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Renew
Online
You may now renew your annual membership dues online. Annual dues are $45.00.
By Stephen Ingle, Wordco
If one of the reasons you're in business is to make money
(besides just having a good time, of course), a budget will help
you reach your financial goals. How much profit at the end of
the year makes you happy? $10,000? $35,000 $85,000? If you set a
goal and meet or exceed that goal you can pat yourself on the
back (or maybe buy that new computer system). You'll also have a
benchmark for next year's budget.
Constructing a successful budget for your business can take
several years to develop. It helps to have an adviser (business
counselor, accountant, etc.) who understands your business and
your goals, as well as how to create a budget. For years, I ran
my business without a budget. I made pretty good money, though
quite a bit less than I make now. Also, I never knew if I was
really charging enough, whether to take on that extra job, and
whether I was putting enough aside for estimated taxes. The
budget helped put my mind at ease.
You can get started on an informal budget right now. This is a
good time to create your 1998 budget, if you haven't already.
Use the following steps:
1) Set a realistic gross income goal for the year (use last
year's data if available). Gross income includes any money
coming into your business. Break it down into twelve months
(some months may be higher than others). You already have
results for January and February.
2) Figure out your normal expenses. These include everything you
subtract on your Schedule C: supplies, utilities, depreciation,
property taxes, as well as inventory.
3) Figure out any additional expenses. Maybe you want to buy a
second computer. Maybe you want to conduct a media campaign. Put
these expenses toward the end of the year, if possible.
4) Make a chart: list the twelve months across the top; in the
left column list your gross income first, then your expenses.
5) Subtract (for each month, and for the year) your expenses
from your income. This gives you your net income. If you have
negatives for any month make sure you have enough cash saved to
cover the deficit.
6) Estimate your income taxes (federal and state) for the year.
Put these amounts in the January, April, June and September
columns.
7) Last but not least, figure how much you will be taking out of
the business every month for your own use. Obviously this total
can be less than, but not more than, whatever's left after you
cover all your expenses and taxes.
8) Once you have your budget set up, USE IT! It won't do you any
good sitting in a drawer. It will do you good if you use it as a
tool to make healthy decisions about your business. At the
beginning of each month, compare your budget for the previous
month with your actual results. If you're ahead of budget,
great, but remember to save a little for possible lean months
ahead.
A budget is not a constraint, it is a planning tool that will
give more discipline to your business. It will help you make
decisions that, in the long run, will let make more money
(possible a lot more). To quote Alexis from The Resident, "A
dream is a goal with a deadline."