Budgets

February 6, 2016

Debt and Budget

Entrepreneurs can avoid debt by following a budget and earning money on the side while building their business. They can also avoid credit card debt. They can have a partner who funds the business for shared ownership.

Five key steps to financial freedom include: 1. Pay Tithing 2. Spend less than you earn. 3. Learn to save. 4. Honor your financial obligations. 5. Teach your children to follow your example.

The most difficult would be different for each person. For me spending less that I earn is hard from time to time. I buy very little. The times I spend more than I earn are with unexpected medical expenses that have come up. Also a family reunion that is across the country and cost $3000 to buy enough plane tickets might cause me to go into debt. It may be the last time our family see’s grandparents (we haven’t visited in 7 years) with failing health. The last big expense is educations loans. When you have two people in the family in college and one on a mission, the budget does not balance. These are just examples that can put people into thousands of dollars of debt. With this said, it is easy to justify, but justification is not the answer.

We can do avoid being greedy and covetous. Elder Wirthlin teaches that debt is a form of bondage. Instead of owning things, our things own us. We can also set aside money to save so that when it rains, we have a reserve to fall back on.

E-Myth  - Consistent Routine and Styles

This week I have learned how important it is to perfect and follow a consistent routine in our business and to teach it to the employees. I also learned that colors and styles matter. A blue suit with a red tie makes more sales than a brown suit. A crescent shape is better than a circle for a logo and a circle is far better than a triangle.

Action Hero – Desh Deshpande Passion and Optimism

Desh Deshpande came to the US with only $8 and was able to build a business in technology. He started out with only $8 and now has a company worth billions. One key to success for him was passion and optimism. Desh had a lot of optimism and always felt as though things would work out.  Life is about setting benchmarks. Knowing what is possible is one of the biggest gifts you can have. He earned a PHD and was educated in business, marketing, and technology which gave him a strong foundation to start his business. One difficulty was when Desh didn’t see eye to eye with his business partner and had to go separate ways. When things go wrong, you may think it is the end of the world, but it is a learning opportunity. As future problems arise, you will be better equipped to handle the difficulties. When you sit on problems for a little bit, things don’t seem quite so bad. Where you start is not as important as having motivation and aspiration. 

$100 Project – The Perfect Cookie

Today I got my daughter to fund the $20 initial investment for the giant cookie. I made the first cookie, took pictures, and sent my kids out to see if it would sell and to collect pre-orders for Valentine’s Day. They came back feeling discourage and sold nothing. Maybe this is how the missionaries feel out here. They get weird looks and have no investigators in our ward. It is a poor area and I think people don’t want to spend $12 for an 11 inch cookie. It is inexpensive for the size and quality, but they are all probably on food stamps (I am not trying to be judgmental, I am very serious - remember these are my neighbors and close to 90% of the school kids qualify for free or reduced school lunches). I know it is day one, but I am feeling very discouraged about this project. I don’t know many people, so the best bet is going door to door which is going nowhere. If I had a car I would drive to the richer neighborhoods.

Business

Elder Hales taught that it is important to know when to say, “We can’t afford it” or “We don’t need it.”

Guy Kawasaki says that the core of a successful company is to make meaning, not money. The purpose is to improve the quality of like. Another great purpose in your business is to right a wrong. A third is to stop from ending something good.

Budgets

The four paths to creating a budget include: making goals, finding ways to achieve the goals, and financing the goals. 1. Set goals 2. Evaluate and choose options (what tactic will you follow to meet goals) 3. How will this affect the budget 4. Coordinate department budgets

There are several types of budgets. I really liked the rolling budget the best. The rolling budget changed each month. It was still a year long, but as one month expired, you would add a month on continuing to have a year-long budget. This would be beneficial because instead of planning the budget for the entire year at once, you could adjust it slowly each month according the changes in expenses and revenues. I think this kind of budget is also best used on a personal level. In a business it may be too time consuming for the budget to be altered monthly, but I still think it is ideal. Budgets are action plans. One other budget I really liked was the Balanced Scorecard. It made sure that an appropriately balanced amount of money went into four categories of the business (financial, customer, internal, and improvement perspective categories). It is a great idea to see the big picture and balance the budget according to the big picture instead of just the little things that come up to spend money on.