Even if the Philippines technically only has two seasons, the local economy is often influenced by periodic changes, such as the filing deadline for income tax returns on April 15 of each year or the start of classes around August. These seasonal changes are important for small business owners to be aware of, especially if they want to be successful in growing their profit margins.
In particular, seasonal demands for small businesses may place pressure on a business’s operating expenses. If you’re a small business owner, it is essential that you manage your finances properly so that you can still engage in business, pay your employees, and stay on top of your taxes and other financial considerations.
From taking out a bank loan to budgeting your monthly costs, here are a number of ways for small businesses to keep up with seasonal demands.
Here are 4 ways to keep up with seasonal demands for small businesses:
1. The two peak seasons in the philippines you need to be aware of
The Management Association of the Philippines lists two peak seasons for most small to medium-sized enterprises (SMEs) in the country: March to April and the “ber” months.
The former requires small businesses to consolidate their expenses and properly record all their income taxes from the previous fiscal year. The annual income tax, which needs to be submitted to the Bureau of Internal Revenue (BIR) before or on April 15 of each year, summarizes all the transactions made by a specific taxpayer, including your payroll payout if you are a business entity. Paying your correct tax each year is essential to continue operating in the country while also contributing to the local economy. Thus, business owners and managers should be vigilant in their documentation and prepare their tax declarations well before the deadline in order to avoid incurring penalties.
On the other hand, the “ber” months are considered the longest holiday season in the Philippines. As Filipinos prepare for Christmas and the New Year, they are more willing to purchase products and services in the months leading up to these celebrations. In this case, businesses should prepare to meet customer demand if they don’t want to miss out on opportunities to make a sale. Making sure that their inventory is well-stocked and that they have enough workers to ensure smooth operations are some of the things that businesses should plan for. The Two Peak seasons in the Philippines you need to be aware of to keep up with seasonal demands for small businesses.
2. Consider hiring contractual workers
It is important that you know when the business peak seasons in the Philippines are so that you can plan ahead. One of the most cost-efficient ways to meet seasonal demands for small businesses is to hire temporary workers during these periods. As the name suggests, these are staff who will only work with you for a predetermined time frame.
Small and medium businesses are encouraged to take advantage of temporary staffing to avoid the extra cost of hiring and training them. It also reduces the risk of hiring more workers than needed and going into overproduction, which can incur additional costs for the business.
Keep in mind that contractual or seasonal employees are still entitled to the rights and privileges under the Philippine Labor Code, including their 13th-month pay and other monetary benefits as provided in their employment contract. This should be factored into your budget if you decide to hire contractual workers.
3. Bank loans may help
Some business owners may shy away from the term “loan,” but these financial vehicles can be a reliable and efficient solution to help you upgrade your business in a short amount of time. Small business loans, which may range from P500,000 to P20,000,000, can help expand operations and enable you to invest more capital in the business. They are especially useful for industries that require large capital upfront, such as if you were starting a restaurant or setting up your own mini convenience store. A bank loan can help you purchase inventory so that you can plan for busier seasons and buy at wholesale prices that minimize production costs.
Many banks offer reasonable payment terms, from one year to 10 years, for you to completely pay off your loan. It’s a good idea to speak with a bank representative to determine which loan would be most beneficial for you, your income, and your specific business objectives. Bank loans may help to keep up with seasonal demands for small businesses.
Keep in mind that you will need to submit several documents that prove your eligibility. For small businesses, this includes business documents such as your Income Tax Return and the Audited Financial Statement (AFS).
4. Planning ahead prevents potential challenges
Ultimately, the best way for you to meet seasonal demands for small businesses is to plan ahead and determine what works best for you and your specific business. While it is ideal for your company to operate all year long, some SME owners may feel that it would be more cost-efficient for them to only open during peak seasons and use the aforementioned tips.
Either way, planning ahead is a great business decision and allows you to properly create the right monthly budget and work out any arrangements with your regular or contractual employees. Consider your monthly revenue and expenses and formulate a strategy that will help support your goals and improve your revenue.
If you are unsure where to begin, you should also consider speaking with your bank and asking them about the options available to you. Many banks have special services for SME owners to discuss their specific needs. With careful planning and appropriate funding, you can turn seasonal demands for small businesses into a profitable period.