Happy Thursday and Mid Year! It is almost the 4th of July weekend and we are so excited the boys are coming tomorrow to play Xbox and enjoy our homemade individual pizzas. It is always a great time.
Kubae and I went shopping last night. This in and of itself is nothing extraordinary, but it is the first time we went shopping based upon a budget. Why a budget you ask? It seems she reads my blog and felt that we should plan for the things we want.
Since we are like almost everyone else in the world (especially like most small businesses) we have limited resources – meaning that we cannot have everything we want. So we sat down over the weekend and did some strategic planning. She wants to take a trip out of the country next year. This was our primary goal.
Now, the fun part became, how do we get there from here? This is where budgeting comes in. A budget is the plan to get from where you are to where you want to be.
First thing you have to do is have a good idea of where you are. So, I downloaded 3 years of bank information, dumped it into Excel and started categorizing. I actually use 4 overhead categories for our personal finances, similar to what I use for small business – Facility, Food, Entertainment and General. After 3 hours, I had a good idea of how we spent money. From here I crafted a few alternative budgets for our upcoming discussion.
Tuesday night we had our “Board Meeting” to review our expenditures and our plan. It was very enlightening and Kubae immediately dug into the details. Part of the historical review is that it really puts somethings in perspective, such as $500 a month on eating out. Having the history made it much easier for us to ask questions like:
- Why do we spend money on this category?
- Is there an alternative?
- Do we impact our quality of life if we redirect the funds to another purpose?
- How does this spending get us to our goal?
Based on this conversation, we were able to move into the various budget proposals. We reviewed each category, moved money from one area to another and made a commitment to the plan. Which led us to last nights shopping trip.
We spent a few minutes creating the list and a rough idea of what we would spend. We allotted ourselves $60 for last night’s shopping. We completed the list and added a few things we had forgotten and the total came to $68. Victory!
I know, you are thinking, but you exceeded your budget so how is this a victory? The answer is, we typically would walk out with over $130 of food and goodies. We were able to cut our typical shopping experience in half. Besides, the $60 was a guess and a pretty accurate one if I say so myself. This was, after all, our first shopping trip in a month’s worth of shopping. I will let you know how well we did for July at our next “Budget Review Meeting” the first of August.
Budgeting is part of your planning. If you want to grow your small business, then you need a goal which requires a plan to reach it. Budgeting is your financial commitment to your plan. so ask yourself where you want your small business to go and then plan how you are going to get there.
If you need help with budgeting and reviewing your past inflows and outflows, talk with your accounting professional and ask his help in understanding what is happening. If you do not have an accounting professional or are looking for a new alternative, feel free to contact me to set up a free no obligation consultation. I am here to help your small business meet your goals and dreams.
Have a great Thursday.