BUDGET Is Not A Dirty Word

Ever gotten that gut wrenching fear in the pit of your belly when you thought of making a budget? Then chances are you’ve never looked up the word in a good dictionary to find out what this word really means, and worked out how you can use that to your business’s financial advantage.

Want some really good News? Running your business on a budget does not entail reducing the quality of the things you buy or denying your company anything it needs to operate. What it does mean, is that you have to figure out how to make enough income to afford the items your business needs and to keep your expenditures under your income.

There’s more good news! The most valuable asset you have is you and your staff, and your income earning potential. If you want a bigger spending budget, then work out a way your staff and you can increase production to bring in more income.

Another definition you need know is this: a BUDGET is the sum total of the income it takes for the company to function, and to reach its goals.

Let’s look at the first part of the definition; how much is needed for you and your business to function. Look at your Profit & Loss Statement to find out how much you spent and add the amount you are carrying on credit cards plus interest. Divide that amount by 52 weeks, and multiply it by 1.036. The result is what your weekly budget is. That is the amount of income your company has to generate just to operate plus barely keep up with increases in the cost of doing business. That doesn’t include paying compund interest on the debt.

More than likely, you have financial goals you also want your company to reach; That’s the second part of the definition. Reaching those goals must become part of your budget as well.

For example: a company owner wants to purchase new office furniture 6 months from now that costs $2,000. They divide the cost of the furniture by the 26 weeks they have before the target purchase date and learn they have to set aside $76.92 every week to have the cash for the furniture. This gets added to the budget, meaning the additional amount of income they have to put into the bank every week.

Most importantly, if you, the business owner, want to reach the goal of financial freedom – not working because you HAVE to, but because you WANT to — then the most important part of the budget needs to be the wealth building cash you set aside in a savings plan and never spend.

Figure out how much money you would have to have in savings to live without working. Divide that dollar amount by the number of weeks until the time you would like to be financially free. Figure out how to make that much more income each week, and you are truly on the right budget track to gaining financial freedom.

Do you absolutely want to be a millionaire in 20 years? Figure out a way to grow the business’s income enough to put away $961.54 a week in savings for the next 1,040 weeks and you will be a millionaire! The additional interest earnings on top of that will be a a nice add on perk that more than keeps up with the rise in the cost of living every year.

Today, with computers in every organization proper budgeting is accomplished much more efficiently than ever before by using Money Management Software, such as shown in this video.. This software operates as a companion to your accounting software for really easy day-to-day operation.

Sandra Simmons, President of Money Management Solutions has years of experience helping business owners and individuals manage their income to achieve financial freedom. To find out about the Money Management Software described in this article, watch the FREE 5-minute demo video on the website www.MoneyMgmtSolutions.com

- Sandra Simmons