Whether you’re an entrepreneur or not, learning how to budget and then sticking to it are as important to your business as making money. In fact you could earn millions, but what good would it do if whatever comes in goes right out the back door? Not much.
Keeping some of what you earn and stashing it away isn’t easy unless you know how to budget. There’s a trick to this and once you learn it, you’ll benefit for the rest of your life—or at least as long as you’re in business. There are many schools of thought on budgeting. Here are Keys to being successful and making the most of your hard-earned money.
Know What You Need
Before you can set a budget for your business, you’ll need to assess your expenses. How much will you need to earn in order to operate your business? Every business is different. If you own a brick and mortar business such as a retail party supply store your expenses will differ from those of a restaurant. Both of you will need money to purchase inventory, albeit different kinds. Knowing what you need to come up with every month will also clue you in on how you need to price your products.
As a restaurateur, you’ll need to cover the cost of staff—servers, cooks, dishwashers, etc. You’ll also have to buy a variety of food and pay for utilities. If you own a party supply store, you’ll need to invest in a large enough inventory of party supplies to capture the interest of potential customers.
Entrepreneurs who venture to succeed in online enterprises have it a little easier in that there are fewer hard costs: no rent, no property taxes, no janitorial service. Depending on the type of business, there may not even be inventory. Businesses that ship directly from a factory or sell digital products fall into this category.
Determine How Much to Charge
Once you add up your monthly expenses, you’ll know what you need to clear to cover them in a 30 day period. This will help you determine your profit margin. Many restaurants triple their wholesale costs to cover operations. In some cases, profit margins are higher, such as is the case with sodas, coffee and popcorn.
Determining the amount of money you need to generate will also help you choose the products and services you want to sell. Items with higher profit-potential will more easily help you meet your goals than will products and services that are likely to pick your pocket instead of fill it. Learn about this and more when you mastermind with us! Please watch the attached video. It’s short; promise!
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee, http://www.123Employee.com. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Business Live! http://www.BeyondBusinessLive.com inspires entrepreneurs to meet challenges head-on in with revolutionary new theories and systems allowing them to design the business and personal lifestyles of their dreams.