Save Up!

You're itching to have your own small business.  You already have the business concept in mind.  The question is, do you have the capital needed to put it up?

We have previously given the tips on how to put up your capital, but if you don't feel comfortable selling your stuff or borrowing money from a bank or a friend, you have to build up your capital the hard but sure way, SAVINGS!

Saving up is the old fashioned way of putting up money for your much needed capital.  This may take a longer time (and a lot of will power!), but the rewards are much more fulfilling.  First, you don't owe anything from anyone.  The money is all yours.  Second, you will avoid the stiff interest rates from cash loans.  Third, you will still keep your valuable possessions, although, some of your stuff really must be disposed off, to have more space inside your home.

The catch here is that, you must have the patience to wait for another year, depending on the amount that you can set aside for your business.  Suppose you can save up to 20% of your monthly income.  For a regular employee who receives roughly ten thousand pesos a month, that means setting aside two thousand pesos monthly.  Deposit the amount of one thousand every 15th and 30th of the month, in a passbook account, to minimize the urge of frequent withdrawal.  The same goes for your whole 13th month pay.  Yes, 100% of your 13th month pay.

After a year, you have saved THIRTY-FOUR THOUSAND PESOS!  The amount may go up depending on your income and your control over your finances.  If you're getting twenty thousand monthly, you can save more than SIXTY-EIGHT THOUSAND PESOS!  Indeed, your future is in your hands!

Cash Loan

Unless you can borrow from a close relative or friend, you may also want to consider getting a loan from a bank. Have you ever received a call from accredited service providers of major banks, offering cash loans without collateral? With minimum requirements such as Certificate of Employment and payslip and with the ease of phone transaction, your loan can be processed within a week.  Just be careful on the pieces of information that you give over the phone.  They may use these for other purposes.  When in doubt, go directly to a bank and inquire.  The loans officer will gladly assist you with your needs.

Getting a loan is the fastest way that you can put up the capital to start your own business. One burden though, this comes with an interest rate from 1% to as high as 3.5% per month or 42% per year. For a loan of Php 50,000 at the rate of 3.5%, you may have to shell out Php 1,750 per month for interest payment.

Liquify your Assets

How much is too much?

You have to answer this for yourself, as you look around the house and inside your closet. Take a look and check the things that you can sell. You may have appliances that you think you can live without, old clothes that you have not worn for over a year, old bags that have been gathering dust in the corner of your bedroom, your son’s used school books in previous levels, anything of value which you can dispose.

Then, get your digicam or even your cellphone with camera and take pictures of these possessions. Assess their values and e-mail to everyone in your address book. You can also post these items for sale in the net, thru www.sulit.com.ph , www.olx.com.ph or other vendor sites.  The source of capital for your own business may just be within your reach.

Cash and Credit Card Payments

When you write down your expenses, does it matter if you pay in cash or by credit card?

The answer is NO. Whether you pay in cash or by other means, the expense remains the same. For example, when you go to the supermarket to buy meat, vegetables, fruits and canned goods, and you use your credit card to pay, there is no cash outlay on your part, at the moment, but you carry the goods with you. You are now a debtor of the card company, which will bill you for the purchases you have made using their card, on a later date.

This means that credit card payments are not accounted entirely as expenses, only the portion of payment for finance charges are recorded. Finance charges are the expenses that you incur for using the credit card, and not paying the whole outstanding balance in full.

Writing down the entire payment to the credit card company as expense will double up the purchases which you have previously taken up before. The redundancy will result to bloating up of expenses and will definitely affect your prepared budget.

How to Prepare A Monthly Personal budget

After defining what budget is, we will now prepare your monthly budget. First of all, we will NOT prepare your budget for the current month. This will be your budget next month or the month after next. Confused?

This is the principle behind an effective and realistic budget. We must first gather receipts, list down payments to a notebook for one whole month. Then we will classify them accordingly. To make it easier to track down your expenses, you can use a planner instead of a notebook. If you can’t find one in your home, don’t buy! Just find an old notebook and label the pages per week. If you can attach the receipts, so much the better. This will be helpful in analyzing your expenses for groceries, shopping, school supplies, etc. There may be expenses incurred for the current month which may not recur the following month, like purchases of items with future use, such bath towels, pillow cases or a vase. You don’t buy these items on a monthly basis, but these are mimimal expenditures with little or nominal value in the future.

Can’t wait for another month? Okay then, if you can vividly recall all expenses last month, you may also write these down in your notebook, this time on a monthly basis, since you may not be able to recall the dates of payment but only the cost paid. Are you ready?