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Did you know that cash flow deficiencies are the main reason most companies go out of business?

If you are seriously interested in making your business a success, then managing your money effectively is critical to the security of your organisation.Irrespective of whether you run a small home based business, or are responsible for a nationwide business, such as a client of mine Softcat who provide Microsoft licensing solutions, the same financial rules apply and keeping a very careful reign on business expenses to maintain a healthy positive cash flow is essential to the success of any business.

When starting a new enterprise it might seem impossible to put together a budget without any financial history on which to base income and expenses. However a business plan, before you even start, with some idea of costs and revenues is essential to determining the viability of a business, even if you are just planning to setup a work at home business. It might seem like guesswork at the beginning, but a tentative budget can be established with some thought and projections of future business. From some past experience in renovating properties, I always say ‘think of a figure and double it’ and then you will be near the mark. I think this is true for other businesses, because it’s human nature to underestimate what we need to spend and over estimate what we will earn.

In the Nottingham web design industry, as with any business, the same two categories of finance exist, income from sales and business expenses.

Under the expense category there can be several sub-categories often falling into two main areas of controllable expenses and uncontrollable. While many business owners believe they can control every expense involved in their business, this is not always the case. Some things such as services costs, the amount of rent and other supposed fixed costs can, and do change, with the owner having no control. For example the recent increase in oil prices are an example of this and have been responsible for a number of small airline and transportation companies going out of business as their fuel costs skyrocketed.

Other expenses such as payroll, insurance and advertising can be subject to a budget, but they are considered controllable expenses. If the business begins to fall off, you can control some of these expenses by laying-off employees and cutting back on advertising. However, living by a budget may help maintain profitability but could also turn against you in the long run.

Depending on the viability of your business it may be a better investment to bite the financial bullet on employee wages and still provide good customer service to the remaining customers until business picks up again. If no one takes care of the customers, it will not be long until there are no more customers to care for.

There are two ways to budget your business money and these are through set dollar amounts or as a percentage of revenue. Many businesses will budget their controllable expenses by the dollar and non-controllable by percentage of income. Obviously a good part of the owner’s time is going to be based on bringing money into the business and how much they have to spend on controllable expenses will be in direct relation to income. With any increase in business the owner will probably need the extra help to take care of the business so a percentage of income will go to more wages, thus freeing the owner to focus on generating additional revenue.

There are many other expenses that fall into the payroll account such as worker’s compensation charges, Social Security tax paid by the employer and paid vacation time or other perks determined by the employer. These need to be calculated into costs when recruiting people into the business.

While you may think a budget is impossible to establish for a new business, it is essential to establish a healthy and sound financial foundation on which success can be built for the coming years.

About the Author: Roger Davies, The senior web developer Advanta Productions manages an e-commerce web design company at the centre of the Nottingham, Derby and Loughborough countryside and has overseen the team who have created hundreds of web site development projects. If you’re not sure how to get your website development started or want to advertise and sell on-line contact Advanta on 0845 22 55 805 or visit the website.

Iphone applications can make you big money! Did you know that a 9 Year old Whiz Kid can program an iphone application and get thousands of downloads in just a few weeks? In fact, this young man had 4000 downloads in a very short time, and it’s not his only application. Just think - what if he earned $1.50 for each download? Yes, $6,000 and counting. Another iphone application whiz - Ethan Nicholas - made over $35,000 in a single day from his iphone application! His success is definitely worth emulating.

But before you say “I couldn’t do that, I don’t know programming” - please hold on! Don’t count yourself out of the iphone marketing game just yet. Here’s a little known secret - you don’t have to know a thing about programing to make money with iphone applications! Like every other work at home business opportunity, you can outsource much of this business model, including the actual programming of an iphone application. If you have the idea and spot the need, there are trustworthy contractors who can do the actualy programming for you.

Entrepreneurs in the iphone applicaton business get paid not because they know how to program, per se, but because they know how to spot a need (or want) and fill it for their customers. The same holds true when it comes to making money with iphone applications. Spotting the need and coming up with the initial idea are as important as the programming. Once programmed and accepted by iTunes, a little publicity can send downloads through the roof. You could create a windfall of cash or an ongoing stream of revenue if you learn the ropes of creating and marketing iphone applications. Undoubtedly there are pitfalls and deadends in this business as with any other. But for the foreseeable future, there is a great opportunity to prosper while creating iphone applications for those who see the potential and invest themselves in serving iphone customers.