Profit advantages

[Article] Budgeting for Profit

Do you have a business budget? Is it in alignment with your 12-month strategic plan?

These two items are critical to the achievement of your business (and life) goals.

Of course we all know what a budget is, but I find many people overlook the absolute importance of having one. So in this article, I will drill down into what an effective budget looks like and why having one is imperative.

In simple terms, a budget is a representation of what the business is going to achieve from a financial point of view.

It is one of the most important (yet often overlooked) activities of a business owner. It serves as a tool that facilitates planning, control and motivation for a business to strive to achieve.

I encounter a common opinion amongst business owners that budgets (both personal and business) are more of a restriction on what can or cannot be spent, rather than being viewed as a critical tool in the planning process.

One of the common traps when creating a budget is to take the previous year’s income and expenditure, add 10% and then say the budgeting process is complete. This fails to take into account what might happen in the economy and marketplace in the next 12 months.

When we meet our clients for the first time, one of the first questions we ask is, “How much profit are you planning to make this month?”

Almost 99% say they don’t even know how much profit they made last month or last quarter let alone a budgeted figure for the next month.

Traditional teachings recommend budgeting for sales, then calculating associated cost of sales, estimating the fixed expenses then working out what budgeted amount of profit is left over at the end of the process.

These teachings are archaic, frugal and more often than not taught by teachers who have negative emotions attached to the word profit and what profit really represents.


“Profits are better than wages.

Wages will make you a living,

profits can make you a fortune.”

– Jim Rohn


What Jim was really saying there is that if you really want to achieve financial independence and accumulate vast amounts of wealth in your life, you must focus on making profits, not just making enough to earn a wage. A wage will only fund your current lifestyle, not surplus cash that can be used for savings and investments.

Profitability is one of many success indicators in any business. It is an indicator of effective leadership and management, superior customer service and quality of produce and service, clear focus on marketing and sales and a clear sign that the business owner values themselves enough to believe that they are worth it.

Profit driven business owners know exactly how much profit they want to make. They make profit a priority. They know what jobs and projects are profitable, and how to get the best ROI from their people, products and prospects.

They know when to say ‘yes’ and when to say ‘no’ and most importantly, they plan for profit in their business.


Do you know how to determine your budget that will be in line with your 12 months strategic business plan? Lets talk more about it and go through some techniques in our proven 4-It System so you can focus on building your business successfully with less time and stress. Click here for your FREE strategy call now. Limited bookings available.

Rob Kropp – The Profit Coach



About the 4It System for your business and life: The Make It, Manage It, Keep It, Grow It™ (4-It System) will help you structure your business in a way to make leveraged profit.  Manage excess earnings so you can scale effectively.   Keep more money in your top pocket.  Then grow it, so you can play a much BIGGER game than just the business.  Your wealth will expand as your financial freedom turns from a dream into a reality through building a business, living a life and leaving a legacy.

Connect with Rob Kropp:
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