I haven’t found a business owner that isn’t in business to make money.
In the “not-for-profit” sector, the goal is to bring in substantial revenue, to be spent on charitable works by the end of the year. In for-profit companies, the issue is simple, make money.
While this is true, in my experience many business owners do not consider that even before they make money, they must create a budget. The word budget seems to be a bad word in personal and business finance. It carries with it connotations of being restrained or told no. However, for the savvy business owner, a budget is the key to ensuring growth and sustainability.
When creating your budget, I recommend that business owners consider six key areas at a minimum. These areas are: • Charitable donations • Owner Salaries • Business Growth • Business Expenses (including employee salaries) • Taxes • Investments/Savings/Capital Expenses
Charitable donations are essential for every business owner, as they show that you are a good corporate citizen. You will gain more support for your cause or your business if you show the community you serve that you are there to help and not just take their money. Think of this as additional advertising you can write off.
Owner salaries should be paid whether you are a start-up, a non-profit or an established business. Ensuring you have budgeted for and pay owner salaries from the beginning helps you see almost immediate rewards for your work.
Business growth can mean growing your client base, your knowledge, and skills or improving your offerings. Make sure you set aside money to help you tap into what’s new in your industry.
Business Expenses should include everything it takes to run your business. Your employee salaries, taxes, and benefits should be included in this number. Also ensure you are considering rent, utilities, supplies, advertising and anything else you need to run your business.
All for-profit business owners are responsible for taxes. Most businesses pay quarterly taxes, so make sure you are checking this account quarterly and writing your check to Uncle Sam. For non-profit organizations, this category can be changed to include additional work for your charity or partner organizations.
Non-profits see your tax professional or CPA here, but there is an opportunity for you to grow your operating capital for the next year by using any surplus for investments. Just make sure you work closely with your trusted professional to do this the right way. For all other companies, this is an excellent opportunity to invest in suppliers or other places to protect your business. All business owners should be sure to keep some of the money in this category liquid to cover capital expenses like building and fleet repairs.
So how does your business stack up to this list? Do you have a budget in place?