BUDGET Is Not A Curse Word

Ever gotten that gut wrenching fear in the pit of your belly when you thought of making a budget? Then the odds are good you’ve never cracked a dictionary and learned all about the correct definition, 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 entail downgrading 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 work out how to make enough income to afford the items your business needs and to keep your expenditures within the limits of your income.

The even better news is this! The most valuable asset you have is your staff and yourself, and your income producing potential. If you want more money to spend, then work out ways your staff and you can increase production to earn more money.

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

Let’s look at the first part of the definition; how much is needed for you and your business to run. 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 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 function plus barely keep up with rising prices. That doesn’t include paying compund interest on credit card debt.

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

Here is an 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 company owner, want to attain the goal of financial independence - working because you WANT TO instead of because you HAVE TO — then the most important part of the budget needs to be the wealth building money you put away in an investment plan and never touch.

Figure out the amount of cash 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 your budget is on the correct path to achieving financial independence.

How badly do you 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 this task of budgeting is made so much easier by streamlined and automated Money Management Software, such as shown in this video.. This software functions 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 private individuals manage their money to achieve financial independence. To find out about the Money Management Software described in this article, watch the FREE 5-minute demo video on her website www.MoneyMgmtSolutions.com

- Sandra Simmons