Financial Management Practices of Laundry Shops

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FORMOSA NEWS - Philipina - Financial Management Practices of Laundry Shops in the Philippines: Key Insights for Small Business Success. A 2026 study conducted by researchers Fe Rose-Anne B. Maramag, Nicolle Angela V. Eusebio, Althea W. Moldero, Isabella L. Paburian, and Vanessa Mae C. Ubugan from the University of Saint Louis Tuguegarao evaluates how laundry shops manage their finances. Published in the Journal of Finance and Business Digital, the research examines the financial operations of small service enterprises in Tuguegarao City, Philippines. The findings highlight the critical role that structured financial practices play in the sustainability and growth of microenterprises, demonstrating that business longevity and income are directly tied to the sophistication of a company's financial strategies.

The Growing Economic Importance of Laundry Enterprises

Small businesses serve as crucial engines for economic growth, innovation, and employment, yet they frequently encounter significant challenges that threaten their survival. These challenges often include limited access to financial resources, intense market competition, and inadequate managerial skills. In recent years, rapid technological advancements and increasingly busy urban lifestyles have fueled a heavy societal reliance on convenience-based services, making the laundry business a highly promising venture. Despite the rising number of laundry businesses, there has been a notable gap in understanding the specific financial challenges they face, as most small and medium enterprise (SME) research historically focuses on retail, food services, or manufacturing. Sound financial management—encompassing the planning, organizing, directing, and controlling of enterprise funds—is vital for mitigating operational costs and preventing business failures caused by inadequate budget allocation or fund mismanagement.

Research Methodology
The research team from the University of Saint Louis Tuguegarao utilized a descriptive quantitative research design to assess local businesses. The study collected data from 90 registered laundry shop owners and managers in Tuguegarao City, representing the complete population of such enterprises in the area during the data gathering period. Using a structured questionnaire, the researchers evaluated seven distinct dimensions of financial management: budgeting, record-keeping, controlling, cash management, debt management, risk management, and investment. The data was then analyzed to determine if financial practices varied based on business profile factors such as years of operation, average monthly income, legal form of the business, number of employees, and daily operating hours.

Key Findings on Financial Operations
The study revealed that laundry shops generally maintain sound financial management practices, prioritizing daily operational stability.

• Top Financial Practices: Record-keeping and controlling were the most consistently practiced areas, both scoring a high mean of 3.70. Owners heavily prioritize balancing cash on hand with recorded expenses and ensuring their financial records remain accurate.
• Budgeting and Risk Management: Budgeting and risk management followed closely with a mean of 3.60. The most observed risk management practice involved continuously monitoring economic trends and adjusting business operations accordingly.
• Cash Management: Cash management achieved a mean of 3.50. Business owners actively prioritize allocating cash to settle bills and maintaining emergency funds, though many prefer holding cash at the shop over depositing it in commercial banks.
• Areas for Growth: Strategic financial planning areas like investment (mean 3.37) and debt management (mean 3.10) were practiced less frequently. Owners often rigorously evaluate the necessity of debt before borrowing, demonstrating cautious financial responsibility.
• Impact of Business Maturity and Income: Significant differences in debt management and investment practices were tied to a business's age and average monthly income. Shops earning above 30,000 PHP monthly are substantially more likely to engage in strategic investment and debt handling compared to shops earning below 10,000 PHP.
• Operating Hours Correlation: Businesses operating for eight hours or more daily exhibited significantly stronger budgeting and control systems than those operating for fewer hours, reflecting the increased need for structured financial mechanisms during extended operations.
• Cash Management: Cash management achieved a mean of 3.50. Business owners actively prioritize allocating cash to settle bills and maintaining emergency funds, though many prefer holding cash at the shop over depositing it in commercial banks.
• Areas for Growth: Strategic financial planning areas like investment (mean 3.37) and debt management (mean 3.10) were practiced less frequently. Owners often rigorously evaluate the necessity of debt before borrowing, demonstrating cautious financial responsibility.
• Impact of Business Maturity and Income: Significant differences in debt management and investment practices were tied to a business's age and average monthly income. Shops earning above 30,000 PHP monthly are substantially more likely to engage in strategic investment and debt handling compared to shops earning below 10,000 PHP.
• Operating Hours Correlation: Businesses operating for eight hours or more daily exhibited significantly stronger budgeting and control systems than those operating for fewer hours, reflecting the increased need for structured financial mechanisms during extended operations.

Real-World Impact and Implications
The insights gathered by the University of Saint Louis Tuguegarao carry substantial implications for the broader SME sector. By understanding that newer, smaller-scale operations focus primarily on survival rather than strategic growth, local policymakers and business incubators can design targeted interventions. Training programs can be tailored to help emerging entrepreneurs formalize their budgeting processes, transition to digital banking rather than holding physical cash, and develop long-term investment plans. Furthermore, understanding that financial sophistication naturally evolves alongside business experience provides a roadmap for business owners aiming to scale their operations and increase their market resilience.

Author Profile
Fe Rose-Anne B. Maramag (Corresponding Author), Nicolle Angela V. Eusebio, Althea W. Moldero, Isabella L. Paburian, and Vanessa Mae C. Ubugan are researchers affiliated with the University of Saint Louis Tuguegarao. Their academic expertise centers on financial management practices, business resilience, and the economic sustainability of small and medium enterprises.

Source
Fe Rose-Anne B. Maramag, Nicolle Angela V. Eusebio, Althea W. Moldero, Isabella L. Paburian, Vanessa Mae C. Ubugan. Financial Management Practices of Laundry Shops. Journal of Finance and Business Digital (JFBD). Vol. 5, No. 3, Tahun 2026, Hal. 305–324
DOI: https://doi.org/10.55927/jfbd.v5i3.21
URL: https://journaljfbd.my.id/index.php/jfbd