Is Your Budget Your Business? It Should Be

People who are successful entrepreneurs know that reducing unnecessary spending can do as much to protect a business’s future as generating more sales. The same rules can apply to you as you work to improve your financial profile if you are willing to apply some of those principles.

Here are five business principles you should consider for your personal life.

1. Know your bottom line: How much do you need to make just to make ends meet? Good businesses know that answer. So should you. You can follow the same principles by listing the bills you have and when they are due. Add to that list what you plan to spend on food and gas and other essentials. Knowing that bottom line figure is essential to knowing how much income you need.
2. Manage every dollar: Spend money to make money. A business with a storefront pays the rent it does so that it can have some place people can either go, or a place they will notice. It’s creating income by spending money. You can follow that same mindset by spending to reduce debt or by setting aside money in savings and investments.  Secondly, when a business is looking at a print job, for example, the owner will shop around to find the quality wanted at the best price. You and your family can adopt the same practices. Once you have established your bottom line spending, most additional spending should be done with an eye on what creates best value and more income.
3. Budget the extras: There will be some spending that doesn’t address the bottom line or make you better off financially. Nonetheless, you probably can’t call it “living” if all you do is provide for your needs. Live it up a little. Just make sure you budget for it. Businesses do this by offering prizes or celebrations for their employees just to improve morale. You deserve to be happy, too. So go ahead and go to the movie, or the ballgame or the concert. Just make sure that when you treat yourself you are staying within a budget.
4. Plan for rainy days: Successful businesses budget funds to prepare for the unexpected, because unexpected expenses will come. If you save enough regularly you will be prepared for any emergency spending you will need so that you don’t have to go into debt when trouble comes.
5. Reduce and stay out of debt: Debts for a home and auto are understandable, and not all debt is bad debt. But most individuals get into trouble when it comes to debt by spending money on things they want, but don’t need. Businesses can go into debt as part of a strategy to create enough income to more than offset the borrowing. That’s rarely an option for individuals.

If you need help creating your business plan for your finances, contact a counselor today!

Published Aug 20, 2014.