing: Participating in local events and networking can help you connect with potential customers and other businesses. 

By combining these strategies, you can develop a marketing plan that not only attracts new customers but also fosters long-lasting relationships, ultimately contributing to your business’s growth.

Step 8: Monitor and Adapt

The business environment in Vietnam is constantly changing, and people’s preferences can shift quickly. To stay on top of things, it’s really important to keep a close eye on how your business is doing and be willing to adjust your plans whenever necessary.

First off, decide on some key performance indicators (KPIs) that you’ll use to track your progress. Take a look at your sales numbers, listen to what your customers are saying, and check out your online engagement metrics to get a sense of how well your business is performing. 

It’s also a good idea to stay updated on what’s happening in the market and keep tabs on your competitors – that way, you can spot new opportunities or potential challenges early on. Use surveys, social media, and good old face-to-face chats to really understand what they want and need. 

Finally, make learning a lifelong habit. By staying curious and adaptable, you’ll make sure your business can weather any storm and thrive in Vietnam’s ever-changing market scene.

Benefits of Using a Coworking Space for Small Businesses

Coworking is a flexible way of working where individuals, freelancers, and small businesses share a common space while still working independently. This setup encourages collaboration and helps create a community where people can share ideas and resources.

Most coworking spaces provide a variety of services, including:

• High-speed internet
• Private meeting rooms
• Printing and copying services
• Comfortable workstations
• Networking events and workshops
• Kitchen and lounge areas

For small businesses, using a coworking space comes with several advantages:

1. Coworking spaces are usually much cheaper than renting a traditional office, making them a great choice for startups and freelancers.
2. These spaces bring together diverse professionals, making it easy to meet new people and potentially collaborate on projects.
3. The professional atmosphere can help you stay focused and motivated, leading to better work output.
4. Many coworking spaces offer flexible membership options, so you can adjust your space as your business grows.
5. Being part of a coworking space helps combat the loneliness that can come with remote work, creating a sense of belonging.

If you’re looking for the perfect coworking environment in Vietnam, especially Ho Chi Minh City, check out The Sentry.

The Sentry: A Premier Coworking Space in Vietnam

Located in the heart of Ho Chi Minh City, The Sentry stands out as a premier coworking space designed to meet the needs of modern professionals and small businesses. Our state-of-the-art facilities are tailored to foster productivity, creativity, and collaboration.

At The Sentry, you’ll find high-speed internet, fully equipped meeting rooms, comfortable workstations, and a variety of office supplies at your fingertips. Our vibrant community of like-minded individuals offers unparalleled networking opportunities, enabling you to connect with potential partners and clients.

We understand the importance of flexibility, which is why we offer a range of membership plans to suit your business needs, whether you require a dedicated desk, a private office, or just a hot desk for a day. 

Join us today and experience the future of work in Ho Chi Minh City!