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Using the 'B' Word Budget!

By Phyllis Davis

Creative, dynamic “A” type personalities have, by wit and ingenuity, propelled new ventures into existence. Their imagination and inventiveness have introduced new products and procedures that have revolutionized the way life works for the masses. From their resourcefulness, employment opportunities have been created and towers have been erected. These are the ones that realized from the beginning that details matter.

However, for every inventive entrepreneur that has succeeded, the relics of shattered start-ups fill the gutters of the business world. Unlike their successful counterparts, these equally dynamic individuals stumbled over what they considered to be trivial details. They failed to give credence to small details in order to build a strong foundation for their business.

Believing that details will work themselves out if enough blood, sweat and tears are expended has been the final push for many business failures. This is not particular to just start-ups. Many established business owners have struggled by taking their eyes off the beams that support the building.         

In this age of homepage icons, shortcuts have become synonymous with progress. Unfortunately, shortcuts are harmful to business success. There is no substitute for thorough and thoughtful planning. Relegating the basics, or the “small stuff,” as trivial will ensure the rapid demise of the business. 

So what about the “B” word and what does it have to do with the success of a business? It is a question that every entrepreneur should ask each month. This is the question that will assist in making decisions about what can or cannot be done in any given business cycle or time frame. While it takes time to devise, the time and money it saves is immeasurable. This magic business bullet is called a Budget!

Realizing that I have lost a good percentage of you at the mention of the “B” word, I continue because after many years of watching businesses fail because they did not establish a budget, I know that your success depends on it. If I am successful in getting you to prepare a budget, you are much more likely to be one of the aforementioned successful entrepreneurs.

First and foremost, a budget should be viewed as a friend interested only in your growth, not a foe whose only goal is to keep you tied up with meaningless details. Contrary to popular opinion, a budget is not for your accountant or your banker, it is for you the business owner. Once you have devised a budget that is reflective of your total operation, you are able to make sound business decisions, and you can then speak intelligently about your business with your accountant, banker, vendors and potential investors. 

The good news about budgets is that you do not have to be a financial guru to prepare one; you need only to know your business and your business cycles. Therefore, you know when to buy products, the cost of production, how much revenue will be generated, when to hire, when to expand and when to seek financing. A budget is simply reducing what you know to writing and gives you a time sensitive snapshot of your business. Success is not based upon guesswork; it comes from devising a strategic plan of which your budget is the most integral part.

A budget is not a wish list. It should accurately and objectively forecast your business’s potential. Your budget may tell you that it is not time to take certain actions or make certain purchases. It is your friend giving you good advice, so listen! Consult it on a regular basis, especially before making any major business decisions. Compare your budget to your operating statement to make certain that you are staying the course.

If you have continued reading this article, you are undoubtedly serious about your business. Take the next step: think. Spend some quiet time thinking about your business. After a time of contemplation, write your business profile. It does not have to be elaborate. It is for your eyes only and is intended to assist you in focusing on what makes your business tick. Once you have reacquainted yourself with your business, build your budget. 

It is okay to cheat. Go online or to a business supply store and select a budget outline that can be reformatted for your particular business. This will assist you in avoiding omissions. In preparing your budget, be realistic, exaggeration has no place in a budget. You can impress after success. 

 

Phyllis Davis is an entrepreneur, a managing real estate broker and a business consultant. She provided venture capital to small business owners for over 25 years and served on the board of a local bank for 30 years.

 

 

*For helpful tips and resources to market your business, visit the Certified Firm only section of the IICRC website at http://www.iicrc.info/certfirms/marketing.html. If you don’t have your login information, enter your Certified Firm number as your username and the last four digits of your primary business phone number on record with the IICRC as your password. Please email help@iicrc.org if you need more information. 




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