Your home business is finally out of the red, cash is coming in and things could not be better. Due to increased demand, you now need a faster computer with more memory and a better printer. Unfortunately, even though your home business is generating revenue, you did not plan a budget and you do not have funds to buy the equipment you need. You could rent, lease or finance the equipment needed for your home business, but you do not know if you can afford monthly payments because, again, you have no budget. Starting to see the problem? Without creating a proper home business budget, you are eventually going to run into some serious financial problems.
Think You Do Not Need a Budget?
If you think you do not need a home business budget, you are sorely mistaken. Trust me, you are not the first person to think they can operate their home business without a budget and you definitely will not be the last. However, like those who have gone before you and those who will come after you, if you do not wake up and realize a home business budget is a true necessity your home business is going to fail.
The only way you can effectively plan for the expenses your home business is going to incur is by creating a home business budget. Without this budget, you are not going to be prepared for anything and if you are not prepared, you might not be able to pay. If you can not pay for the services and supplies your business needs, your home business is going to crumble to the ground. Don’t believe me? Look at this scenario.
Let’s say John started a home business and did not bother to lay out a home business budget. John knows what his home business needs, but he has got cash in reserve so he is not too worried about paying for those needs. Three months into the home business, John’s cash reserves are becoming nonexistent and while his business is bringing in some money, it is going to take another three months for his home business to generate enough revenue to cover the business expenses and John’s salary. Unfortunately, the money in reserve is not going to last three more months and John’s got a serious problem.
John’s DSL bill comes in and he can not pay it. His DSL service gets disconnected. It is an inconvenience, but he can operate his home business with a dialup connection so it is not yet a disaster. However, a few weeks later he can not pay his phone bill and his phone gets turned off. You can not operate your business without a phone or a connection to the Internet. John’s home business is now dead in the water. The sad part is, if he had created a home business budget he would have been better prepared and this would never have happened. When you stop and think about the consequences of not having a home business budget, the importance of having one becomes all too clear.
If you want to avoid the same disaster John faced, get your home business budget in order. Lay all of your expenses on the table and make sure you add a cushion for unexpected expenses and emergencies. This way you have some idea of how much you need to make each month and what you need to spend.
Better Late Than Never
If you have not yet created a budget for your home business, do not despair. You are not alone and it is not too late. Creating a budget for your home business is not too hard to do and it should not take too much time. Get paper and a pencil, sit down at your desk and get to work. You will be done with the home business budget before you know it and someday you will thank yourself for it.