CEO Jason Rowley Guides Business Owners Through Budgeting Basics
The lengthy business and legal career of Jason Rowley taught him many facets of appropriate business budgeting that can help lead to the success of an organization. When structuring a budget, he draws on three key components of success – visionary leadership, discipline and compliance.
Most budgeting textbooks explain the fiscal precepts involved and how to structure a line-item budget. Rowley’s advice focuses on how to ensure the budget covers the organization’s needs and addresses what matters most. Each facet of his budget advice stems from a formative area of his education and professional life.
Budgets Should Reflect Visionary Leadership
According to Rowley, for an organization to succeed, its employees must believe in the vision offered by its leadership. The founder’s vision provides the foundation for the company, but the budget must reflect the vision. For example, if the company president says that the company prioritizes continuing education of its employees, yet budgets no money to support that, employees won’t “buy-into” the president’s vision.
Write down the company vision statement. Use its key terms to determine budget highlights. Create a list of budget needs from the vision statement, then add this to the standard operating budget.
Budgets Need to Exemplify Discipline
Rowley, a business professional, understands discipline. Trim the fiscal fat when creating a budget for a business or project. Avoid padding the budget, but use realistic numbers.
Plan the budget based on the mid-range materials cost when creating cost projections. For example, if the cheapest paper clips cost $1 a box and the most expensive ones cost $3 per box, budget for the mid-range paper clips, which cost $2 per box. If everyone needs paperclips and the $1 boxes sell out, your budget will still cover the more expensive ones.
Build a Budget with Compliance in Mind
First-time business owners often forget essentials in their budgets, like taxes, insurance, and building maintenance tasks like boiler repair, ac maintenance, etc. They take an operations-centric mindset that builds a budget around the necessary computer, pens, cell phones, etc. As an attorney with a Juris Doctorate from The University of Arizona, Rowley encourages businesses to create a budget that plans for compliance by researching compliance costs your state and city require. Add federal requirements to those.
What might this include? At the federal level, a business owes income taxes each year. Set aside those funds at the outset of the fiscal year or a startup’s launch. These funds include payroll taxes if you employ anyone.
Solopreneurs don’t need to add payroll taxes if they file taxes as independent contractors. If a business hires employees, it will also need to pay their Social Security taxes, considered a part of the federal payroll taxes. Employee medical insurance and workers’ compensation insurance also form a must-pay item for businesses that hire employees. Budgeting for these compliance issues ensures the organization has the funds ready to pay for legal requirements.
Budgeting for Success
Following the budgeting advice of Jason Rowley, create an organizational budget that prioritizes company and employee needs. That fiscal foundation goes a long way toward motivating the people within an organization to work toward its vision.