- How much money they have,
- How much they need to spend,
- How much needs to be earned to meet goals.
- Being prepared if bankers and other financiers ask to see a budget if a loan is pursued.
When creating a budget, Kohl suggests, if you have never made one, partner with those who have such as consultants, CPAs and other entrepreneurs. “To receive honest guidance, step outside of your circle and engage professionals. Entrepreneurs are often unrealistic in the costs they think will be generated and they overestimate earnings. It’s important to understand it will take time to see a break even.”
Speaking of time, Kohl suggests having a five-year plan, not just a one-year plan. In that plan, he advises to, “Justify every line item and why you think you can do it. For example, if you say you are going to double your revenue every year, my first question will be how. And, know that every single legitimate expense needs to be documented.”
When it comes to hiring, how do you justify the costs and when? “The timing depends on the role you need. If it’s sales, no one should be able to sell your company better than you. If it’s a technical role that you don’t possess, and it is critical to your business, I suggest making those hires (or using contractors) as your budget allows. Hiring is driven by how you build your business and, many times, to create growth, it’s an investment you have to make,” explains Kohl.
For entrepreneurs, another big question is when and how to pay themselves. Kohl says there are a few ways to look at this, “Calculate that you are making an investment of time and money. How much of the money will be your first year’s salary? Or, you can look at it as, ‘I’m going to build this business. I’m going to invest XX number of dollars and I won’t take a paycheck until I can do so.’”
About BBSI – BBSI, a long-standing, leading provider of business management solutions, is new to Las Vegas. BBSI will help businesses of all sizes in the Las Vegas market improve the efficiency of their operations. With 101 teams in 58 physical locations, BBSI partners with businesses to develop a blueprint for success that includes important areas such as human resources, payroll and risk management, as well as business management coaching.