Financial Planning: Budgeting for Your First Year in Cebu

Estimate Your Burn Rate, Plan Your Runway, and Stay Financially Fit

Introduction: Why Budgeting is Your Startup’s Lifeline

In the world of startups, dreams are big—but resources are limited. And if you’re launching your venture in Cebu, proper budgeting isn’t just smart—it’s necessary. Whether you’re bootstrapping, preparing to raise capital, or receiving your first round of funding, how you manage your first year financially can make or break your business.

This guide walks you through how to budget wisely for your first 6 to 12 months in Cebu. From estimating costs and runway to using templates and financial models, you’ll gain the clarity needed to execute with confidence.

Part 1: Start with the End in Mind — What Are You Planning For?

1. What Are You Trying to Achieve in Year 1?

Before budgeting, define your goals. Are you trying to:

• Build a prototype or MVP?

• Validate product-market fit?

• Acquire your first 100 customers?

• Generate revenue?

• Attract seed investors?

Each goal influences your spending structure, from hiring and marketing to rent and R&D.

2. Choose Your Startup Model

• SaaS: Expect high development costs upfront

• Service-based: Expect higher payroll and operational costs

• Marketplace: Budget for both supply and demand acquisition

• E-commerce: Plan for inventory, warehousing, and logistics

Part 2: Cost Categories to Include in Your Budget

Let’s break down the major categories that should appear in your financial plan.

1. Personnel Costs (40–60%)

• Co-founders (if paid): ₱20,000–₱60,000/month

• Developers: ₱30,000–₱70,000/month

• Designers: ₱25,000–₱50,000/month

• Virtual Assistants: ₱15,000–₱25,000/month

• Sales/Marketing: ₱20,000–₱50,000/month

Don’t forget 13th-month pay, SSS, PhilHealth, Pag-IBIG, and taxes. Consider full-time vs contract workers.

2. Office and Infrastructure (10–20%)

• Coworking space: ₱6,000–₱10,000/person/month (e.g., The Company Cebu, KMC)

• Internet and utilities: ₱2,000–₱5,000/month

• Equipment (laptops, monitors): ₱30,000–₱60,000/person (one-time)

Remote work? Your infra costs may drop drastically.

3. Product Development (10–25%)

• Software tools (Figma, GitHub, Notion): ₱2,000–₱5,000/month

• Cloud hosting (AWS, DigitalOcean): ₱3,000–₱10,000/month

• Payment processing fees (Stripe, PayMongo): 2.9% average

4. Marketing and Customer Acquisition (10–30%)

• Paid ads (Meta, Google): ₱10,000–₱50,000/month

• Branding and website: ₱20,000–₱50,000 (one-time or via freelancer)

• Events, flyers, merchandise: ₱5,000–₱20,000

5. Legal and Compliance (5–10%)

• Business registration (DTI, SEC, BIR): ₱10,000–₱30,000 (first year)

• Lawyer/consultant fees: ₱1,500–₱5,000/hour

• Accounting services: ₱3,000–₱10,000/month

6. Founder Living Expenses (10–25%)

If you’re budgeting personally as a founder in Cebu:

• Rent: ₱10,000–₱25,000/month

• Food and transportation: ₱10,000–₱15,000/month

• Health insurance: ₱1,500–₱3,000/month

Tip: Avoid using company funds for personal expenses unless accounted for as compensation or reimbursement.

Part 3: Building a Monthly Budget and Burn Rate Table

Here’s a sample monthly table:

If your startup has ₱1.2M in funding, your runway = ₱1,200,000 ÷ ₱212,000 = ~5.6 months.

Part 4: Using Budget Templates and Forecast Models

1. Google Sheets Starter Template

Use a shared spreadsheet with tabs for:

• Monthly budget

• Actual vs. forecast

• Cash flow tracker

• Expense receipts

• Hiring plan

Make use of conditional formatting to flag overspending or approaching limits.

2. Financial Planning Tools

• LivePlan: User-friendly for pitch decks

• Causal: For SaaS and forecast scenarios

• Brixx: Visual financial modeling

• Airtable or Notion: For founders who prefer more flexibility

Part 5: Common Financial Mistakes in Year 1

1. Overhiring Early
   Hire only for mission-critical roles until product-market fit is clear.

2. Underestimating Marketing Costs
   Organic growth is great, but budget for paid campaigns to test reach.

3. Mixing Personal and Company Funds
   Always open a separate bank account for your startup.

4. No Buffer for Emergencies
   Keep 1–2 months of expenses in reserve.

5. No Tracking of Actual Spend
   Update your spreadsheet weekly — not monthly — to spot overspending trends early.

Part 6: Sample First-Year Budget Scenarios

Scenario A: Solo Founder SaaS MVP

• No staff, working from home

• ₱10,000 tools + ₱20,000 personal living + ₱5,000 marketing

• Monthly burn = ₱35,000

• ₱420,000/year → ~USD 7,500

Scenario B: 3-Person Team with Office

• 2 developers + 1 sales + founder

• ₱150,000 payroll + ₱30,000 office + ₱20,000 marketing

• Monthly burn = ₱200,000

• ₱2.4M/year → ~USD 42,000

Scenario C: Funded Startup

• ₱5M seed funding

• Monthly burn target: ₱300,000–₱400,000

• Runway: 12–16 months

• Includes business travel, expansion plans

Part 7: Planning for Fundraising and Financial Milestones

Investors will expect:

• Monthly burn rate report

• Runway projection

• Revenue vs. cost breakdown

• Hiring plans tied to metrics

• Cash flow forecast (12–18 months)

Tip: Plan fundraising 3–6 months before runway ends. If you wait too long, desperation shows — and terms suffer.

Part 8: Financial Health Metrics to Monitor

1. Burn Rate = Monthly expenses

2. Runway = Cash on hand ÷ Burn rate

3. Gross Margin = (Revenue – COGS) ÷ Revenue

4. LTV:CAC = Lifetime value to acquisition cost

5. Cash Conversion Cycle = How quickly you turn inputs into cash

Use dashboards or monthly reviews to track these. Even simple visual graphs in Google Sheets help.

Conclusion: Survive, Then Thrive

The first year of your Cebu-based startup will be a rollercoaster. But with solid budgeting and financial planning, you’ll have the peace of mind and control to make smart decisions. Planning isn’t about restricting your vision — it’s about ensuring you can sustain it long enough to see it succeed.

✅ Know your numbers
✅ Use realistic assumptions
✅ Update forecasts monthly
✅ Separate personal and business finances
✅ Prepare to adapt

Remember: Budgeting doesn’t kill creativity. It protects it.