Budgets and Cost analysis: key to running a successful business

So many business owners are planning for an even better 2012 than 2011! I’m really excited to hear what my clients and associates have planned for this year. However, when consulting with many of them, I’m finding that I’m emphasizing 2 things that have always served me well personally and especially in business: Budgeting and cost projections. While these two terms are not the glamorous part of business, they are essential to success. I find that many small business owners and entrepreneurs feel that a budget and cost projections are not really necessary. However, let me mention a fact that I’ve gauged from all the clients that I’ve consulted with and helped prepare a budget: 100% of them increased their bottom line in the first quarter of doing so! That’s correct: 100%. That means it’s crucial to actually sit down and work through what is needed financially for you to succeed in the coming year. Let’s start with cost projections.

  • Cost projections is a phrase I use. It means that you analyze any increases in the amount you’ll need to spend on the essentials to run your business. For instance, do you hire contractors or freelancers like us, to help run your business? If so, ever so often, you should project that the price of this labor will increase, along with the cost of living. What about supplies or office equipment? If you make such purchases regularly, keep track of any fluctuations in price or rental fees. This step of analyzing costs is crucial and I do this with clients BEFORE we plan their budgets for the year.
  • Budgeting is something that most are familiar with, understand the importance of, yet never use :). Again, remember that when I’ve helped clients or freelancers prepare a budget, every single one of them has had an increase in their profits. This is not a co-incidence. Budgeting can prevent you from becoming “cash strapped”, especially if someone like me (who actually loves budgeting and sticking to it) is your accountability consultant. 🙂 I’ll make sure you allocate enough funds for things like supplies, administrative help, taxes, etc. I always OVER estimate these costs; as it better to have an excess, that you can reinvest in your brand or business, rather than searching for funds to handle essentials.

So have you decided to sit down and invest a little time in yourself and your business, by getting financially prepared this year? If you’re ready, you can schedule a consultation with me here and we will spend an hour projecting costs and preparing your budget. I will try to make it as fun and exciting as I can! 🙂

If you want to share your budgeting success story or reasons you have not prepared a budget as of yet, I’d love to hear about it in the comments and will respond personally!

This is Shilonda Downing, signing off for Virtual Work Team LLC!

4 thoughts on “Budgets and Cost analysis: key to running a successful business

  1. You know, even as a Freelancer I agree that I need to do a budget and cost projection but I have not done so. When I write down exactly what my goal is, as a Freelancer for 2012, I will take this information in hand and apply it.

    Thank You
    Barbara

    1. Barb:

      You’re always on the right track, it’s great for freelancers to budget and even those who have been in business for a long time fail to do so and it can be a costly mistake. I’m glad article was an encouragement to you and thanks so much for commenting!

      Shilonda Downing
      Virtual Work Team LLC

  2. Excellent points! My Dad was trying to make these same points with me over the holidays LOL!! I’m glad you’re emphasizing this in your New Year’s blog – we small business entrepreneurs really do tend to slack on financial planning…
    -Izabella

    1. Thanks for the compliment Izabella! Your Dad is a wise man 🙂 It’s really beneficial to sit down and plan financially and it can be fun too, when you see how it positively affects your bottom line. I’m so glad you stopped by and thanks for chiming in!

      Shilonda Downing
      Virtual Work Team LLC

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