• Terence

Free personal budget planner for new business owners

It is imperative to pay yourself enough of a salary that you do not end up with "your hand in your business' Cookie Jar”.

This may sound harsh, but it simply means that the money in the till or business bank account is not yours…….yet.

Pay yourself a fair salary

The Springboard Academy’s Terence Knott-Craig was asked for help by a business owner who had got into some cash-flow difficulties.

“While analysing the business’ finances, I asked what the owner’s salary was, to which he proudly replied, ‘Nothing.’

“When we had finished the analysis, however, we discovered that he had, in fact, been drawing an average of R17 000 per month. A take-away meal here, a packet of cigarettes there, some petrol, just a little cash from the till, and so on,” Knott-Craig explains.

“He found that had he paid himself a salary, he would have made been able to manage with a lot less, and the cash flow problem would have been less severe.”

So, if you have planned to pay yourself a fair salary, your business may be able to pay you a dividend. You should not have to dig any further in company coffers.

How do you know how much is enough?

Complete a detailed personal budget and it will determine how much you need to meet all your commitments.

The Springboard Academy can help you to do just that. Complete the registration form by using the reference ‘PB’ in the message box, and we will send you a free Personal Budget template within 24 hours.

The template has four sections: Summary, Debt Settlement, Income and Expense.

Follow these easy instructions to plan your personal budget.

1. Go to the expense schedule and complete the detailed categories (from Cell A26 on the expenses sheet). You may change the item names if you need to. These categories will automatically update the summary table and graph at the top of the page. Remember to complete the investment and savings section, as these are important for you, the business owner, to view the complete picture of your commitments.

2. Once you have finished with the expense schedule, continue to the income section (cell A9 on the Income sheet). Fill in all items of income under the category tables, excluding your salary. The summary at the top of the page will update again.

3. Continue to the debt settlement section and complete the statement of debt schedule.

4. The summary section - which is automatically updated from the above sections - will indicate the shortfall in your budget. The balancing figure is your desired salary.

You need to be realistic, however. If the number seems too high, you will need to revisit your expense section to find areas where spending can be reduced. You will also have to re-look at your income table and make sure you have recorded all sources of generated revenue.

The salary figure you finally decide on needs to be added into the expenses section on your business budget.

Take your time to get it right

Remember, this exercise may take a few days or weeks to complete. It is a good idea to record and summarise your actual personal expenses for a period of a month, before finalising the figures.

This template serves as only a tool to complete your personal budget. The detail and the accuracy of it, is entirely up to you.

Happy planning! #businessgrowth #hopeforafuture #entrepreneur #smallbusiness #debt #cashflow

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