Do I Really Need a Budget Plan for My Business?

Many entrepreneurs wait until it is too late to appreciate the benefits of having a budget.

Although budgets are important to be prepared throughout the entire life of your business, it is ESSENTIAL BEFORE starting your business.

Why?

You must determine if the business has the ability to cover its business expenses because if it can’t, the business will be broke before it even starts to earn money (generate revenue).

Therefore, the business must be able to pay its own way for its expenses or it will not be able to continue.

It is obvious why this is so important!

What is a budget plan?

Briefly, budgets are used for planning the expenses the business will require and the revenues the business expects to generate.

Simply put as an entrepreneur you must:

• understand the cash outflows (expenses) and,

• understand the cash inflows (revenue) of your business.

Since all entrepreneurs have the same goal: To Be Profitable – it makes sense that a strategy to measure if the business will be profitable must be put into place.

A budget can help to achieve this.

Although budget plans are often considered to be challenging – they are essential and should not be ignored.

The money, the numbers are often considered to be one of the driest parts of a business – some would even say boring!

However, especially if you are a new entrepreneur, you should learn from the start how to have a healthy respect and appreciation for “working with the numbers” in your business.

Focus on the vast amount of benefit and information that budgeting can provide for you.

Is Creating a Budget Plan Difficult?

There is no doubt that budget creation can be very complex. The level of detail, time frames and assumption that can be part of the budgeting process is often difficult even for those well versed with it. However, it is usually larger companies, government and expansive non-profit organizations that need for the budgeting process to be more complicated and involved. They are creating budgets for more than just owners, it is for a number of interested parties and stakeholders that have an interest in the company.

However, there is a difference for new, start-up businesses with regard to their budget. Like business plans, it is not necessary for the small business owner, especially start-ups to prepare overly lengthy and detailed budgets.

New entrepreneurs should have a Preliminary Budget Plan that will include the main financial essentials of start-up for the first year.

The intent of this Preliminary Budget Plan is to get you:

· Understanding the benefits of creating your first budget.

· Feeling “at-home” with creating a budget.

· Committed from the beginning to the habit of establishing and having a budget.

· Feeling in control of how budgeting works.

· Lessening your frustration/anxiety about creating a budget.

Often times it may seem as though everything has been considered, but there can be certain aspects that have not appropriately been addressed from a financial prospective… that can leave you feeling unsure and doubtful of your abilities as an entrepreneur.

Why is it called a Preliminary Budget Plan?

Note there are many formats and versions of budget plans, however they have similar features and are created for the same purpose: to help you determine what the revenue is expected to be in the company, the direct costs associated with generating this revenue and the expenses that are anticipated to be incurred.

Assuming that you are starting a new business and are in the start-up phase, it is not necessary to have an overly detailed budget plan.

It is called the Preliminary Budget Plan as it is a starting point budget that is intended to get you, the entrepreneur involved in the habit of establishing and having a budget, right from the beginning. It is presented in a straight-forward, step-by-step fashion. A Preliminary Budget Plan is also shorter and easier to understand and prepare.

Therefore, this Preliminary Budget Plan provides a minimum layout to get you started!

Here are just some of the questions that a Preliminary Budget Plan should answer when it is applied:

· Measure if revenue is in fact covering your costs

  • Make pricing decisions
  • Measure the current success of your business
  • Foresee problems in your business

· Provide valuable strategic information about your business

+ other financial answers…

A Preliminary Budget Plan is shown in a step-by-step method that allows you to organize your thoughts and WRITE DOWN your intentions through documenting them in a meaningful way. It also provides you with a document to provide to interested parties (for example, banks, investors, etc.) if the need arises.

A Preliminary Budget Plan will help you to:

1. Establish what revenue (sales) the business intends to earn.

2. Establish how much the business intends to spend on direct costs and expenses.

3. Determine if items 1 and 2 above will result in the business being profitable.

For as long as you are an entrepreneur, it is essential to understand the money.

You need to prepare a Preliminary Budget Plan, if you are:

· An aspiring entrepreneur who is serious about properly planning a new business and would like to discover how to prepare a business budget.

· An experienced entrepreneur who never has prepared a budget plan, but would like to learn how.

· An aspiring entrepreneur who is skeptical of a budget plan, but would like to explore the process and know more.

· Any entrepreneur who has heard about budget plans, but are confused and would like some clear DIRECTION of what to do.

So. How Do I, As an Entrepreneur Create a Simple Budget?

Through our process of preparing a Preliminary Budget Plan you will:

1. Engage in strategies that will help you to improve your mindset about money.

2. Help you to focus on the financial intentions of your business.

3. Apply a straightforward, step-by-step process to prepare your Preliminary Budget Plan.

4. Obtain some financial clarity about your business.

5. Feel confident using the “simple elegance” of this process.

What Else Does Creating the Budgeting Plan Offer to the Entrepreneur?

Aside from the obvious, practical benefits that have already been discussed, there are other valuable contributions that budgeting brings to you, the thoughtful entrepreneur:

This notably includes:

  • Increased confidence
  • Increased decision-making abilities
  • Increased ability to assess possibilities
  • Increased self-esteem with better awareness
  • Increased judgement capabilities

Why?

The more you can create, evaluate and understand the money aspects of your business, the more in control and able to make your business all that it can be – it is within your reach!

Remember: these are skills that you will have for the LIFETIME of your business as you will ALWAYS need to consider your business budget.

Forex Education Tips – 5 Steps to Successful Forex Trading

Close to 95% of all Forex traders will lose money. We’re not just talking about novices, either. Whether you trade Forex for a living, as a hobby or just for fun, odds are against your success. That’s a simply astonishing fact. However, the remaining 5% of Forex traders somehow manage to break even and there are those lucky few that actually make money in the currency market – consistently!Like the TV show says … “How’d they do that, anyway?”That’s the million dollar questions, isn’t it? Countless books, seminars and expos have been hosted to answer this very question. That sad fact is that thousands of books have been written and countless seminars and interviews have been conducted in an attempt to answer the magic questions. The reality of the situation is that there is no magic formula; no one single Holy Grail of Forex trading.So what do the successful traders do that the rest of us have simple not comprehended. They have mastered a process of winning where they combine and customize several factor to produce consistent results. They have mastered the Process of Trading.The Process of Trading is:Strategy > Money Management > Self-MasteryHere are some simple Forex Education tips to help you master the process of forex trading:Success Tip #1 – You’ve Got To Have a PlanYou must have a written business plan that will detail all aspects of your trading. When are you going to trade, how much to risk, strategies for entries and exits are just o name a few. To become a consistent (profitable) Forex trader you have to plan your trade sand trade your plan.

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Simplicity rules! Don’t make this plan too complicated. One sheet of paper for you mission statement and another for your trading plan should suffice. Anything more is probably too complicated.Success Tip #2 – Focus on Your Personal PsychologyKnowing yourself will allow you to master the discipline necessary to execute high quality trades with solid money management techniques. Lack of discipline is fatal in Forex trading. Go on a personal journey to identify you attitudes towards risk and money. Get intimate with your strengths and weaknesses as a trader and build in to your trading plan strategies to minimize those weaknesses and maximize your strengths.Different personalities lend to different trading styles. Get familiar with all the different styles and over time you will begin to gravitate towards one particular style. Don’t fight the urge like I did. I insisted I was a day trader, but had only limited results. I found my winning percentages were much higher when I entered swing trades. Guess what’s my bread and butter strategy now!Success Tip #3 – Be Realistic About Your ExpectationsThis is a hard one, I know! I am on the internet every day and the amount of advertising is staggering. Brokers are offering free education (fox in the hen house if you ask me), forums of all different trading styles and points of view. Gurus pushing their system as “the one” that will make you the big bucks. How do you get through all that noise?Let me tell you loud and clear right now – everyone is right and everyone is wrong. You have to make a personal commitment to become a successful trader, find a trading style that works for you and expect a slow and steady approach to wealth building through Forex.What works for me may not work for you. Expect to go through an exploratory period where you are learning and at the same time exploring yourself as a trader. Keep an open mind and don’t pay attention to all the noise out there.Success Tip #4 – Exercise PatienceRome was not built in a day and neither will your trading account. In fact, I tell all of my students that while they are studying to become successful Forex traders they should not look solely at their account balance as an indication of success or failure.By tracking and increasing your percentage of high quality trades you execute is a far better barometer of your progress than your account balance. Cause and effect rule here. Over time when you increase your probabilities through the execution of high quality trades your account balance will respond accordingly.Keep the focus on the process and with time your results will blow your mind.Success Tip #5 – Money Management Is Top PriorityI would rather have a shaky strategy and excellent money management techniques than the other way around. This topic warrants its own blog post to do it justice. Limited your exposure (read “risk”) allows for you to stay in the game and allow the laws of probability to work.

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Let’s take a casino for example. They need gamblers to frequent their slot machines to make money. Why? They have a game that has a greater than 50% chance of making money for the house. The more people that play the slots, the greater the casino’s profits.The casino controls risk by payout tables (always favoring the house!) and increases their probabilities by keeping gamblers at the slot machines (read “free drinks”). As a trader you must limit your risk by committing only 1% – 3% of available capital to a single trade. When you execute enough trades with a high probability strategy you too can clean up like the casinos – but only by staying in the game long term.In conclusion, Forex trading is not easy. It’s hard work and will test the limits of your patience and perseverance. If anyone tells you otherwise .., buyers beware! It can be a very rewarding and profitable venture if done correctly. In the end it is a profession that requires a learning curve and practical experience, no different than an airline pilot or engineer. Understanding how to approach and learn this game will allow you to reap all the benefits advertised. It is your Forex Education that you will master the Process of Forex Trading.