FEATURE ARTICLE Billy Hofacker
YOUR BUSINESS SPENDING PLAN Moving toward financial freedom | By Billy Hofacker
ave you ever been in a low place financially? Maybe it was significant debt, creditors harassing you, or perhaps you even came close (or worse) to losing the house or car. Whatever the circumstance might have been or currently is now, as a small business owner you know finances (or lack thereof) can be a difficult obstacle. The knowledge and personal experience gained over the years as a small business owner can teach you more about finance than obtaining an MBA. One of the most important things you can do as a business owner is to create a business spending plan each month. You may know this as a budget. A budget, for some, can feel scary or restrictive but a “spending plan” connotes freedom. Why do a spending plan? It’s interesting that fitness professionals often have their workout and nutrition plans fully detailed and dialed-in to the finest detail.
However, many are “fat” with their finances, and not in a good way. Whether your business is succeeding right now or if you’re struggling to pay the bills, a spending plan will help you see beyond the immediate and plan for the future. Some of the benefits of committing to this practice of a monthly spending plan include: Peace of mind knowing that you aren’t just guessing and hoping for the best The ability to maximize your business’ profit rather than wonder where it went Protection during the anticipated dips in business The ability to persevere through unexpected events A plan for long-term growth and success Built-in efficiency and control within your business 5 steps to create a spending plan Assuming you’re sold on the benefits of creating and being accountable to a spending
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plan, here are five steps to making it happen: 1. Analyze your history Assuming you’re not a start-up business, look at your P&L statement (i.e. profit and loss, or income statement) from the previous month, quarter, and year. If you’re newer in business, you’ll have to make your best estimates based on the information you have. 2. Project total revenue for the upcoming month Whether it’s taking the average from your P&L statement, making an estimate, or a combination of both, determine what your estimated total revenue will be for the coming month including all revenue streams. 3. Determine fixed and variable expenses Fixed expenses don’t change and include things like rent and monthly fees you pay for certain services. Variable expenses change with volume and might include marketing and payroll. 4. Determine profit (or loss) When you take your revenue and subtract your expenses, you’re left with either your profit or loss. Depending on
Personal Fitness Professional Fall 2019