Many entrepreneurs, business owners, and service professionals get or develop their budget for the year, and do not realize that something is missing. As a result of emphasizing short term cash flow needs over a long term growth strategy, many business budgeting plans neglect personal and professional training and development. Some companies have never budgeted for ongoing training in the first place! Others have in the past and, for some reason, have decreased or eliminated that part of their business budget plan. Now, many people can easily grasp the idea that building a legacy and creating an enduring business is dependent on employee investment and leadership team development. But theory and implementation are oftentimes quite separate. So how do you manage your business budget planning the smart way, so that your cash flow needs are met and that your future investment in the human resources of your business remains stable, if not continually increasing?
First, identify your short term cash flow needs. What are your profit centers? In other words, what business activities are generating money for you? How much money is being consistently generated, and how volatile are the shifts in generated cash flow? Do you have a great winter season and a slow summer season? To what extent is the success of your business dependent on consumer confidence? The more specific your analysis is, the better you will be able to determine the relationship between the time, money, and other reasources you put in, to the money that comes out. You know you are in great shape when you can, as an example, look at the different kinds of advertising you do and very clearly, with numerical data, quantify the return on investment.
Next, take a look at your cost centers, or the parts of your business that drain money: employee salary, cost of inventory, even licensing fees. Your objective here is to identify and then calculate where and to what extent you are paying in excess of what you need to pay. Perhaps you can get a better deal on parts or products; maybe you can renegotiate licensing fees. The point here is to be creative! When you start to add up your cost savings, you now have more cash to draw from when deciding how to invest in your continued business development.
Finally, decide where and in what way to implement your newfound profit margin. Many business owners, entrepreneurs, and professionals do not even realize that by investing in leadership team development, they actually empower their employees and their organization to work together as a team -- not just in name but actually in spirit. The result is a huge increase in employee productivity, a dramatic reduction in tension and conflict, and a unifying culture of cooperation and collaboration. Can you see how that kind of investment in the human resources of your organization would produce breakthrough results? Can you see how building a proper business budget plan can open the door to that kind of long-term growth opportunity?