TUESDAY CHALLENGE: LET’S BUDGET
A budget is similar to a business plan; without a budget you won’t know where you are and what you need to do to get to your final destination at the end of the year. The budget provides a road map for you to follow.
Your challenge for this week is to start the budgeting process for 2017. The goal is to create a 12 month budget and to have it ready by the 22nd of December. It will give you a good dose of reality as to what you should and should not do.
A good place to start is with a list of all your current income sources. Notice, I did not ask, at this point, for how much you have made in the past from each source, not what you anticipate each income source to be in 2017.
Your second task is to create another list which contains all the possible expenses you may have in 2017. Make sure that you list your salary as part of the expenses and the funding of a retirement plan.
Now comes the filling in of the numbers in both categories. If your business is over a year old, you can refer to past income and expense records to help populate the different categories. As a new business, you need to research what the “real expenses” are that will enable you to run your business in a cost effective manner. The goal is to make sure that your projected income is more than your projected expenses. This is the heart of your business.
The next step is to sign up for a basic version of QuickBooks. The monthly fee is very low yet it will provide the foundation for growing your business.
Once completed, your budget becomes a working document. It should be reviewed each month to see how your income and expenses projections are doing when compared to your QuickBooks records. This system will tell you if your expenses are out of line or if you need to generate more income.
A budget is a living document, and sometimes changes need to be made to accommodate disruptive changes in your business.
A budget is telling your money where to go instead of wondering where it went.” Dave Ramsey
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