Running a small business means making daily decisions about where your money should go. For sari-sari store owners, online sellers, food vendors, service providers, and other small entrepreneurs, sales income may need to cover new stock, bills, transportation, household expenses, and other responsibilities. Because business and personal money can easily get mixed, it may be hard to tell whether the business is actually earning or whether the available funds are enough for the next set of expenses.
A clear and simple budget can help you monitor your money, protect your business funds, prepare for slower sales periods, and make more informed spending decisions.
Important Budgeting Terms to Know
Before creating a business budget, it helps to understand some commonly used financial terms:
- Sales or revenue: The total amount earned from selling products or services.
- Expenses: The money spent to operate the business, such as rent, electricity, transportation, packaging, and supplies.
- Profit: The amount left after business expenses are deducted from total sales.
- Cash flow: The movement of money entering and leaving the business.
- Working capital or puhunan: The money used for daily business needs, including restocking products and paying operating expenses.
- Fixed costs: Expenses that usually remain the same each month, such as rent or subscriptions.
- Variable costs: Expenses that may increase or decrease depending on sales and business activity, such as inventory, packaging, and delivery fees.
- Inventory: The products or supplies that the business currently has available for sale.
- Emergency fund: Money reserved for unexpected business expenses.
- Owner’s pay: A regular amount the business owner sets aside for personal or household use.
Understanding these terms can make it easier to organize your finances and create a budget that fits your business.
Separate Business and Personal Money
Keep business and personal finances separate as much as possible. Use separate accounts, records, cash boxes, or digital wallets for business transactions so you can clearly see how much money belongs to the business.
For example, the money earned from sari-sari store sales should first be recorded as business income before any amount is used for household expenses.
This makes it easier to measure actual business performance, track expenses, and avoid using your puhunan for personal purchases.
Track Cash Inflows and Outflows
Cash inflows refer to money entering the business, such as daily sales and customer payments. Cash outflows refer to money leaving the business for supplies, rent, utilities, transportation, wages, platform fees, repairs, and other operating expenses.
Record every amount that comes in and goes out. You may use a notebook, spreadsheet, or budgeting app depending on what is most convenient for you. Updating your records daily or several times a week can give you a clearer picture of your available cash. It also helps you identify unnecessary expenses before they become a bigger problem.
Identify Fixed and Variable Costs
Fixed costs generally stay the same each month, such as store rent or certain subscriptions. Variable costs change depending on sales or business activity, such as inventory, packaging, delivery, and supplies. For example, a sari-sari store’s rent may remain the same every month, while the amount spent on drinks, snacks, canned goods, and other paninda may change depending on customer demand.
Knowing the difference helps you estimate your regular operating requirements and determine which expenses can be adjusted during slower periods.
Create a Cash Flow Forecast
A cash flow forecast is a simple estimate of how much money you expect to receive and spend during a certain period. List your expected sales and customer payments, followed by upcoming expenses and their due dates. This can help you check whether the business will have enough available cash to cover its needs.
A business may have strong sales but still experience a temporary cash shortage if customer payments arrive later than supplier or operating bills.
Review your expected income and expenses regularly. Update your forecast whenever sales patterns, supplier schedules, or payment dates change.
Build a Business Emergency Fund
Set aside part of your business income or profit for unexpected operating costs. This fund can help cover repairs, equipment replacement, temporary sales declines, damaged stock, or other expenses that are difficult to predict.
You do not need to build the fund all at once. Start with a small amount that fits your current cash flow and increase it gradually as the business becomes more stable. Even a small reserve can help protect your puhunan when an unexpected expense occurs. Control Inventory
Inventory can take up a significant portion of a small business’s available cash. Track which products sell quickly and which remain on the shelves longer. For sari-sari store owners, this may mean checking which drinks, snacks, toiletries, canned goods, or household products customers regularly purchase.
Avoid buying more stock than you can reasonably sell, even when bulk purchases appear cheaper. Excess inventory can tie up your cash and increase the risk of expired, damaged, outdated, or unsold products.
Review Supplier Terms
When choosing suppliers, compare more than the unit price. Consider delivery fees, minimum order quantities, payment schedules, product quality, and reliability. A supplier offering a lower price may not always be the best option if you need to purchase more products than you can sell or pay the full amount before your business has enough cash.
Choose supplier arrangements that match your current sales volume and available budget.
Set a Regular Owner’s Pay
Instead of taking money from the business whenever you need it, establish a regular and realistic amount for personal or household use. For example, you may set a daily, weekly, or monthly amount depending on your business income. This creates a clearer separation between your personal income and the business’s operating funds.
If the business earns more than expected, consider keeping part of the additional money for working capital, savings, or future business needs before increasing your personal withdrawals.
Borrow Only for a Clear Business Purpose
If you are considering borrowing money, identify exactly how the funds will be used before accepting a financial obligation. Borrowing may be considered for a specific and temporary need, such as purchasing necessary inventory, replacing essential equipment, or covering a short-term cash gap.
Review the total cost of borrowing, expected business income, and repayment schedule first. Make sure the repayments remain manageable even when sales are lower than expected. If you need additional funds for a specific and manageable business need, you may consider JuanHand. Eligible users can access loan offers of up to ₱50,000, with daily interest rates as low as 0.025%. Applications require only 1 valid ID, and you can get approved as fast as 5 minutes.
JuanHand is also compliant with the Securities and Exchange Commission (SEC), National Privacy Commission (NPC), and the Anti-Money Laundering Council (AMLC), which makes sure that your data and privacy are safe and secure. Remember that JuanHand does not charge a processing fee and doesn't transact through text and private messages. If you have questions you can contact our JuanHand Customer Service, available 7 day's a week. So, if you need a Helping Hand, JuanHand is right here for you.
Review and Adjust Your Budget Regularly
A business budget should be updated as your sales, expenses, and business needs change.
Set a regular schedule to review your records. You may do this weekly for daily operating expenses and monthly for overall business performance.
Check whether your sales were enough to cover your expenses, which products performed well, and where you may need to reduce or adjust spending.
Key Takeaways
Smart budgeting helps small business owners make better use of their available cash and prepare for changing business conditions.
- Keep business and personal finances separate.
- Track all income and expenses regularly.
- Understand your fixed and variable costs.
- Monitor your cash flow and upcoming payments.
- Protect your working capital or puhunan.
- Build an emergency fund gradually.
- Avoid purchasing more inventory than you can sell.
- Compare supplier prices, order requirements, and payment terms.
- Set a consistent amount for the owner’s personal use.
- Borrow only when there is a clear and manageable purpose.
- Review your budget regularly and adjust it when needed.
Download the JuanHand app today via the iOS App Store or Google Play Store, or visit www.juanhand.com.
Frequently Asked Questions (FAQs)
Why should I separate business and personal money?
Separating your finances makes it easier to track business income, expenses, and profit. It also helps prevent personal spending from reducing the money needed for daily business operations.
What is the difference between sales and profit?
Sales refer to the total amount earned from customers. Profit is the amount left after deducting business expenses from your total sales.
What is working capital or puhunan?
Working capital is the money available for daily business operations. It may be used to restock products, purchase supplies, pay bills, and cover other operating expenses.
How often should I update my business records?
Daily tracking is ideal, especially for businesses with frequent transactions. If daily recording is not practical, update your records several times a week so you have a reliable view of your cash position.
How much should I set aside for a business emergency fund?
There is no single amount that works for every business. Start with an amount that your current cash flow can support and gradually build your reserve as the business grows.
Should I borrow money to cover business expenses?
Borrowing should have a clear and realistic purpose. Before taking a loan, consider the total borrowing cost, expected business income, and whether you can comfortably manage the repayments.
Does JuanHand charge processing fees?
No. JuanHand does not charge a processing fee. Loan amounts, interest rates, charges, and repayment terms may vary depending on the user’s eligibility and assessment.