The balancing of income and debts is critical to creating a successful business. Business financial planning is a known cornerstone of business and has proven itself to be a central challenge of any business. The importance of successful planning is compounded when dealing with a Micro-business or any small business. When you are a large multinational corporation you can afford to make a 2 or 3 percent return on your business dollar because of the large amount of cash you are typically dealing with. As a small business owner I like to see a 50 percent profit margin for every dollar I invest at a minimum. That isnt being greedy its just what is necessary to stay afloat on the small amount of cash I work with.
The importance of controlling your personal finances is understated in business planning which downplays it’s importance to your venture. The lifestyle you have chosen for yourself was based on your past income. Your new business will most likely not match your old income at first, or ever, and you need to cut your nonessential expenses to the bare minimum. Millionaires are made not by the hundreds or thousands of dollars they make but by the 10’s and 20’s they never spent to begin with. While the difference seems negligible the long-term results have proven to be gospel.
The recipe for success in the small business game is to run a lean tight ship both inside and outside the business. Controlling cost on the business side without considering your expenditures at home can sink your financial ship faster than anything. Owning a business is not something you are doing alone. This is a family effort that requires the sacrifice and determination of everyone. If your spouse or children assume that things are not going to change for you financially now is the time for a sit-down come to Jesus meeting on the subject before it becomes a problem. New businesses are stressful enough without the added drama of financial burdens at home. Prepare for the worst financial situation you can, that way if things turn out great you can relax in the knowledge that you were ready and able to weather most downturns.
Learning is essential in this game. The knowledge is out there for the taking although it may not be what you want to hear. The realities of our new economy mean that your two new cars, credit card debt, and underwater mortgage are simply untenable. You need to feel successful in economic security by living well-below your means and take pleasure from saving your money and building a financial cushion. Having pretty new stuff is awesome until bad things happen and you have to struggle to pay for them. The alternative of paying for your things as needed and reducing your debt will double or triple the financial gains your new business will produce. Benjamin Franklin observed that a business is made by controlling cost and letting the income take care of itself. If you have a quality product or service that is fairly priced you have done what you could to promote the sale. Controlling your expenses is the most manageable portion of your balance sheet and can have the greatest impact on your bottom line. Give it the respect and attention it deserves.
The two blogs I would recommend which do a remarkably better job of explaining this are
Unemployed Heroes 
Posted on 2012/06/12
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