|
  |
|
|
BUDGET Is Not A Four Letter Word
Ever gotten that feeling of anger and despair when you thought of working out a budget? Then the odds are good you’ve never cracked open a dictionary to find out what this word really means, and figured 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 mean cutting back on the quality of the things you buy or not purchasing something your business needs to operate. What it does mean, is that you have to figure out how to make enough income to be able to afford the items your business needs and to keep your spending under the limits of your income.
There’s more good news! The most valuable asset you have is you and your staff, and your ability to produce income. If you want a bigger spending budget, then work out ways you and your staff can increase production to generate more income.
Another definition you need know is this: a BUDGET is amount of money it takes for the business function, and to attain its goals.
Let’s look at the first part of the definition; how much it takes for you and your business to function. Add up all the money you spent in the past year to see how much money went out the door including what you put on credit cards plus interest. Divide the total amount by 52 weeks, and multiply it by 2.036. The result is your weekly budget. That is the amount of income your business has to generate just to function plus barely keep up with increases in the cost of doing business. That doesn’t include paying accumulating interest on any of the debt.
More than likely, you have financial goals you also want the business to reach; that’s the second part of the definition. Reaching those goals must become part of your budget as well.
Here are some examples: a business owner wants to buy a new piece of equipment 6 months from now that costs $4,000. They divide the cost of the equipment by the 26 weeks they have before the target purchase date and learn they have to set aside $153.85 every week to have the cash for the equipment. This amount gets added to the budget, meaning the additional amount of income they have to put into the bank every week. Or a company owner wants to purchase new office furniture 12 months from now that costs $2,000. They divide the cost of the furniture by 52 weeks they have before the target purchase date and learn they have to set aside $67.31 every week to have the cash for the furniture. This also gets added to the weekly budget.
Most importantly, if you, the business owner, want to reach the goal of financial independence – 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.
Work 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 achieving financial independence.
How badly do you want to be a millionaire in 20 years? Work out a way to increase the company’s income enough to stash away $961.54 a week in savings for the next 1,040 weeks and you have made it to being a millionaire! The additional interest earnings on top of that will be a fat bonus that more than keeps up with the rise in the cost of living every year.
|
Contributor's Note
Money Management Solutions, Inc. provides money management software, training and consulting for business owners.
|
|
Claim Your FREE Report - 7 Fatal Money Management Mistakes Business Owners Make
| Get Your FREE Business Money Management Analysis
| Claim Your FREE Money Control Solutions Guide
| Claim Your FREE Debt Reduction Solutions Guide
| Claim Your FREE Checklist to Increase Business Profits
PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
No reactions yet.
Please login or sign up to rate this intel.
Please login or sign up to add a comment.
The copyright for this content entitled "BUDGET Is Not A Four Letter Word" has been specified by the contributor as:
All Rights Reserved
This content may not be copied, distributed or adapted by anyone under any circumstances.
|
 |
May, 2012
2008
January, February, March, April, May, June, July, August, September, October, November, December
2009
January, February, March, April, May, June, July, August, September, October, November, December
2010
January, February, March, April, May, June, July, August, September, October, November, December
2011
January, February, March, April, May, June, July, August, September, October, November, December
2012
January, February, March, April, May
|
|
Not a member yet?
Qondio is a powerful network for making it online. If you have a website to
promote, we can help.
Sign up and get in on the action.
|
|
Welcome to Qondio! Discover the awesome power this network can deliver by going to our About page. Or you could skip straight to the Sign Up form.
|
|
