If you want to buy a new jacket, do you really save money if you wait a month? Or, do you just push off the same expense to the next month?
In a business, if you want to get a trademark for a new product you’re launching, do you save legal costs if you force yourself to stick to a monthly legal budget and push that trademark expense off to the next month?
The answer to both is, “yes, you do save money by delaying expenses.”
When the next month rolls around, you’ll want a new piece of clothing and you’ll have to weigh that against the jacket you didn’t purchase the month before. If you didn’t delay that purchase, the pain of buying the jacket would be long forgotten and you’d be on to the next purchase.
In a business, there’s always more you can spend money on. Building a business is never-ending. There’s an infinite number of ways you can attempt to improve your business. Every month brings new opportunities.
However, there’s a finite amount of money we make each month personally and in our businesses. The only solution to guarantee we earn a profit is to set budgets and stick to them.
In my businesses, we set legal budgets, advertising budgets, and payroll budgets. When we do a big promotion or marketing campaign, we set specific budgets for those too.
We don’t always follow these perfectly. But, forcing ourselves to set budgets results in more cost-efficient spending and more profit.
Look at your income, either in your business or in your personal life (or both): How much do you expect to make per month for the next three months?
How much do you want to keep of what you make?
Great! The difference is your overall budget.
For example, say you conservatively estimate your business will produce $50,000 in gross profit (sales after all direct expenses) per month for the next three months. Your goal is to keep $20,000 per month. This means your overall budget is $30,000 per month in additional expenses.
The next step is to apply specific budgets to each major category of expense so you hit your target.
This process doesn’t need to take a long time. The hard part is actually doing it and doing it consistently throughout the year.
If you do, however, you will keep far more of the money you make. You’ll have less stress and a more valuable business (or more wealth personally).