Understand Your Business Finances

Before you can create a budget, you need to have a clear understanding of your current financial situation. This means tracking every peso that comes in and goes out of your business.

  • Use Free or Affordable Financial Tools: You don’t need to invest in expensive accounting software right away. Free tools like Microsoft Excel, Google Sheets, or mobile apps such as GCash or PayMaya can help you monitor income and expenses efficiently.
  • Categorize Fixed and Variable Costs: Fixed costs are those that stay the same every month, such as rent, salaries, and loan payments. Variable costs, on the other hand, fluctuate based on your business activities—these include raw materials, marketing expenses, and utility bills. Separating these will give you a clearer picture of your spending patterns.
  • Analyze Your Cash Flow: The Philippine Institute for Development Studies (PIDS) reports that 82% of micro, small, and medium enterprises (MSMEs) lack proper financial planning. To avoid cash flow problems, prepare a cash flow statement that outlines how much money is coming in from sales and how much is going out for expenses. This will help you identify potential financial gaps and take action before they become critical.

Set Realistic and Measurable Financial Goals

Once you understand your finances, the next step is to set goals that guide your budgeting decisions. These goals should be both short-term and long-term to ensure financial stability and business growth.

  • Short-term goals (1-6 months): These could include paying suppliers on time, covering monthly operational expenses, or saving for minor equipment upgrades.
  • Long-term goals (6+ months to a few years): Examples include expanding your store, purchasing high-value equipment, or hiring more employees.
  • Use the SMART Criteria: Make sure your goals are Specific, Measurable, Achievable, Relevant, and Time-bound. For instance, instead of saying, “I want to save money,” a SMART goal would be, “I will save ₱10,000 per month for six months to invest in a new delivery vehicle.”

Prioritize Emergency Funds

Many small business owners overlook the importance of having an emergency fund. However, having a financial cushion can be the difference between surviving a tough time or closing down.

  • Save 5-10% of Your Revenue Monthly: Setting aside a small percentage of your revenue each month ensures you have a financial buffer for unexpected expenses.
  • Aim for 3-6 Months’ Worth of Expenses: This means if your business expenses are ₱50,000 per month, your emergency fund should ideally be between ₱150,000 to ₱300,000.
  • Use Secure and Interest-Earning Storage: Instead of keeping your emergency fund in a regular savings account, consider storing it in a BSP-regulated digital bank or a time deposit account where it can earn interest over time.
  • Reserve the Fund for Genuine Emergencies: Avoid dipping into your emergency fund for unnecessary purchases. Use it only for urgent situations like delayed client payments, equipment breakdowns, or unexpected operational disruptions.

Monitor and Adapt Your Budget

Creating a budget isn’t a one-time activity—it’s an ongoing process that requires regular review and adjustments.

  • Conduct Monthly Budget Reviews: Track whether you are staying within budget or overspending. Adjust your expenses if necessary and reallocate funds where needed.
  • Account for Inflation: According to the Philippine Statistics Authority (PSA), inflation in the country is expected to hover around 5.6% in Q3 of 2024. This means the cost of goods and services will likely increase, so be sure to factor inflation into your budget planning.
  • Invest in High-Performing Products or Services: If you notice that certain products or services generate the highest profit, allocate more funds toward improving and marketing those offerings. This ensures that your budget supports growth rather than just covering costs.

Boost Your Business with Smarter Financing

Even with a well-planned budget, there will be times when you need additional funds to seize growth opportunities or navigate unexpected financial challenges. This is where ULoan comes in as your partner for better business financing.

Unlike fully automated lending platforms that rely solely on online applications, ULoan provides a personalized approach to financing. After applying online, you can still expect a ULoan officer to reach out, ensuring that you receive the better financing solution tailored to your business needs. 

Start a year with a well-structured budget and the right financial support system can set your business on a path to success. Plan ahead, make informed financial decisions, and leverage better funding solutions like ULoan to keep your business thriving.

Know more about business loans by contacting us at (632) 8892-0991 from M-F, 8AM-5PM.

ULoan Business is the brand that represents the financing services dedicated to businesses offered by Unicapital Finance and Investments, Inc. (UFII) with SEC REGISTRATION NO. 68716 | CERTIFICATE OF AUTHORITY NO. 0022. UFII is a subsidiary company under the Unicapital group, a leading financial services provider in the Philippines.

For more information, visit https://unicapital-inc.com/financing/.

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