The Closed Circle Budget and the Business Owner
Business owners should have a separate Closed Circle Budget for their business. If there is more than one business, then each business should have its own Closed Circle. The exception to this is if you have a small home based business that is a sole proprietorship. At the beginning, there are probably not a lot of expenses, nor is there much income, so in this case, you could just include the small home based business in your personal Closed Circle Budget until it grows to a point where the income is covering the expenses.
In Creating a Closed Circle Budget for Your Business:
Obligations are Cost of Goods Sold
Necessities are Operating Expenses
Wants are expenses for growth and team enjoyment
The Closed Circle Budget for business owners works very similar to a Closed Circle for Individuals. You should still use the same steps as you did to create your personal Closed Circle Budget. However, the main difference is that you have to do a lot more forecasting as your business will grow.
Closed Circle Budget for business owners must also be reviewed regularly and changed as the business goes through growth and changes.
Also, since we get paid personally from our business, we must factor that into the Closed Circle Budget. We know how much we need for our personal Closed Circle. Therefore, we should budget the amount we will pay ourselves in the obligations section of your business’ Closed Circle Budget.
If you’d like to learn more about the Closed Circle Budget and other financial topics, you can sign up for one of our Financial Boot Camps or our Monthly Video Membership Series.
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