Small Business

A Picture Guide To Creating An Effective Budget – Part 1 of 3

Budget.  For many, this is a scary word.  It means numbers.  Making sense of numbers.  Calculating numbers.  And quite frankly, I’ve learned over the years that not everyone is comfortable confronting numbers.  But if you want to have control of your financial situation and use simple concepts that big businesses use to your advantage, you’ll need to be armed and ready to face the numbers.  I’m happy to say that they’re not as intimidating as they may seem!

Even numbers can be visual, and in this Three-Part Series, I’ll show, in pictures, how you can create an effective budget that gives you power and control over your finances.  In Part 1, we’ll address the overview of a budget and why it is important.  In Part 2, we’ll go over how to create a budget; and in Part 3, we’ll address what to do after you’ve created your budget to maximize its use.

So what is a budget, why is it important and why do you need one?

A budget is an itemized financial plan for a certain period of time such as a week, month or year.  You anticipate your income (inflows) and plan your expenses (outflows) accordingly so you can see what you’re left with.  Ideally, you will spend less than you bring in.  Here is what this looks like:

This snapshot of a budget allows you to see your monthly income, itemized expenses and what you have remaining. This makes it easy to see if you’re sending more than what you’re bringing in.

Over time, a budget helps with planning ahead and in anticipating problems that may arise.  This insight allows you to think about what changes should be made and respond by reallocating resources as needed.  For example, if you’re over your groceries amount for the month, you can plan to spend less.  Or if you’re spending too much on cable each month, you can negotiate a lower rate with your cable company.

See how the highlighted amounts changed compared to those in Exhibit A. By planning and reducing your expenses in certain areas, you’ll be left with more to reallocate.

To your benefit, a budget provides an organized and easily understood breakdown of how much money you’re bringing in and how much is leaving your pocket.  It is an invaluable tool that allows you to manage your money and prioritize your spending.  An important point is the fact that the effectiveness of a budget doesn’t depend on your income.  In fact, your financial situation is largely about what you do with your money as opposed to how much you make.  With a budget, you can identify and get rid of wasteful spending, quickly adapt as your financial situation changes and attain your financial goals faster.  You’ll have a more accurate sense of if you’re able to afford your dream vacation or your friend’s wedding.  You’ll know how much you can save for your future.  This financial clarity is especially empowering.

With the reductions made in Exhibit B, additional money at your disposal can help you save more for your future or toward planned expenses.

In Part 2 of this series, we’ll go over each step in creating a budget that is tailored to your situation.  Share your experience with a budget or what you would like to see in Parts 2 or 3 in the comments section below!

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Survival Skills Everyone Should Have

No matter who you are or what you do, there comes a time when you’ll find something you are passionate about, have a move you’ll want to make, or get your eureka moment when the timing is right to make something happen.  Every person is unique; and everyone has their own gifts and talents to share with the world.  So until your time comes, what do you do?

There’s a beauty in preparing for a rainy day or your window of opportunity.  You never know exactly what will come your way or when, but you’re  certainly in a better position to tackle anything if you start preparing today versus tomorrow.

As the proficiency and aptitude in a particular area, skills can be leveraged to propel you forward and to combat obstacles.  Some may be innate, but others are acquired through practice and in conjunction with additional knowledge and experience.  They enhance your performance, expertise and also your adaptability and mobility.  No matter where your destination will be, here are some skills that will facilitate your journey.

Finance & Accounting Skills.  We live in a numbers-driven world.  So everyone needs to understand numbers and how they work.  For example, if you’re a business owner and you want to increase your bottom-line, you should understand that you have the options of boosting your top-line or decreasing your expenses. You don’t have to be the one-man accounting department; but you need to understand numbers well enough to know what is happening with your business and about its performance.  Numbers not only lead to fancy spreadsheets but they display relationships that are explained by words; therefore it is important to understand how numbers drive other relationships.  Even when you have qualitative decisions to make, there may be implications that translate to numbers so be able to cut through the surface and understand the analytics and ratios and know what they’re telling you.

Money Management Skills. This goes beyond business and is personal.  Cash flow is glamorous, but it can disappear by nightfall if it isn’t handled appropriately.  How are you allocating the income you’re generating?  Are you living above what you can truthfully afford?  You may be saving, but are you saving enough?  Being consistent with tracking actual expenses, creating realistic budgets based on this and holding yourself accountable for staying within your means are  not learned overnight and take a lot of discipline.  In addition to managing your current financial situation, knowing ways to make your money grow and increasing your net worth are other challenges.  Once you understand the concepts, however, the application process can be mirrored whether it is from your personal life to business or vice versa.

Marketing Skills. If you’re in business, you’ll quickly learn that a good marketing plan can make or break your business.  Another secret that many don’t realize is that even for business, much of the impact comes down to personal branding and relationships.  At the end of the day, people do business with those they know, like an trust.  As an extension of this, a personal brand is essential in business, but it doesn’t end with business.  Know yourself, your strengths and what you do best.  Be able to market yourself when you need to.  Be consistent in your message and commit to your brand.   Learn how to tell a story and a great compelling one at that.

Communication Skills.  Some days you my have to write, others you may have to speak, and others you may have to present.  Be ready for each of these.  If preparation entails doing impromptu speaking to get better, joining organizations where you can practice, writing for yourself, or learning how to use PowerPoint, get started as soon as you can.  Communication is very important anywhere from our everyday interactions to the boardroom.  There may even be a time when all you have is 30 seconds for your elevator pitch.   Be ready.

Social/Networking Skills.  None of us can survive in a bubble – not in this world.  Knowing people, being able to interact and relate, sharing stories, networking, and knowing how to treat people well are all very important.  If you are in a client-serving role, it is important to be attentive, responsive  and understanding to your clients.  Being able to show that you are working with them and not just telling them what to do is also a key way to differentiate yourself.  As basic as it may seem, the Golden Rule always applies.

Do you struggle with any of these skills?  Do you excel at any of these?  What other skills have been vital to you in life and business?


12 Ways PodCamp Can Benefit You and Your Business

Registration.  Name tags.  Sign-in sheets. Driving directions.  Hotels. Free stuff.  Business cards.  Does this remind you of anything?  If you attended PodCamp Philly 2011 this past weekend at Temple University, then this is all still fresh in your mind.

PodCamp is a BarCamp-style unconference where people come together to share and learn about new media such as blogging, social media, podcasting, social networking, and videocasting.  The first PodCamp was held in Boston, Massachusetts in 2006 and today enthusiasts can catch it in cities around the world such as New York, Montreal, London, Toronto and Barcelona.  PodCamp is open to everyone – experts and novice alike.

At the event this past weekend, I spoke at one session entitled Bootstrapping 101 – Using Social Media To Innovatively Optimize Your Bottom Line.  You can see a little more about the session here.  The audience was great – interactive, curious and very willing to share information with each other.  So I left my own session with a number of takeaways, thanks to them!

With so much energy and the free-flow of knowledge, unconferences such as PodCamp are packed with advantages. Let’s take a look at some of the benefits, whether you’re attending for yourself or your business.

1. Networking – This is not a day that attendees want to forget their business cards; but with laptops, tablets, and other mobile devices welcome, it is easy to keep up with the professionals, small businesses owners, bloggers, and other content creators you’ll make connections with.

2. Best practices – As you learn from speakers and participate in discussions, you’ll get insight on how your company can better improve processes and workflow.

3. Teambuilding – These events are a lot of fun if you go with a big group because you can decide which sessions members of your group will attend and debrief to share the main ideas after.  With familiar faces around, you’re bound to have a good time.

4. Increase awareness – Nothing is worse than being out of the loop.  Sitting through the various sessions broadens your knowledge and gets you up to speed with the latest and greatest.  You’ll learn what else is out there, what others are doing, and how they’re doing it.

5. Leveraging technology and tools – Because you have the latest gadget or you’re using the newest social media tool doesn’t make you an expert.  You can get tips and tricks to better use your time and become more efficient with these tools.

6. Take the pulse of the market – Do you have a great product or service idea?  What better place to find out if it will have traction than a weekend full of energetic and opinionated people?  Maximize their feedback.

7. Branding – With the opportunity to speak and share your insight during interactive sessions, you can promote your business and position yourself as an expert and thought leader.

8. Training – Some sessions will be very specific with step-by-step guides.   This is a great way to get a crash course for yourself or your team.

9. Big picture analysis – With so many passionate people and ideas floating around, you will leave revitalized and inspired.  It is a great opportunity to take some time to reflect and rethink your overall personal or business strategy.

10. Give back and share – This isn’t all about your takeaways and what you learn.  Add value to someone else’s experience by sharing what you know.

11. Take online relationships offline.  Social media is great because of its reach and the fact that geographic location doesn’t limit who you interact with.  But nothing beats a face-to-face connection which is possible if you plan to meet up with others ahead of time.

12. Take a break, get energized and have fun!  Yes, this is what it is all about.  A community of movers and shakers who want to make a difference is bound to be magnetic!

What is your experience with unconferences?  How have they benefited you?

 


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