This is a cautionary tale about a business that was once on a solid foundation but due to poor management and decision making when it comes to a budget, now is on the verge of destruction. The story doesn’t have to do with greed, although that is a part of it, mostly it is an example of how poor business budgeting can cost a business its ability to remain credible in a market that caters to the needs of parents and kids. A simple strict budget would have allowed for an easy management during tough times.
The Business Background
The business in question is a summer camp that for many years had a relatively large enrollment, which took in a large amount of money. The camp owner never made a budget for his business and simply spent what he wanted, using company profits for personal expenses whenever he saw fit. There was plenty of money, so it seemed like there was no need to fret over any expenditures. Then an economic recession hit and the enrollment at the camp were reduced to the point that there wasn’t a lot of extra money to maintain the lifestyle the owner originally lived. This led to cutbacks in the services provided and the quality of the experience of the campers fell, causing the cash flow of the business to fall even further. This caused a reduced cash flow, which essentially caused the owner of the business to put his personal finances over that of his business.
The Business Budget that Should Have Been
This is a cautionary tale for all business owners to plan appropriately, using helpful services and products such as those offered at www.upyourcashflow.com, for all times. There should never be a time when there isn’t a business budget that states where finances should be allocated. Everyone, from the cooks in the kitchen to the owner himself, should be paid a set amount for working in the business; any excess money needs to be rolled back into the business for improvements, to add to the value of the product and to increase the facilities. This sort of business budget would allow for the more difficult times that may lie ahead and the ability to deal with those times. A business budget would have allowed this owner to maintain the quality of the product so that enrollment stayed more consistent and the cash flow coming in would be a consistent asset, allowing the business to thrive continually.
What a Bad Budget Led To
Declining enrollment required more financial discipline, but the lack of an ability to change made for poor decisions. So, facilities that should be upgraded and replaced were repaired and reused. Assets like vehicles and boats were allowed to depreciate in performance to the point the kids at the camp noticed. Parents complain because they are spending top dollar for a camp that is providing shoddy experiences for the kids who are there.