Last Updated on March 31, 2024 by Lorna Barrow


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Make a budget…don’t forget to make a budget…


How many times have you been given this advice, whether you asked for it or not?


Don’t worry, this advice is often given to Small Business Owners, Entrepreneurs and Self-employed persons. And it’s good advice actually…but I have a big problem with the advice that follows, on how to develop that budget.


So, when some of my clients learn that I was an Accountant in an earlier life, they usually ask me:

Can you help me make a budget, Lorna? A meaningful one?  One that I can stick to?


And I usually say to them: I can…in a heartbeat. The question is: Will you have the guts to implement it?


That question should be a clue to the fact that my approach to budgeting is “somewhat” removed from what I learnt in business studies. It is even further removed from what I had to regularly submit to Non-profit boards in a previous life.


You see, I believe that when an entrepreneur or a self-employed person sets out to make a budget, it must give reality to the life you dreamed of, when you started your business. It has to help you become that person that develops yourself equally as you grow your business. And at the same time, it must be help you to be adaptable and flexible. 


Unfortunately, the well-meaning advice you’re usually given will not take you there.


So, do you want some budgeting advice that’s guaranteed to get you the results you want? Do you want a budgeting approach that truly aligns with your entrepreneurial spirit? One that works for me and my clients who dared to try it?


If you’re sure, and you’re ready…here goes!

Forget trying to keep your personal life separate from your business

Especially, if your business is small or you’re self employed.


How ever hard you try, when you come to make a budget, keeping your personal life and business life separate, does not work. I don’t know if it’s even desirable.


Look, you cannot grow or scale your business without growing yourself. My Rapid Scale Leadership Programme shows you exactly how to do this.


Furthermore, it is not as easy as Accountants lead you to believe.


When you are self-employed or run a small business, the distinction between you and your business is somewhat blurred. Trying to keep them separated in all cases leads to confusion and frustration on your part.


That out of the way, now you’re ready to make a budget.


Develop the expenditure side of your budget first

Before you actually decide what your expenses should be, decide on a length of time you want your budget to cover. A year, 18 months, two years? It’s up to you but I cover a year at a time.


Now you can decide what you want to spend money on.


This is where I believe that a budget for an entrepreneur or an SBO must part company with regular budgeting approaches.


Here are some of the items you should budget to spend on when you make a budget:


1. Budget for your goals and dreams

These are made up of what you would love to achieve (dreams) and specific things you have set yourself to achieve in the budget period (goals).


Yeah…you have those, Don’t you?


Just like how I advise you to write them down, go a step further and write them in your budget. These should both be for the business and yourself. In your first budget following this system, start with small amounts. You can always increase them in your second year.


If you want to sacrifice any one of them, make it the dreams. This is to prevent you from having too many nightmares.


2.  Include new business ventures

As a business person, your brain should always be ticking over with new business ideas.


There is no better place, than in your budget, for you to lovingly show your seriousness and commitment to growing your business. 


First, evaluate your ideas, using whatever method you choose. Then select the one you believe you can bring to reality the fastest and give you that big breakthrough in your business. Now, simply set aside a sum of money for it in your budget. 


Depending on the nature of your idea, it can take as many as 2 – 3 budget periods before you have enough money to start working on it. But if you don’t put it in the budget at all, you may never take any action on it.


3.  Savings must be an expense in your budget

“Excuse me! savings? please explain…” That is the response I often get when I guide clients through my budgeting process. Some will go so far as to remind me that I am not making recognised accounting sense. So let me explain my thinking on this one.


If you don’t make savings an expense, a “committed” expense, you will struggle to save, trust me.


When you make a budget, and include savings on the expense side, actually save the amount that you include. Not only will you develop the wonderful habit of saving, you will somehow manage to get everything done on what’s left.


And you do need savings. It is savings that help you to live through those time when money isn’t coming as fast as you would like. You know, when you can’t repay a debt, or your business hits on hard times. 


4.  Include Philanthropic activities when you make a budget

Don’t look now…but there’s really a cost to all those free sessions you give.  As well as the donations to your favourite charities. And the events you sponsor.


And you should budget for them.


Thoughtfully decide on an amount that you can comfortably give away and put it in your budget. My friends argue that this is a “non-cash” expenditure but I disagree. If you are now starting out in business, if you don’t assign a cost to these and add them to your budget, you might give away more than you make. Yes!


Furthermore, here’s a cool benefit of doing this. You no longer have to feel bad saying “no” to another charity request. Instead, you can say “I have already exceeded my philanthropic budget for this year…” How cool is that?


5.  Personal Development is a must

Yes, this must go into your budget too.


Now tell me, how are you going to grow your business if you don’t plan for and grow yourself? I know you don’t want to be that big barrier to your own self-development.


Not being specific and budgeting for personal development is a weakness that is all too common among Caribbean SBOs and entrepreneurs.


You can change that. Budget for your personal and professional development and actually max out the amount on it.


6.  Health and Wellness goes in when you make a budget

Especially when you are self-employed, it is very important to look after yourself. By now you know that when you are not well, your business will suffer also. So, the approach that “prevention is better than cure” must be your guide.


Budget for a medical insurance plan as well as annual check-ups for the doctor, dentist, etc. 


If you go to a gym, or plan to, it goes in here, as well as any club membership.


7.  Lick-out money has to be included

Aahhh! I love putting this in my budget!


In my country, when we talk of “lick-out money” we are referring to money which you spend on non-essentials. Money you just blow. Writing this in my budget is spiritual to me.


By actually budgeting money to treat yourself, to buy little fancy things for your office, to just “lick out,” remove the guilt you feel when you treat yourself.


In addition, budgeting for it gives you a serious measure of control, if you stick to the budget. It also reminds you that treating yourself does not prevent you from getting rich.


8.  Your salary…if you pay yourself one

I believe in paying yourself a salary. It is from this that you finance those personal expenses you cannot charge to the business.


However, don’t make this too large to attract a high tax rate. Don’t forget that many of your expenses can be legitimately charged to the business anyhow.  (Once an Accountant…)


9.  Don’t forget the regular expenses

You know…the stationery, the utilities, the rent, the mortgage etc. And don’t forget those annual expenses like car insurance, for example.

Now for the income side of your budget

Now that you have identified your expenses, it seems to follow that budgeting for income should be pretty simple.


After all, you just have to add up all your expenditure amounts and go out there and make the money to cover them, right?


Well, yes…BUT not so fast…


A better way to determine your income projections

Your income projections are not determined by the amount of money you allocated to the expenditure items alone.


Remember, whatever the reason you are in business, you want to make a profit from your efforts. So, the income amount you want to earn must include your expected profit.


There are two ways you can include profit in your budget

1.You can determine how much profit you want to make, either as a specific amount or a percentage of the expenditure. Then you add this equally to the individual items. Or…


2.  You can use it as a motivator. In this approach, you select the items that are likely to add the most value and or growth to you or your business. These are items such as goals and dreams, personal development, new business ventures. Then you allocate the required profit among these items only.

In this way you are motivated to put more effort into achieving those things that grow your business, since your profit are tied to them.


Decide how you will earn the money you put in your budget

How you earn the income you specify in your budget is up to you and how you leverage and combine your unique personal and business strengths. It also depends on the nature of your business and your goals.


For example, in one budget year, I decided that I wanted to train more people in public speaking, invest in another family business and attend 2 online courses for my personal development.


So I develop 2 public speaking courses open to the public, targeting different ends of the market. I also delivered versions of these courses in-house to selected businesses. Then I use my coaching and consulting to earn the income I wanted for investment and personal development.


Your next “make a budget” move…

So there you have it…a budgeting process which I developed and use for myself and my (BOLD) clients. I know it’s a great budgeting model for the self-employed and entrepreneurs.


As a matter of fact, It is a complete antithesis to the popular nickel-and-dime-don’t-spend-more-than-you-earn approach. But it requires you to be aggressive and focused in looking for money-making opportunities – something that many entrepreneurs and self-employed people find hard to do.


It’s also very liberating and spiritual because you’re not limited by the economy, the amount you made last year, what the “gurus” are making or even the average earning rate for your industry.


Above all, I know it’s a budget that you will stick to!


So I urge you to give it a try and let me know how it worked out for you. Go on…you will be so motivated to stick to your budget.


To your budgeting success…


How to Make a Budget Guaranteed to Get The Results You Want!

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Lorna Barrow

Lorna Barrow is a Business Breakthrough Specialist, an unfiltered Transformational Speaker, a Writer, a Coach and a self-confessed Small Business Junkie. She recognises that small businesses are unique and when it comes to helping you and your business make that BIG breakthrough, she's all in for you!

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