Are you budgeting for your business?

I wanted to send out a little training tip today. I see a big mistake being made by too many people in the MLM profession and that is spending the money they make from their business on their bills and lifestyle – rather than re-investing that money back into growing their business.

Yes, you’re going to reach a level of success in Lightyear at some point where you’ll have LOT’S of excess money to spend on those things. But when you are just starting out and you haven’t reached that level of success yet it’s vital that you’re focusing on growing your business and that is going to require time and a financial investment.

Take personal and professional development. I recommend people read at least 30 minutes of quality personal/professional growth material each day. That means investing in books/CD’s. Not a huge expense but something that should be budgeted into your business expenses (figure $15 to $20 per month).

I think attending national events hosted by Lightyear are VITAL to your success in your business. For most people that means that you have to travel to attend them. We hold roughly 4 major events that every Lightyear representative should attend, no questions asked. That means $300 for airfare, maybe $200+/- for the hotel and possibly $50 for the event – 4 times per year. Yes, that’s $2,200 per year! But let me ask you – if I were to tell you that by doing these things it could potenally lead to creating millions of dollars and complete lifestyle freedom, wouldn’t you do it? That’s roughly $183 to $200 per month that you should be budgeting for attending events. If you don’t think attending these events are necessary then it’s going to be very difficult for you to create true, long-term success in this profession.

Then comes your business tools. Your web system is $50/month. That’s really the only vital business tool you can’t live without. There are things like the magazines/DVD’s which are helpful. Lightmail can be a useful tool if you’re doing some marketing. But I truly believe you can be successful with just the web system alone.

Add all that stuff up and you’re looking at budgeting only about $250 to $300 per month to grow yourself and your business. If you’re a Senior Manager that means you only have to enroll 3 SM’s per month to cover your costs. If you’re an RM only 2 SM’s. If you’re a VP it’s 1.5. If you’re an SVP it’s only 1.

I’m not even talking about all the other sources of income (web system residuals, wireless residuals, downline bonus overrides, etc).

The problem is that people take the first bonuses they make and they go out and spend it on a night out. Or they pay their credit card bill with it. Now, I know what some are thinking, “But Ben, I thought this business was supposed to help me with those bills.” And you’re right, but not yet! You first need to lay a solid foundation in your business. You need to grow yourself and your business to a point of leverage – where you’re creating income without you having to be touching your business.

Imagine starting a franchise for $100,000. Then imagine you take the first $1,000 you make and instead of putting back towards your business expenses (rent, supplies, employees, overhead, etc) you just went out and spent it on new clothes. You consider that to be ridiculous don’t you? Well, our business shouldn’t be any different.

Don’t live off the income you make from the business until you’ve reached a point where your Lightyear income is growing exponentially. Put all of your money back into your business until you’ve created an income that covers all of your business expenses. Then once you reach that level start putting the excess money into a “retire your job” savings account. That means, any excess income you make above your business expenses should go into a savings account that you’re creating to help you fire you job! I recommend people have at least 6 months of income needed to support your lifestyle set aside before walking away from their job. I also recommend having ZERO consumer debt (no car or CC payments) before leaving your job.

The biggest mistake people make is thinking that just because they’re matched their job income that now it’s time to leave their job. No! You have to be smart with your money. You can’t build an MLM business needing to make money. You have to build to empower others and it’s very difficult to think like that when you’re building out of desperation.

Yes, I know there are going to be serious situations where people need to help pay their bills with the money they’re making. I understand that Lightyear is an amazing vehicle that help people do just that. And I understand exceptions will need to be made and I’m fine with that. But please understand this concept and try your best to put yourself in a situation where you can create the habits I mentioned above.

ONE LAST TIP: Create a business checking account (most credit unions will give you FREE checking). When you keep your Lightyear income separate from your personal income it’s a lot easier to manage your money and make sure you are spending your Lightyear income on business expenses first. It’s also very smart to keep them separate for tax purposes.