You’ve probably seen the 50/30/20 rule all over personal finance advice:
- 50% for needs
- 30% for wants
- 20% for savings
It’s simple, easy to remember, and helps people manage their money without complex spreadsheets. But what if you applied the same rule to running a business — specifically an F&B or retail business in Malaysia?
In this blog, we explore whether the 50/30/20 framework can be a useful guide for business planning, how it might apply to your monthly budget, and what real-world adjustments you might need to make along the way.
Understanding the 50/30/20 Rule in a Business Context
The 50/30/20 rule was originally developed as a personal budgeting framework — meant to help individuals manage their monthly income by dividing it into needs (50%), wants (30%), and savings (20%). It’s designed for simplicity and accessibility, especially for people who might not be financially savvy but want a practical structure to avoid overspending.
But when it comes to business planning, especially for F&B and retail businesses in Malaysia, things get more complex. Still, the core idea — categorising your expenses in a way that balances survival, growth, and long-term sustainability — can be a useful mental model for financial decision-making.
Let’s put this into perspective: imagine you run a café in Penang or a boutique retail shop in Kuala Lumpur, bringing in RM30,000 in monthly revenue. Could you reasonably split your budget using this formula?
- 50% for essentials: these would include non-negotiables like rent, ingredients or inventory, staff wages, and utilities. These are the costs that keep your doors open and operations running daily.
- 30% for “wants”: while “wants” in personal finance refer to lifestyle indulgences, in business this could mean marketing experiments, aesthetic upgrades, new product development, or seasonal promotions — investments that aren’t strictly necessary, but could drive brand visibility and customer engagement.
- 20% for savings or reinvestment: this bucket could be used for building emergency cash reserves, upgrading outdated systems, opening a second location, or onboarding new tech tools that improve efficiency and scalability.
On paper, this split feels balanced. It pushes business owners to avoid overcommitting to day-to-day operations while still prioritising future growth. But in reality? The cost structures of most F&B and retail businesses rarely fit into such neat percentages — and that’s where the nuance begins.
Why Most F&B and Retail Businesses Spend More Than 50% on “Needs”
Most small businesses — especially in the F&B industry — spend well over 50% of their revenue on essential operational costs.
Labour alone can easily eat up 30–40% of your monthly budget if you’re running a full-service restaurant or café with multiple shifts. Add to that rent (which varies greatly depending on whether you’re in a city mall or a quieter neighbourhood), your cost of goods sold (COGS), and utilities — and your “needs” could already be consuming 70–80% of your revenue.
Let’s break it down using a real-world example:
A small neighbourhood café earning RM30,000 a month might allocate spending like this:
- RM6,000 in rent
- RM9,000 in salaries (3 full-time staff, including EPF/SOCSO)
- RM4,500 in ingredient restocks and packaging
- RM1,500 in electricity, water, and internet bills
That’s a total of RM21,000 — or 70% of monthly revenue — just to keep the lights on and doors open.
Retail businesses may have a bit more flexibility depending on product margins, especially if they carry their own brand or sell high-margin items.
But costs like seasonal inventory restocking, display and merchandising updates, staffing, online store management, and returns logistics can still drive up operational expenses. For example, a small fashion boutique in KL might spend more during certain seasons to keep up with trends and meet demand — leading to fluctuating “need” expenses throughout the year.
So where does this leave the 50/30/20 rule?
The takeaway isn’t that the model is flawed — but that business needs are heavier and less flexible than personal ones. Instead of discarding the rule altogether, it can be reframed as a flexible benchmark.
For instance, you might adjust your approach to a 70/20/10 model (70% needs, 20% wants, 10% savings) during the early growth phase of your business, or a 65/25/10 split when you’re ramping up for expansion and still need to keep some breathing room.
What matters more than the exact percentages is the habit of categorising your expenses, tracking your financials monthly, and ensuring that you’re not overextending in one area while neglecting another. And that’s where structured business planning and real-time reporting tools become crucial.
Reframing “Wants” as Strategic Investments
In personal finance, the “wants” category is often reserved for non-essentials — dining out, travel, entertainment, or shopping sprees.
But in business, this category deserves a more nuanced interpretation. What may appear as a discretionary spend at first glance is often an investment into growth, customer retention, or brand positioning.
Let’s say you run a café in Subang or a lifestyle retail store in Penang. Spending RM1,000 on social media ads might feel like a “want” — but if it drives traffic to your store, increases sales of high-margin products, or grows your loyal customer base, it’s not just a luxury, it’s a lever.
Some examples of strategic “wants” in F&B and retail businesses include:
- Running targeted Facebook or TikTok ads to boost weekday footfall
- Redesigning your space to improve ambience and encourage longer visits
- Collaborating with micro-influencers to create buzz around your new store opening
- Launching seasonal menus or limited collections to drive urgency and repeat purchases
These initiatives may not be essential to keeping your business operational today — but they can be critical to ensuring it’s still around tomorrow.
The key is not to overspend blindly on every new idea, but to test, track, and optimise based on results. That’s where having visibility into your business performance is crucial.
With tools like the StoreHub POS system, you get detailed insights into your sales trends, bestselling items, staff performance, and even average order values. This gives you a clearer picture of what’s truly working — so you’re not just relying on gut feel or guesswork when allocating budget.
For example, if your StoreHub POS shows that bundling a drink with a pastry increases your average order value by 20%, then that RM500 you spent designing posters and promoting the combo offer suddenly becomes a highly profitable move.
Beyond just better decision-making, this kind of visibility helps save time, reduce manual reporting, and avoid trial-and-error spending — all while freeing up your team to focus on delivering great customer experiences rather than digging through spreadsheets.
So rather than treating “wants” as optional fluff, it’s better to view them as strategic bets. As long as you’re measuring outcomes and adjusting as you go, these “wants” can quickly become the drivers of your next stage of growth.
The Real Power of the 20%: Building Financial Cushion and Optionality
Perhaps the most overlooked part of the 50/30/20 rule — both personally and professionally — is the 20% savings or reinvestment portion. For small businesses, this slice often disappears quickly due to unexpected equipment repairs, supplier delays, or slower-than-usual weeks.
But even setting aside just 5–10% of your monthly revenue can create a meaningful financial buffer that gives you breathing room and flexibility.
Let’s say your café typically earns RM30,000 a month, and you consistently save RM2,000–3,000.
In six months, that adds up to RM12,000–18,000 — enough to:
- Cover operating costs during a two-week renovation
- Replace critical equipment like an espresso machine before it breaks down
- Ensure staff are paid on time even during a slow holiday season
This kind of buffer doesn’t just help you survive tough periods — it also allows you to act when opportunities come up. Whether that’s securing a good deal on bulk inventory, jumping on a limited-time location rental, or hiring a new staff member during a busy growth period, having reserves gives your business optionality.
Can the 50/30/20 Rule Work for Your Business?
The 50/30/20 rule was never meant to be a one-size-fits-all formula for businesses — and it shouldn’t be treated as one. But as a framework for thinking about business finance, especially for newer entrepreneurs or solo founders, it offers a simple and accessible starting point.
What makes it valuable isn’t the exact ratios — it’s the intentionality behind them. It encourages business owners to categorise spending, reflect on trade-offs, and think proactively instead of reactively.
Rather than asking “Does this split apply perfectly to my business?”, ask:
- Are my operational costs growing faster than my revenue?
- Am I investing in areas that genuinely impact customer experience or long-term growth?
- Do I have enough liquidity to handle seasonal dips, supplier hiccups, or sudden opportunities?
By regularly reviewing your spending patterns through a 50/30/20-inspired lens, you develop the financial awareness to spot inefficiencies and redirect funds more effectively.
In practice, your own ratio might look more like 70/20/10 or 65/25/10, especially in capital-intensive industries like F&B or retail. The numbers will shift over time — and they should. A startup in its first year will have very different cost structures compared to a mature café group with three outlets and established SOPs.
At the end of the day, smart business planning is also about designing systems that align with your goals, stage of growth, and available resources. And having a financial structure — even a flexible one — puts you in a better position to plan, optimise, and scale with confidence.
Final Thoughts
Applying a personal finance framework like the 50/30/20 rule to a business might feel unconventional — but sometimes, a simple shift in perspective is all it takes to get clearer about where your money is going and why.
Financial planning doesn’t need to be rigid or complicated. What matters most is having clarity, purpose, and adaptability in your decision-making — especially when cash flow tightens or opportunities arise unexpectedly.
With the right mindset and tools in place, you’re able to create the foundation your F&B or retail business needs for long-term growth, sustainability, and resilience.
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