It is wonderful to have work that allows you to be self-sufficient, part of that is making a realistic budget.
At a minimum, entrepreneurs want their businesses to be self-sufficient. In order to be self-sufficient, a business must be able to work within a budget set by the entrepreneur. When broken down into its simplest terms, a budget is a summary of estimated expenses and income. One of the first steps an entrepreneur should take when starting a business or when reviewing business activities should be to create a realistic budget. When you have an accurate budget, you are able to make accurate plans to have a self-sufficient business.
When creating a budget for your business, be sure to include all sources of income including:
- Sales
- Passive income
- Residual income
It is also important to include all expenses including:
- Petty cash
- Annual bonuses for employees
- Corporate gifts
- Coffee and snack supplies for office
Often when preparing a budget, entrepreneurs fill in all the big and major expenses like loan payments and taxes due but forget to include small sums that they spend on a regular basis such as the office coffee and snacks. By failing to include these small sums, over the course of time, the money for these items will be taken out of the business and thus not available for the major items that were included in the budget. As a result, there will be a cash flow shortage. So, when making your budget, be careful to take into account all your income and expense information.
When a business is self-sufficient it is able to provide for itself without the entrepreneur having to continuously supply cash to the business. A self-sufficient business is a mature business that is able to cover all its expenses including the salary the entrepreneur chooses to draw from the business. If you are running a business that is not able to pay its bills without you bringing in money from an outside source, your business is not self-sufficient. If you have been running a business for an extended period of time and the income the business provides does not cover the business’ expenses what you have is a hobby, not a business.
In conclusion, it is wonderful to have work that allows you to be self-sufficient, part of that is making a realistic budget. So, the question for you this wonderful day is have you prepared a realistic budget for your business?