How to write the financial plan of a business plan

Startup costs: your puhunan list

List everything you must pay before the first sale. Group it into registration and permits, the space, equipment, initial stock, and a cash reserve. Get written quotations from suppliers where you can and put them in the appendix.

Some registration costs are fixed and published. DTI charges ₱500 to register a business name with city or municipality scope, plus a ₱30 documentary stamp tax on every registration fee. BIR no longer charges the ₱500 Annual Registration Fee: business taxpayers stopped filing Form 0605 and paying it from 22 January 2024, both for new businesses and renewals.^[1,2]

Other permit costs are not uniform. The barangay clearance fee is set by the barangay, and the mayor's permit and related fees are assessed by the city or municipality based on your business type and declared capital. Ask the office directly and write down what they tell you. See the guides on barangay clearance and the mayor's permit.

Monthly operating costs

These are the costs you pay every month whether you sell a lot or a little, plus the costs that rise with sales. Separate them, because the difference drives your break-even.

Fixed: rent, salaries, electricity and water minimums, internet, loan payments, bookkeeping. Variable: stock or ingredients, packaging, delivery fees, extra electricity from longer hours. If you plan to hire, include employer contributions for SSS, PhilHealth and Pag-IBIG, and pay at least the minimum wage for your region. Include your own pay too, or the plan will look better than it is.

A sales estimate you can defend

Do not pick a monthly sales number out of the air. Build it from parts you can check:

Customers per day × average sale per customer × days open per month = monthly sales.

Get customers per day by counting people passing your spot, or customers going into a similar store, at different times on at least three days. Get the average sale from the prices you will charge and what a typical customer buys. Then write a low, middle and high version. Lenders trust a plan that shows a cautious case.

Then work out gross margin: sales minus the cost of the goods sold. A store that buys a product at ₱____ and sells it at ₱____ keeps the difference, not the whole sale.

Break-even and payback

Break-even is the sales level where gross margin exactly covers fixed monthly costs. The formula is simple: fixed monthly costs ÷ gross margin percentage = break-even monthly sales. If your fixed costs are ₱____ a month and you keep ____% of each sale after the cost of goods, divide the first by the second.

Payback is how many months of profit it takes to recover the puhunan. Divide total startup cost by expected monthly profit after all costs. If payback is longer than the lease or the loan term, rethink the plan before you spend.

Worked example: a sari-sari store's first-year budget

This example shows how the pieces fit. Only the registration fees below are published figures. Every other number is an example only, not a forecast. Replace each one with your own quotation, count or price.

Registration (published fees). DTI business name, city or municipality scope: ₱500, plus ₱30 documentary stamp tax, so ₱530. BIR registration: ₱0 annual registration fee, since BIR stopped collecting it from 22 January 2024. BIR lists a ₱30 documentary stamp tax as the only registration charge.^[1,2,3]

Barangay clearance: ₱____ (set by the barangay). Mayor's permit and city fees: ₱____ (assessed by the city). Ask both offices and write in their figures.

Startup costs (example figures). Shelving and display: ₱15,000 (example, use your quote). Initial stock: ₱30,000 (example, use your supplier price list). Cash reserve: ₱10,000 (example). Add the ₱530 DTI and ₱30 BIR charges and the example startup total is ₱55,560, before the barangay and city fees you fill in.

Monthly sales (example figures). 60 customers a day × ₱25 average sale × 30 days = ₱45,000 a month. If the store keeps 15% of each sale after the cost of stock (example margin), gross margin is ₱6,750 a month.

Monthly fixed costs (example figure): ₱5,000 for electricity, rent share and bookkeeping. Add your own pay if you take one. Monthly profit in this example is ₱6,750 − ₱5,000 = ₱1,750.

Break-even and payback (from the example figures). ₱5,000 ÷ 15% = ₱33,333 in monthly sales to break even. Payback is ₱55,560 ÷ ₱1,750, or about 32 months. For the first year, the example adds up to ₱540,000 in sales, ₱81,000 in gross margin, ₱60,000 in fixed costs and ₱21,000 in profit.

These are illustrations to show the arithmetic, not what a sari-sari store earns. In this example, payback takes almost three years, which is a sign to test a lower startup cost or a higher margin before you spend. Run your own numbers through the same steps, and keep a low case beside them.

Common mistakes

• Leaving out the owner's own salary, so profit looks bigger than it is.
• Forgetting taxes. Read about percentage tax and the 8% income tax option and include what applies to you.
• No cash reserve. Most micro businesses need money to cover costs while sales build up.
• Using one optimistic sales number with no low case.
• Copying fee figures from old blogs, including the BIR ₱500 annual fee that no longer applies.
• Mixing personal and business spending in the same estimate.

Startup cost table (fill in your own figures)

Questions people ask

How much is the DTI registration fee to put in my financial plan?

For a business name with city or municipality scope, DTI charges ₱500 plus a ₱30 documentary stamp tax, so ₱530. Barangay, regional and national scopes cost different amounts.

Do I still budget ₱500 for BIR registration?

No. BIR stopped collecting the ₱500 Annual Registration Fee from 22 January 2024, for new businesses and renewals. You still need to register with BIR, and you will still have taxes to file.

What if I cannot get exact figures?

Ask suppliers for written quotations and ask the barangay and city hall for their fee schedules. Where you still have no figure, leave the blank visible and mark it as pending rather than guessing.

How many months of projections do I need?

Twelve months is common for a micro business plan. A lender may ask for longer if the loan term is longer.