Ducks in a Row: It’s All About the Benjamin…Franklin, that is.

There are two ways to increase your wealth. Increase your means
or decrease your wants. The best is to do both at the same time.”

— Benjamin Franklin.

Benjamin Franklin portrait isolated on white backgroundBenjamin Franklin was a wise man. He was also a wealthy man. He grew wealthy as a self-employed publisher. Let there be no doubt that he was a man who knew the numbers side of his business. He understood the essential rule of business. You increase wealth one of two ways. Either increase your revenue or decrease your expenses. And better yet, do both.

In business, that’s the only equation that matters when it comes to finances. All financial management can be distilled down to that one equation. Increase revenue plus decrease expense equals more profit. It is profit that builds wealth. A business without profit does not prosper. A business with profit that is then heavily taxed by the government does not prosper.

In recent years a lot of talk has gone on about disgustingly profitable businesses and high rates of CEO pay. This is not representative of the vast majority of businesses in the United States. We are a nation of shopkeepers, service providers, and small manufacturers. According to the Small Business Administration, there are nearly 24 million businesses with the business owner as the only “employee.” And all those businesses together generate just 4% of the total economy. That’s a lot of very small operations, with business owners all working away at making a living for themselves and their families.

As one-person business owners (and I include myself in the ranks), we have special concerns and challenges. How do we make enough to pay the bills of the business, provide a satisfactory living for ourselves, and keep the process going year after year? How do we make the best use of our most precious and limited resource…Time? How do we make the best use of every dollar that comes in to the business? How do we bring in more dollars consistently? How do we move from survival to profitability and wealth?

The way we answer those questions determines the success or failure of our businesses. That’s a whole lot of pressure, isn’t it? But, by distilling it down to Benjamin Franklin’s equation: Increase revenue AND decrease expenses, we can simplify the process. That simple equation leads to questions like this:

• What are my best opportunities to increase sales? (Untapped potential or underused assets)
• Do I have leaks in my business that drain cash and provide no benefit? (Bank fees, subscriptions)
• To increase revenue will my expenses need to increase? (Think marketing or cost of goods)
• How can I minimize my tax burden? (Better tracking of financial information, hire a CPA for taxes)

Running a successful business isn’t just about how we deliver the goods and services we provide. We have to be financially savvy, too. Once we combine talent in delivering the goods and services with the talents of business acumen, we arrive at a place that Old Ben would consider to be “healthy, wealthy, and wise.”

Get Your Ducks in a Row: Buckets of Expenses

People often think of accounting as some complicated math exercise. In truth, it’s really just a system for categorizing transactions in your business. A sale is a transaction. A check is a transaction. A deposit is a transaction. All accounting does is keep track of each transaction and total it up. Those totals tell you what you need to know about your business.

Keeping track of the expenses of your business is a critical matter. It’s not complicated, but it is easy to let slide the day to day tracking of those expenses. That’s when business owners get themselves into trouble.

Let’s think about accounting in terms of buckets. Let say you have a big green bucket to keep all your revenue or income in. You collect it like rain water. From that big green bucket, you start taking out the rain water in smaller cups, let’s say they’re red plastic cups. You dip out some cash in a red cup for electricity costs. Another red cupful for rent. Another cup for insurance. If at the end of all that dipping, you have rain water left in your big green bucket, you have a profit for the month or the year. That’s all accounting is. It’s just one big green bucket and a bunch of red plastic cups.

Money in  trash can, isolated on white Plastic red cups isolated on white background

The magical part is when you actually start using the information provided by the bucket and the cups to help you run your business. It all starts with a plan.

Let’s say you have a pretty good idea of how much rain water will come into the big green bucket. And let’s say you have a pretty good idea of how much each red cup will scoop out. You can begin to make some plans on how to ensure you have rain water left over (profit.) If your red cups need more to fill them then what’s in big green bucket, you end up having to borrow from someone else’s green bucket (the bank, your personal savings, your credit cards.) Or, if the big green bucket has exactly enough in it each month to satisfy the thirst of the red cups, you are at a breakeven point, but no profit! You can begin to look at increasing what goes into the big green bucket or decreasing what is needed for the red cups so your business can sustain itself.

Unfortunately, for most small business owners, knowing exactly how much rain will enter the big green bucket is often unpredictable. There may be a drought or a deluge. This is why planning and knowing your numbers are such an important part of running a business. What happens to your business if you have a slow month? Do you have a contingency plan? A rainy day fund (or in this case a drought fund)? What happens if your expenses increase unexpectedly? Thinking about these important questions before you have a slow down in revenue or an increase in expenses helps keep you in control of your business. It’s all part of getting your ducks in a row.

Get Your Ducks in a Row: Revenue Tracking

One of the major parts of getting your ducks in a row is tracking the money that comes in (or should come in) to your business. We’ll start with some best practices.

1. Invoice your customer as quickly as possible, like immediately.

When you sell an item or a service to a customer, don’t wait a month to send a bill. I’ve seen it over and over again with small businesses. Invoicing customers gets pushed aside to make room for doing the work to satisfy the next customer, or it gets buried on a crowded desk. The more time that passes between the delivery of goods and services and the invoice being generated, the more likely you are to NOT get paid, get paid late, or to send an inaccurate bill because time has passed and you don’t remember the order well, for example, an electrician forgetting to charge a homeowner for an additional repair while on the job.

A number of easy smart phone apps are available for on-the-go invoicing including QuickBooks Online and Xero, both of which are complete accounting solutions, and a host of other solutions that are invoicing only apps.

2. Whenever possible get paid before delivery of goods or services.

When you purchase an item online, it is commonplace to pay for that item at the time of purchase. The same goes for buying groceries. If you sell a product, it is usually possible to get paid at the point of sale. An exception might be a large ticket item that requires financing. If you sell a service that has a definite price tag, for example an oil change or a doctor’s office visit, getting paid at time of service is common practice.

It becomes more complicated if you are selling goods or services that vary depending on the problem or need being solved. A perfect example of this is setting a price for a tax return. How much does a tax return cost? It depends on how complicated the return is. Or if you are working in a repair business…How much does it cost to repair a car or a furnace? It depends on what’s broken.

One way around this is to develop package pricing for a typical sale. In the tax return example, a package price can be developed for a typical sole proprietor business return. An automobile repair shop can develop a package price for a typical brake job. Whenever you can systemize your pricing, you create an easier scenario for getting paid, and you take fear and anxiety away from your customer. It also allows an opportunity for upsells and extras.

Use technology for on-the-go payment collection. Take a look at companies like Paypal, Stripe, and Square.

3. Have a plan for granting credit.

If you do need to grant credit to a customer, for example, a payment plan or 30 day terms, be sure to decide ahead of actually granting credit, what your terms are and who will get credit with your business. Remember that a sale isn’t a sale until the money is in the bank. A promise to pay later has an impact on your cash flow now. Granting credit to people or businesses who may default on their payments puts your business at risk. Make sure you can afford to take that risk.

4. Have a plan for collecting cash from credit sales.

If you do decide to grant credit, be sure to have a plan in place to ensure the cash is collected as promised. When a customer’s bill is overdue, communicate quickly. The longer a bill goes unpaid, the less likely it is you will receive the cash. Tracking when an invoice is due is an important function of your system, whether it’s tracked in software or on your calendar. Without that critical piece of information, your cash sits in someone else’s pocket while you act as a bank for your customers.

With a solid revenue tracking system in place, you will be able to see how much your sales are this week/month/year. With that information you can begin to build data that will help you determine how much you need to do in sales to pay your bills (and take a paycheck), whether you are on track to do that, and to do comparisons between weeks/months/years to see how healthy your business is.
Rubber ducks in a row on sand with sky in the background

For more information on getting your ducks in a row, visit www.cashflowrollercoaster.com

Financial Organization: The First Step to Getting Your Ducks in a Row

Closeup of a hand gripping a message "Get Your Ducks In A Row", possibly for a business strategy, isolated on a white background.
We all know what we’re supposed to do, right? We know we need to eat healthy, exercise regularly, and call our mothers. And if we own a business, we know we’re supposed to take care of that pesky financial stuff like keeping track of what we spend, what we owe, and what hole the money went down. If you’re like most business owners, you’ve probably mentioned to yourself (okay, nagged yourself) that you need to “get your ducks in a row.” And maybe, just maybe, you wonder to yourself just what having your ducks in a row really means. What should you be doing that you’re not doing? And even more importantly, if you did do that thing, whatever it is, what difference would it really make?

I’ve gathered up a few of my duck friends to help you out with this important subject.

ducks

First and foremost, in the process of “getting your ducks in a row”, having some sort of holding pen to put those wandering ducks into once you’ve herded them is important. When we’re talking about the financial aspects of your business, this holding pen can be a software program like QuickBooks or Xero or an Excel spreadsheet. Or if you’re more old school, a shoebox. Now, I don’t recommend keeping your ducks in a shoebox, but if that’s what you have, we’ll start there and work our way into a better system.

Once you have some sort of high- or low-tech containment solution, the next step is herding the ducks into it. Financially speaking, those “ducks” are things like receipts, checks, bank deposits, bank statements, credit card charges, and the like. Each one of those “ducks” is a part of the puzzle that tells you what is really going on in your business. Each piece of the puzzle put together in an appropriate way, reveals a complete picture of your business.

Every check, receipt, deposit, credit card charge then gets sorted into a bucket. This receipt goes into the bucket called Office Supplies. That credit card charge goes in the bucket called Gas. This deposit goes into the bucket called Sales. And so forth, until all the pieces of the puzzle are sorted out.

From there, the buckets each get totaled up. Those totals tell you important things about where your money came from and where it went. To make life easier, we put all those totals in a column. Money in goes at the top, followed by money out. Money In minus Money Out equals Profit. Or if the ducks are too hungry…Money In is less than Money Out and that means one of your ducks has got to go.

Often, keeping track of the ducks gets pushed aside when the business owner is occupied with other things…like providing services or goods or putting out the inevitable fires of running a business. Then, the ducks wander off in all directions. This is bad. Once you lose control of the ducks, herding them just gets harder. But, once a year the Day of Reckoning arrives. The Duck Revenue Service stops by every April 15th to find out how many ducks you have. This is sometimes the only time a business owner gets her ducks in a row. Herding ducks on a deadline is very stressful. It’s also far too late to find out what you needed to know to help your business succeed because the ducks you’re herding on April 15th are last year’s ducks. They’re the ducks that have already flown the coop.

Getting your ducks in a row is an important function of running your business. Stay tuned for real world solutions to make the process easier, and for insights on how to use the information you gather to create a more profitable and cash flow positive business.

Until next time…Don’t be a chicken. Get your ducks in a row.

Classic yellow rubber ducks in water.

Caroline Grimm
Cash Flow Wizard and Head Duck Wrangler

The Death of Transactional Bookkeeping
Transactional BookkeepingGone are the days of paying a bookkeeper to do data entry. With the advent of electronic downloads from banks, credit card companies, and vendors, the tedious nature of bookkeeping is being replaced by efficient processes and systems that save time and increase accuracy. Although some businesses have been slow to adopt new technologies, tech-savvy business owners are embracing the change. A change that is revolutionizing the back office workings of every business, and freeing up resources formerly spent on low-value activities.

The bookkeeper of old (B.C. Before Computers) was tasked with tracking every transaction of a business manually, carefully recording and tallying up columns, and cross checking for accuracy. With the advent of programs like QuickBooks, many business owners (mistakenly) believed they could “handle the books.” With little or no knowledge of accounting and financial management, chaos reigned. Once a tangled mess was created, it was time, they thought, to call in a bookkeeper to straighten the mess out. Unfortunately, the modern day bookkeeper is often a pale shadow of the old school bookkeeper, lacking accounting knowledge and the skills needed to clean up the messes of others. The result is often one tangled mess piled on top of the original tangled mess.

Technological advances have made the need for transactional bookkeeping a thing of the past. Modern accountants and bookkeepers need to be “differently” skilled. Transactional bookkeeping is still necessary in that transactions need to be correctly coded when downloaded. But, downloading and coding take far less time than the paper processing activities of old. The new accounting professional needs to be both tech-savvy and a skilled financial manager. The need for business owners has been and always will be for professional financial management. With no professional financial management, businesses will always suffer. Cash flow will be erratic. Profits will evaporate.

Still, many business owners continue to think that they can get by with “doing the books” themselves or having a spouse, family member, or “cheap” bookkeeper handle the task. While technology makes the day to day transactions easier, the lack of a qualified professional providing oversight and insight in a business will always lead to lost profits and tight cash flow. The revolutionary changes in the accounting field are an opportunity for business owners to attract competent financial managers to help increase profit and improve cash flow. For the accounting professional, it is an opportunity to bring real value to clients’ businesses by being well-versed in both the knowledge and the tools to make businesses more efficient and profitable.

Transactional bookkeeping is dead. In its place will be old school financial management matched with new technology that guides businesses down the path to profitability and smooth cash flow.

Called the Wizard of Cash Flow, Caroline Grimm focuses on helping her clients build strong, profitable businesses by employing seemingly magical financial management tools and strategies. For more information visit www.CashFlowRollerCoaster.com.

Of Rubber Bands and Catapults: Strategies for Business Growth

A growing small business bears a great deal of resemblance to a rubber band. Left to its own devices a rubber band holds one shape. With the right type of pressure, a rubber band can expand to great lengths as long as the pressure is held steady or carefully stretched more and more. If too much pressure is applied or you lose your grip, the rubber band sails off across the room and someone loses an eye.

 

Apply this analogy to a small business. Sometimes businesses fade away because the owner doesn’t apply the right pressure (or any pressure) to move the business forward. Sometimes pressure to move the business forward is only applied sporadically, leading to inconsistent results. Pressure is applied and the business moves forward. Pressure is slacked off and the business moves back three spaces. Sometimes too many people are applying pressure in different directions, pulling the business in different directions, too. This creates infighting and factions that prevent the business from thriving. And often, small business are “stretched too thin” and find operating day to day outweighs business growth. And cash flow? Suffers every time. Every. Time.

 

Now consider the catapult. When someone refers to “going ballistic,” the catapult fits the bill very well. Using concentrated force, the catapult can hurl fire, take down walls, and make a big splash. Catapults are all about “go big or go home.”

 

If a small business uses a catapult approach to business growth, growth happens forcefully and fast. It’s a tried and true way of getting bigger, faster results. But, this method has its own challenges. First of all, if the catapult is not well-built, it will not sustain the force exerted and will fall apart. Building a strong business before attempting fast growth is necessary. That means having critical skills and competencies in place to build that solid infrastructure. The second big challenge with a catapult approach is to have a plan in place for once the walls are breached. Catapults open the doors to opportunities, but a business has to be poised to capitalize on those opportunities. All those expenses of catapulting and capitalizing can cause cash flow problems, too.

 

So, which business growth plan is better? The rubber band plan or the catapult plan. The answer is that it’s really just having a plan that is the important point. The plan determines the tools and skills needed. Executing that plan often requires the use of both steady pressure and the use of massive force. There is no “one size fits all” plan for business success. If there was, we’d all buy that book. The truth is small business ownership takes constant thought, planning, action, tweaking, and re-engineering. We work in an ever-changing field of endeavor where we must always be on the edge of our chairs, ready to adjust to circumstances as they come. And most of us wouldn’t have it any other way.

 

Lean Times in the Bean Fields: Why Business Owners Should Earn Minimum Wage

I believe in the concept of a minimum wage. The minimum wage that I’m referring to is not THE minimum wage–federally or state mandated for employees. The minimum wage I’m talking about is a minimum wage for business owners. You see, for many small business owners the Federal minimum wage would be a raise in pay. For some, it would be an immense raise in pay.

Let me use some examples of this from my own long and interesting career. I started work at the tender age of ten or eleven. My first job was babysitting. My pay varied greatly and often amounted to whatever was left in a neighbor’s pocket after the bar closed. My second job was working on a farm where I earned my money based on productivity in the bean field. I well remember working all through August to earn my first $20 bill. My third job was a huge step up since I earned minimum wage and had regular hours. Minimum wage at that time was $2.30 an hour.

What I realized at that young tender age was some jobs paid better than others. So, I started figuring out how to get the jobs that paid better. And that led me to discover that the jobs that paid better required more skills. So, I learned more skills. And more skills. And more skills. Until finally I could make a good living.

And then I became self employed. My pay was whatever was left over after the expenses of the business were paid. Sometimes $2.30 would have been a very welcome pay increase. Obviously, this is not a sustainable existence. (It IS obvious, right?)

Flash forward many years.

In my accounting and consulting practice, I’ve worked with scores of business owners. Many of them were not making a living wage. They did a great job creating good paying jobs for their employees, but they did it at the expense of their own financial health and sanity. Let me give you an example of how that looks from a numbers perspective.

A starry-eyed man, we’ll call him Joe, decides to start a business. To cover his starting costs, he empties his 401k account, uses his house as collateral for a home equity line, and maxes out his credit cards. Let’s say he needed a modest $50,000 to get the business up and running. Here’s the financial impact of that business startup:

1. The money from the 401k account is now no longer producing any interest or dividends, and has a tax penalty and expense.
2. The equity in his house has disappeared, he’s worth less and has more debt.
3. His credit card has increased his debt, plus added interest expense.
4. His cash flow is impacted by the payments on the home equity line and credit card.
5. The $50,000 ends up costing far more due to lost income and increased debt and expense.

Now, check out the various percentages attached to business failure rates. Depending on the source, Joe has a 5-15% chance of succeeding. An 85-95% chance of failing. Frightening odds when everything Joe owns is now on the hook. And then, let’s say the cost of starting the business ends up being $55,000 factoring in lost income and increased debt and expense. Now, let’s say Joe wants to get back that money over a three year period. Joe needs to pay himself about $350 a week to make that happen. This is before he even begins paying himself a living wage.

Meanwhile, Joe’s credit score has dropped because of his added debt and his iffy income. This makes him less able to get more credit if he needs to buy a vehicle for the business (or himself.) And every time he does make a profit in the business, the government takes a chunk of it for taxes. It’s a bleak financial reality for many small business owners.

Now, does this mean that small business is doomed? Does it mean anyone starting a business is a fool? I’ll leave that to you to decide. What I do know is that there is a far better way of doing business. A way that makes sure the business owner’s financial situation pays better than picking beans and taking the leftover change from mother’s night at the bar.

It all starts out with the business owner making the right choices for his or her own financial health. Can your business provide you with the return on investment you need in addition to making the minimum wage you determine you’re worth? Owning and running a business is a very difficult job. A job requiring a variety of skills and a huge investment of time and money. Make sure you are adequately compensated by structuring your business to pay you your required minimum wage. Anything less than that is an exercise in futility, financially speaking. Without that sustaining level of income, you can quickly find yourself wishing you could work somewhere for “regular” minimum wage. A few years in you may well be heading for the bean field to make ends meet.

Want to learn more about how to build a business that is worth more than a hill of beans? Find out more about From Chaos to Control; my crash course in small business finances.

 

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That Bearded Fellow: A Christmas Parable

I’ve heard a lot of quacking this week about a certain bearded man who said some things that put him in the soup, as it were. Of course, you know of whom I speak. None other than the Patron Saint of Materialism, Mr. Santa Q. Claus. It seems Mr. Claus, also known by the aliases St. Nick and Father Christmas, made a few choice remarks about elves.

Now, if you know your history, you know that Mr. Claus and the elves who work for him have a very special relationship. Mr. Claus relies on them for producing the goods and the elves rely on Mr. Claus to provide secure jobs and good working conditions. So, when Mr. Claus made his unfortunate remarks, the elves were understandably upset.

Mr. Claus’s supporters rushed to his aide touting the Free Speech argument. Mr. Claus was, after all, only exercising his right to say whatever he darn well feels like saying. Meanwhile the Elf Defamation League issued a stern reprimand and PETE (People for the Ethical Treatment of Elves) began a worldwide smear campaign. To make matters worse, the powerful Elf Union immediately voted to strike. The Reindeer Union also walked off the job in support of the elves. Production at the North Pole ground to a halt. It seemed Christmas might have to be cancelled.

In stepped Mrs. Claus, who as we all know is the real brains behind the North Pole Conglomerate. She did what no one ever wants to be forced to do. She sent Santa to his room to think over his actions. She then turned her efforts to damage control. With the entire North Pole shut down by the walkout, and elves and reindeer picketing outside the factory, and the news media sticking microphones in everyone’s faces, she had her work cut out for her.

Her first challenge was to restore Santa’s credibility as a loveable icon in the eyes of the children of the world. Fortunately, over the years the Elf Marketing Department had built perhaps the most extensive customer contact list in the world. Mrs. Claus set about sending out an email blast to all the children of the world letting them know that Santa had a headache and it made him cranky and he said something he didn’t really mean and he was sorry and not to worry, little tykes, Christmas was in no danger of being cancelled as had been reported on all the news-ertainment shows.

With a combination of sweet talking and sugar cookies, Mrs. Claus skillfully managed to get the elves to go back to work and the reindeer back to the barn, promising them an opportunity to fully voice their own views after the busy season was over, and reminding them of the all the sad little faces of the children who would not get their Bill-Buster Duck Rifles on Christmas morning. After hanging Santa in effigy, they headed back to their desks and workbenches, slightly mollified.

Then, Mrs. Claus headed back to the plush condo she shared with Mr. Claus. She called him from his room and sat him down in the living room. “Now, Santa,” she said, “What do you have to say for yourself?” And Santa replied, “Well, Mother, I know I CAN say whatever I want to say, but maybe sometimes it’s wiser to put my boot in my mouth instead.” And I heard him exclaim as he drove out of sight, “I’ve got nothing to say, because that, too, is my right.”

The Rewards of Poverty

Raise your cupMany years ago, deep in the wilds of rural Maine, in a humble cottage at the edge of the big woods, lived a family of no means. In that cottage at the edge of the woods, lived a little girl. Tucked up under the eaves every night, this little girl was growing up poor. It was a world of poverty and want. It was a world of bricks heated on the woodstove, wrapped in newspaper and tucked under the covers to keep her tiny toes from freezing. It was a world of plastic bread wrappers worn inside leaky boots.

Hunger stalked about the door every day, looking for a chance to move in. But the little girl’s mother knew strong magic. She knew how to make soup from nothing to feed her brood. She knew how to stretch a penny until it screamed for mercy. She knew how to find a few coppers to tuck into a little girl’s pocket for a school field trip.

Faced with the rigors of growing up poor, the child grew strong. The kind taxpayers of the little town gave of their own money to fund a school for all of the children of the hamlet. And the little girl went gladly each day to the halls of learning. Nurtured by caring teachers, she learned valuable skills and gained knowledge that could help her leave behind the gnawing pangs of poverty. As she grew, she began to learn some magic tricks of her own. She learned to be a Cash Flow Wizard.

Lo, these many years later, dear friends, your Cash Flow Wizard has come to appreciate the great lessons of poverty. I learned to be resourceful. I learned to work hard for what I want. I learned to keep going when things were tough. I learned all sorts of valuable skills in order to survive. I learned how to get by on a tiny budget. And I grew a fine, strong backbone. In fact, growing up in poverty and want gave me all the tools I needed to start a business and to make it successful. That’s a rewards program you won’t find anywhere else.

So, during this season of celebration, raise a cup to the hardships that strengthen us and the resolve that keeps us going. And give generously to those causes that bring hope to those who need it. It matters.

Rejoice! The Season for Budgeting is Upon Us

Caroline Grimm, Cash Flow ElfIt’s the most wonderful time of the year! It’s Budget Time! Oh, how I love budgets. They make me smile and laugh out loud with elf-like glee. No, really. And what’s even better is that my clients get downright gleeful, too. To see business owners get excited about budgeting makes me even happier. I start to dance around in my Cash Flow Wizard hat, the coins in my wizard pockets a-jingling, tossing handfuls of gold nuggets into the cheering throng.

Whoa! Easy does it there, Wizard! Gold nuggets weren’t in the budget!

The reason I love budgeting is that it is the most powerful of all the Financial Power Tools that I keep tucked up my Wizard sleeve. When a business (or a household) doesn’t have a budget, here is what happens: You spend money opportunistically. There’s cash in the bank account, and you just happen to need a hundred different shiny things and in walks a sales rep selling one of them. BAM! You get that shiny thing. Then, a month rolls by and your delivery van commits suicide rather than endure any more neglect. A week later you receive a letter from the I.R.S. chastising you for forgetting to pay your payroll taxes. (Sheesh, you miss one little week, and they get all up in your grill.) The end of the year rolls around, and you find out you paid out way more than you took in. That’s the “Fly by the Seat of Your Pants” approach to business finances. It’s chaotic and crazy, and it’s the way so many business owners operate because they simply don’t know any better.

There is a better way, and it’s all about planning. It’s about making decisions about where the money will go before it ever comes in the door. That’s what budgeting is all about. You make the decisions on a high level prior to getting the money. That way you ensure your business has what it needs. As money comes in, it is already spent on things like payroll taxes, van maintenance, and vendor payments.

Recently, someone took the Cash Flow Wizard to task about budgets. She said, in essence, “You can’t budget for emergencies.” Au contraire! You MUST budget for emergencies. Emergencies happen. “Stuff happens” is the #1 rule of small business. Now, my crystal ball doesn’t tell me ahead of time what the “stuff” will be, but I can guarantee there will be some. If your delivery van is 10 years old and hasn’t been maintained, the probability of it breaking down (or breaking up with you altogether) is very high. You’re already on borrowed time. But budgeting funds for such happenings means that when the “stuff” happens, it won’t bring your business to its knees.

Now, creating a budget takes a lot of the drama out of small business finances, and for those who like the thrills and chills of a chaotic financial existence, that is a total turnoff. For those of us who enjoy smoother sailing, business budgets can’t be beat. And to you smooth sailing fans I say, “Rejoice! Rejoice! It’s budget season. Time to plan for profits and success!”

Need help with budgeting? You can get a real world, crash course in great financial management right here.