What a title! Did it grab your attention? It did mine when I read this and thought how this would apply to financial health or the budgeting for profit theory.
Here goes the story: While growing up in the US, I always thought it interesting that in some countries motorist drive on the left side of the road instead of the right side. Then, when I was in England, I heard a London tour guide explain one possible reason for this law: “In the 1800’s, pedestrians as well as horse-and-carriages used the same roads. When a carriage was on the right side of the road, a driver’s horse whip would sometimes hit a passerby. To remove the hazard, a law was passed requiring all carriages to travel on the left side of the road so the pedestrians could be kept safe.”
(Borrowed from “Our Daily Bread” by Dennis Fisher)
The Rules of the Budgeting Road
Just as the rules of the road are for our benefit and protection, so are sound financial principles in our budgeting for profit theory. Stay with me and I will share some of the rules of the road so the financial whip will not hurt you.
- Always view desired profit in $$ and count them as a cost of doing business
- Always view desired working capital buildup as a cost of doing business
- Always view reserve buildup secondary after you have sufficient working capital
- Always understand how money leaks out from your balance sheet
- Always maximize your sales margins before cutting cost of doing business items
- Always know your “true cost of doing business” (TAT Language)
- Always know your “true net profit” (TAT Language)
Are you driving your financials on the left side or right side of the road? The left side of the road is dealing with leftovers as your profit. The right side of the road is planning for what is leftover. I don’t know about you. but I want to plan for leftovers, not deal with what is left over.
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It’s time to make your money count! It’s time to plan what’s left over! It’s time to take control of your driving!