Almost every OFW in the world dreams to return home, reunite with their family, and start a business alongside their loved ones. Building a solid business plan contains multiple parts, and the budget plan is the most fundamental piece of all. However, knowing how much exact savings is enough to start a business is challenging even for the most financially savvy OFWs. This blog explains the budget plan in simple terms, its important parts, and four expert tips to create a reliable budget plan—so you can start your business with confidence.

What is a Budget Plan?

A business budget plan is a financial roadmap that projects your business' revenue and costs. It contains three parts: Projected Revenue, Projected Costs, and Projected Profit/Loss. With a thoughtfully made budget plan, you are able to effectively estimate the precise amount you need to save for your business and allocate your resources.

Now, let's break down each part.

Part #1: Projected Revenue

The first part to a sound budget plan describes how much you expect to earn—your revenue. Revenue is the total amount of money your business earns from selling your products and services. Most businesses often earn in more than one way, which is why revenue should be calculated in terms of each revenue streams.

There are three common revenue streams you should consider:

• Goods - tangible products customers buy (like soap)
• Services - intangible tasks customers experience (like coaching services)
• Rental - assets customers lease for temporary usage (like a boarding house stay)

Ultimately, revenue streams vary by business, and should be calculated according to your own revenue streams, with expected price and volume to find your revenue estimates. At HelpBridge, we teach our OFW students how to properly set a realistic price that customers will accept, so be thoughtful in pricing for your business.

Remember that revenue is NOT your profit, which brings us to the second part of the budget plan.

Part #2: Projected Costs

The second part to the budget plan descries how much you expect to spend—your costs. Costs are the total amount of money you pay to start and run your business. Operating a business involves different types of costs, and therefore should also be calculated by type of cost.

There are three common types of costs you should consider:

• One-off costs - initial costs required to set up your business (like land or equipment)
• Fixed costs - Regular costs that often stay the same (like utilities or wages)
• Variable costs - Regular costs that depend on amount of sales (like ingredients or packaging)

Each business will have a different set of costs. For example, a carinderia business will often have higher one-off costs as it requires initial investment in land and equipment, unlike an online coaching business which will need neither. It's important to be thorough and practical in estimating your projected costs, because it's YOUR MONEY that's going into the business! Calculate thoughtfully.

Part #3: Projected Profit/Loss

Once you calculate the parts and overall totals of your projected revenue and projected costs, you can then estimate how much profit or loss you will make at the end of your budget planning period.

To find this, subtract your total projected costs from your total projected revenue, which will give you your projected profit or loss. Once you've calculated, you'd have finished creating your budget plan!

Four Expert Tips

Budget planning is not a simple exercise. It requires dedicated research, estimation, and reasoning to calculate an amount that makes sense. The process takes time and effort, but is worth it because it will help you finally determine the final amount to (1) know you have saved enough and (2) feel comfortable enough to start your business. Once you have enough savings and a ready mindset, you will have the financial readiness to start your business.

Below are key tips to bear in mind as your plan your business budget.

1. Budget on a monthly or annual basis

Budget plans are created either on a monthly basis (for short-term periods) or an annual basis (for long-term periods), ensuring you set your financial plans in an organized fashion—as you should with your personal finances.

2. Identify revenue streams like solutions to a problem

As we teach our students in our Business Planning course, to find the best revenue stream/s for your business, it's a must to combine your personal skills with your community's needs. Successful businesses come not from selling just anything. They come from selling a helpful solution to a real problem in your community.

3. Be obsessed with every single detail

While projected costs are not meant to be 100% accurate, they are significantly more helpful if they're close to reality. To successfully identify all the realistic costs of your business, you need to be obsessed with every single detail of your business. While you may not be operating your business when planning your budget, imagining what "a day running the business looks like" helps. Consider running a side hustle in your off days or while on holiday so you can sample your business and better predict your expenses. 

4. Build your expected capital by asking yourself these two questions 

Once you've estimated the capital you need to start your business, the next step is saving to reach that amount. To identify how much you need to save monthly to get there, answer these two questions for yourself:

• When will you start your business? Identify the month & year you plan to return home and start your business. That will help you identify the number of payment months you have to save towards your planned capital and calculate your required monthly savings.
• What are your sources of capital? Will 100% of the business be funded by you? Would you consider co-investing with a trusted business partner? Or taking a loan? These all depend on you, but remember that there are other sources of capital beyond your monthly loan, which have their pros and cons. 

Once you answer these two questions, you will be able to actually save towards the amount you calculated, and get one step closer to making your business come to life.

Create Your Budget Plan with Expert Guidance

Budgeting with the help of a Filipino business expert can not only make the process much faster, but you will also be significantly more confident. Consider joining a HelpBridge course to get easy, step-by-step guidance to creating your budget plan or starting your business. Our OFW business courses use detailed examples and sample case studies, and are taught by a teacher who understands OFW needs and challenges. Our students have gone on to successfully budget with peace of mind, and start their own businesses.

Let's get closer to your dream business! Explore our courses here.