The Upside Down Budget

Episode 10


About The Show

One of the most important things you can do in your business is to implement a regular budgeting process.

Putting together a detailed budget for your business is like charting a financial roadmap for your business, it shows you the road ahead for your business finances, highlighting any peaks and troughs and more importantly it helps you avoid potential financial disasters before they happen also.

Many people when they implement a budgeting process in their business, approach it the wrong way.

In this episode, I share with a budgeting process that turns things on its head.

It’s a budgeting system that will help you achieve the financial results you are seeking in your business, and deliver the bottom line profits you are seeking to meet your lifestyle goals too.



What You'll Learn!

  • The surprising question that not many business owners know how to answer
  • What is the Upside Down Business Budget and why it is so important to your business
  • Why every business owner needs to know their sales and turnover targets
  • Two business case studies that demonstrate the importance of doing the budget and  examples of pitfalls and risks they faced without knowing their sales revenue targets
  • How to work out to work out exactly what you need for the lifestyle you want.
  • Working out your Return on Investment (ROI)
  • Operating costs
  • Tax considerations
  • What to do once you have you have completed the budget.

Links Mentioned

Download your copy of the FREE upside down budget template to kick start the profit growth in your business.

Join other business owners in our Free Facebook Community all sharing their trials, ideas and wins in business. It's a fantastic community of driven and supportive entrepreneurs.



Email Marketing is one of the fastest ways to grow your business.

You Need An Email Service Provider That Ticks All The Boxes.

  • Reliable Delivery Of Your Mail To Your Audience
  • Cost Effective - (Particularly When Starting Out)
  • Out Of The Box Easy To Set Up
  • Easy To Use And Operate
  • Scales With You As Your Business Grows
  • Has The Automation and Smarts Of The Bigger Systems

I have used and trialled many email and automation systems in my 20+ years of business, from free inexpensive systems to the more elaborate, expensive and high end. 

Convertkit, ticks all the boxes when it comes to getting results with your email marketing.

convertkit-long 1626x324

Full Episode Transcript

G’day, g’day. Welcome to the “Business Made Easy” podcast, where we make
business easy. I’m your host, Jason Skinner and whatever you’re up to, I hope
you’re doing well and business is pointing in the right direction for you and
you’re kicking some goals.
I hope you’re kicking some goals and having some wins in your business
because that’s what it’s all about. And not stressing out and, yeah. Business is
designed to provide us with life and give us life, not take life from us and
that’s something that we all need to remember from time to time.
So I hope you’re well and thanks so much for joining me. I do appreciate your
time and for those of you that have been providing feedback over the coming,
past weeks. Thank you for that, it’s really helpful and I’ve been noting it down
and taking it on board. It really is important to me that I provide relevant
content to business owners and people wanting to start businesses or grow
their business. So, it really, that feedback is invaluable, so thank you so much
for doing that.
If you’re just joining me, this is your first episode on the show, thank you for
joining me. I hope you get some value out of it. As I said, my goal and purpose
is to provide valuable content that a business owner can take away and
implement, in their business in a practical fashion. And I’m going to have, I’ve
got some great interviews coming up over the coming weeks.
But today’s’ episode is a practical episode, it’s a bit of a teaching, learning
episode. And I’m going to introduce you to a system, that I call the ‘u
down business budget’. And I’ll get into a bit about what that is in a minute.
But I just wanted to share with you, just how that came about.
Because over the years, I’ve met with many, many businesses, of all different
shapes and sizes. And I’ve helped so many of them. But one of the very first
questions I ask when a new business owner comes to me, or I see a new
business owner. I say “what sales figure, what turnover figure do we need to
make, in your business to achieve your bottom line goals?” And it astounds
me, to no end, how nobody knows the answer or very few people know the
answer to that question. Usually when we hear, if I give you a bit of
Usually when we start out in business or people start out in business, they
start out with a passionate idea. So they have an idea that they want to make
bread, or they want to sell widgets. I always use widgets as a word but,
widgets pretty well cover everything. A lot of widgets made out there.
Or they want to drive a tow truck or they want to, whatever it is that they
want to do, in that business. But they very rarely know what income figure
they need to generate in that business to achieve their goals. And that largely
starts with the problem, that they don’t know, at the end of the day what
they’re goals are. Clearly.
So when I say, “don’t know what their goals are, clearly”, what I mean is they
don’t have a clearly identifiable bottom line goal that they are trying to
achieve. They know how to do what they want to do and they’re passionate
about doing what they want to do but they don’t. And to a large extent, they
want, most people want the same things. They want a nice house, they want
to be able to go on holidays; they want this.
But they don’t know, they haven’t quantified what that actually looks like, in
real terms. Physically, what that looks like. And if you don’t do that as a
starting point, if you don’t have that as your foundation, then what’s going to
happen is you’re not, there’s no way in the world you’re going to know what
sales figure you should be doing in your business, to achieve that bottom
And that’s why I developed over this, and I’m going to share this with you. It’s
a freebie I’m putting in the show notes for you. And you’ll be able to get that
by going to www.businessmadeeasypodcast.comepisode10 and if you write
out the word episode in full, so it’s business made easy podcast dot com
forward slash episode 10.
And if you go there, you’ll be able to download this freebie that I’m going to
give you today. But that, this is why I’ve designed the, I guess it’s called the
‘upside down budget’. It flips everything on its head so that at the end of the
day, what we end up at the bottom is the sales figure that we need to strive
for or achieve, in our business.
And I’m going to go through a little, a couple of stories for you that explain
exactly why this system is so important. And exactly why every business
owner really should have something like this, or at least know exactly how to,
what sales figure or turnover figure that they’re looking for in their business.
Now, I’ve changed the names of these stories, so they are real stories, they
are true however I’ve changed the name to, out of confidentiality and I want
to protect those people that have experienced this, but certainly, the stories
and situations are true.
The first one I’m going to talk about is Jan and Terry and Jan and Terry
started a retail fruit business. They had the idea, Terry had been in fruit for a
lot of years and knew the fruit industry. So he was very passionate, he knew
how it worked and knew how the markets etcetera worked and where to buy
and source the fruit and whatnot.
And over talking, Jan and Terry decided that they would be able to start a
fruit business. Because after all, Terry knows how to buy the fruit etcetera
and Jan was, is a very personable person. She would be great at customer
service and could work the register and that sort of thing.
So they had the idea to start this retail fruit business, so they do what most
people do first, they start looking at logos and colours and dreaming how the
shop’s going to look and feel and all those things. You know, what it’s going to
be like when a customer comes in and you know, how good the quality of
their fruit is going to be. All those things that a passionate business owner,
starting out really would look for.
And once they had all that down pat, they started looking around for
locations where it would be a great place to have this, this shop and how it
was all going to look as well. And identifying a place, to cut the story short,
they identified a place and negotiated a lease and the lease they negotiated
was a five-year lease. So they were signing up, with this fruit shop for five
They felt confident that it was going to be a success because after all,
everyone eats fruit and Terry knows fruit, so and Jan’s good at selling fruit.
So it was all going to work and the marketplace was, going to be fine. They
engaged shop fitters, they had refrigeration units and all sorts of stuff that
they needed ordered. Everything was done, the lease was in place. They were
fully committed.
And they had a fair bit of equity in their house, at the time, so they’d paid a lot
of money off their home and their home loan was down and the value of their
property was up. So they could access some of that and the bank was happy
to do that because the bank has the security of their house.
And they were going to employ staff to help them out because it was going to
be a decent size business. But their accountant at the time had really not
done any planning with them and certainly hadn’t steered them in the right
direction in terms of pre-planning. But that aside, they’d fully committed and
when they finally, well actually they came to me for some help on another
But when I asked them, “what level of sales does this business need to make
to achieve your goals?” The look on their face was quite, quite pale. They
didn’t know. And I, which is okay, because a lot of people don’t sit down and
identify this because it all seems too hard sometimes. And sometimes it’s just
a lack of interest, in terms of wanting to do it.
But they just didn’t know and then when I asked them what their goals were,
they were really, really cloudy as well. They knew they wanted to have a fruit
business, they knew it was going to be seven days a week and they knew they
could employ some staff to do it.
But if you look at this situation, Jan and Terry have committed so much to
running this business and setting this business up. They’ve put their home at
risk, at commercial risk. They’ve signed up for a five-year lease. Yet they don’t
know how much money this business has to actually make, to support their
lifestyle or what that ultimate lifestyle is even going to look like.
So, that’s a real case in point of what I’m talking about today and why I
developed this system called the ‘upside down budget’ because I put together
a way that if you follow the step by step template, you can really just, you can
really just, really come up with this figure. You know, using the 80/20
principle quite accurately, it certainly gives you a lot more goal to focus on
than just having nothing.
So, Jan and Terry, we went through this process that we’re going to talk
about today. The other one I want to talk about, the other situation and case
study I want to talk about is Richard. And again, the name has been changed
to protect the innocent. But Richard, he was in a totally different situation.
He had to take a redundancy or decided to take a redundancy from his
banking position, his long-term banking position. So he’d been working, he’d
worked his way up the ladder in the banking system and they were cutting
staff and he decided to take the redundancy offered to him.
So with that money, he was able to pay out his house and but Richard was
sort of an older guy and he didn’t, he was a bit concerned about getting
re-employed, I guess, at his age. So and with his skill set, so he sort of, after
having a bit of a holiday and a bit of a break. Paying the house off, he had a
little bit of money left over and decided to venture into the online space.
And over in the online space, he’d done his research in terms of what sort of
products he could sell and where he could source the products etcetera and
how it could all work. And so he stumbled across an LED lighting
manufacturer in China. And he was going to, his business model was basically
to have these LED lights manufactured in China and then he was going to
ship them directly to Amazon to Amazon FBA. Which is Fulfillment By
Amazon, so FBA stands for Fulfillment By Amazon.
And basically Amazon was going to be his warehouse and his distributor and
they were going to look after all his customer returns and everything like
that. So he’d really done a lot of work around this space and he worked out
that there was a market for LEDs. People putting LEDs in their homes, they
were USA compliant, US compliant, so they would work. It was a great
business model for him because effectively it’s something he could do himself
and he could basically still be engaged and employed and whatnot.
So he was very excited about it but until he came and saw me, but when I sat
down with Richard, I said to him, “Richard, this is fantastic, you’ve clearly
done all your research etcetera but again the same question, you’re going to
invest, you’ve got your house paid off, which is great. But rates still need to be
paid and you’ve still got bills coming in and you’ve still got lifestyle to
maintain. You’ve had a great lifestyle up till now. How do you want to
maintain, how are you going, is this business going to be enough to support
that lifestyle? What level of sales, the magical question, what level of sales
have we got to make to support your lifestyle?”
Now again, blank face looked at me and goes “I didn’t think of that, I just
thought that these would sell and it’ll all be okay.”
Now call me a conservative accountant or business advisor, whatever you
want to do. And my wife tells me all the time that I take the fun out of things,
but here is a case in point. If Richard firstly identified exactly the level of
income that he needs after tax, to support his lifestyle, no matter where
you’re living, whatever you’re doing. If you clearly identify your goals and
what you need to fund those goals, so we reverse engineer it.
Now, so let’s, let me take you through the steps and you’ll need to work
through the worksheet. I have provided a free worksheet over on the podcast
website, so you can get it there, remember at
www.businessmadeeasypodcast.com/episode10 so I’m just repeating that
because if I lose you in explaining this. You may want to go over and
download that worksheet and you can work through this again, you may
want to replay it.
Particularly if you’re at the gym or if you’re out exercising or something at
the moment, the last thing you’re going to want to do is to go through
numbers. So, I’ll go through it quite clearly, exactly what I told Jan and Terry
and exactly what I told Richard as well and how we helped them to get clear
about what it is that they needed to do, to really get their business pointing in
the right direction.
So, the first thing we did was we sat down and we had a whiteboard session,
but this can be done on any piece of paper. But sat down and worked out
exactly what their goals look like. Now that means, what do, do we want an
overseas holiday once a year? Do we want to buy an investment property?
Do we want a new car in two or three years’ time?
And we put numbers next to them, what do they look like in terms of
timeframe and dollar value. And we basically got very, very clear from the
outset about that. Because of that, at the end of the day, you can sit on the, I
have this saying, you can sit on the beach and go broke. You can sit on the
beach, do absolutely nothing and still go broke or you can go and commit to
all of this stuff in business, put all this time and money and stress into
business and still go broke.
So, I don’t want to do that and I don’t want that for you. So, what we need to
do is make sure that the business or the risk that we’re going to go in to and
commit to is going to make sure that it supports our lifestyle. So, we worked
out exactly what it is that their lifestyle needed in terms of dollar value and
broke it down to an annual amount.
So that was very, very, they had to be very clear. That has to be the first thing
because you don’t know what you’re needing. The next thing we did then is
worked out how much money we have invested in the business. Particularly
in Jan and Terry’s case but also Richard because Jan and Terry are borrowing
money from the bank, off their mortgage, so that, I think the interest rate at
the time was about five and a half per cent on the money that they’d
borrowed to put in. So, really whatever that money is, the business needs to
be able to repay that back as well. So we worked out exactly what that
amount is.
Richard had some cash and he was investing that in his, so he basically
needed a return on that money. Because he could actually get that same
amount of money and go and put it in a term deposit or a security with the
bank and get a return on it. So we worked out exactly what looked like as
well. And we added the two together, so what do we need for our goals?
What do we need to repay back the money we’re putting back into the
Okay so that’s what we call our capital we’re putting in, and that’s the total
after-tax profit minimum that we need in the business. So that’s what we
worked on from there. We then worked out, well what before tax, what does
that amount of money look like before tax? And again this is on the
worksheet but what amount of money?
So let’s say, for instance, I’ll just use a round figure. Let’s say we decided that,
for example, we need $70,000 a year after tax to pay this money. But the tax
rate is, I’ll just pick a figure, we’ll say 30 percent. So if we’ve got, if we need
$70,000 but we’ve got to pay $30,000 tax we really need $100,000 before
So, I hope that makes sense we’re working out what the before tax figure is
now. And it’ll be different depending on your country or region that you’re in.
But this worksheet will work anywhere, so again it’s clear in the worksheet.
Once we’ve got our before tax figure, we then want to work backwards and
say “okay, what costs are we going to have on the business?” So once we’ve
identified all the relevant costs, what’s it cost to buy our goods, what’s it cost
to keep, pay the lease, what’s it cost, all our costs? We have to do a fairly
thorough budget here and past information will help you with this as well.
So if you’ve got past financials, if you’re an existing business you can go back
and look at those and that’ll give you a guide as well with those. But that’s,
again clear in the worksheet. So once you’ve worked out those costs, you add
that to our before-tax money, our $100,000.
So, let’s just say, for argument’s sake, that our cost to run our business is
$200,000. So, we need $100,000 before tax, we need $200,000 worth of
sales to pay for our costs. So that’s $300,000, 100 plus the 200, gives us 300.
So we need to make sales of $300,000 in order to have a $70,000 after-tax
profit, to service our goals and meet our needs.
So, do you see how that works? We’ve reversed it, we started with what we
need to drop out of the bottom of our business and we’ve worked backwards
as to how what our gross turnover is. Now I hope I’ve explained that. Okay,
it’s very difficult to explain numbers and I might actually do a bit of a
YouTube tutorial video on this too to work through the worksheet with you.
If that’s of interest, just drop me a line and I’ll certainly to work to help you
with doing that. But it’s very, very important that we start with what our
goals are, work back from there, what money we need to service those goals,
what money we need to pay our tax, what money we need to pay our
overheads and the resulting figure, all added up will be the sales figure.
Minimum sales figure that we need to make in our business to at least service
our needs.
Now if we can make more than that, that’s great. But the main thing is, if
you’re making less than that, then we’ve got a problem because obviously,
we’re not meeting all out commitments that we need to make.
The other thing that I want to take away from that is when we know that
figure, we know, we then have one target to work to. We can actually now
work towards attacking that figure and doing all the things necessary. We
can adjust our marketing, we can monitor it and test it and that’s the benefit
of using this method, the reverse budget method. Is that when you come up
with a sales figure that you need to make in your business, whether it’s
online, off or physical business, you know where you have to head. And you
know what you’ve gotta do, so you can out your marketing strategies
etcetera into place.
We can monitor the progress and there are that many unknowns in business,
I’m sure you’ll agree. There are that many unknowns in business that this
gives you a framework and an easy method to engineer the sales figure that
you need to make to have profit and success in your business.
And that’s the benefit of implementing this system because it gives you clear,
identifiable figures to work to and you can monitor and track it. Now from
there, we can use our accounting system and we can monitor it from month
to month. We can break it down, we can look at it and we can really see what
resources we need to achieve that figure.
For instance, in my example there where I said, “okay, we need $300,000
worth of sales to make the profit that we’re looking for.” Well, we mightn’t
have enough customers to reach that $300,000. So what we need to do in
that instance, is actually say “well, what’s our gap? What’s our shortfall? We
might only have $250,000 worth of sales, what strategies are we going to put
in place to make sure we do get to that $300,000?”
But I hope you can see that because $300,000 is the number we need, it
doesn’t mean that we just rest and go “we only came in at $250,000,” we
really need to work towards and work out what we’re going to do to do that.
So that’s where your marketing strategies etcetera comes in and identifying
the resources that you need to get you to that figure.
So the thing I’m talking about today, mustn’t be confused with marketing. It
really is just a framework to help you, step by step go through and identify
what the sales, what the magic sales figure is in your business and that’s, I
guess, the point of the exercise there.
But, I think if you get the template, if you go and download the template from
the website. Again it’s www.businessmadeeasypodcast.comepisode10 and
you can download it, work through it. It’s just a fillable PDF, if you need a
hand with it, by all means drop me a line and I’m more than happy to answer
any questions that you have on it. Because I do know that when you do get in
to talking about numbers and those sorts of things, you can lose people. So, I
get that.
Alrighty, so I hope that helps. It’s my ‘upside down budget’. I want you to
certainly go and grab a copy of it if you think it will be of help to you. And
again, if you’ve got any questions, you can always drop me a line. So, thank
That’s all I wanted to talk about today, I hope you’re well and I hope you got
some value out of that. Again, if you’ve got any questions in business, please
go over to the www.businessmadeeasypodcast.com website.
You can record your question there, I’d love to hear from you. People who
have their question answered on the show, get a free too easy t-shirt that
we’ll send out to you. And my team will make sure you get that in the mail,
they’re a great t-shirt. I love wearing mine, I’m wearing it all the time. And
yeah, so go to www.businessmadeeasypodcast.com and you can record your
question there.
I’ll get that in a voicemail and I’ll answer that on the show for you and make
sure that we get the answers that you need from there.
Well, that’s all from me, again good luck in business this week. I hope you kick
some goals and everything points in the right direction for you. And I might
hand over to Mia to take us out, till next week.
To your success, bye.

Read More



Cashflow is critical to success in business. You can have the best business idea ever, but if you can’t generate cash and pay the bills you won’t survive.

Grab my 12 simple ways to boost your cashflow cheatsheet!

Get Notified

When We Realese


About Your Host

Almost There

Your Upside Down Budget Cheatsheet

Will Be In Your Inbox


We respect your privacy. We do not SPAM & promise to only send you helpful content to help you grow your business.

Progress Bar
Almost There 90%



Business Success With Certainty

Will Be In Your Inbox


We respect your privacy. We do not SPAM & promise to only send you helpful content to help you grow your business.


Join The Free

Business Made Easy Newsletter

We respect your privacy. We promise to only send you helpful content to help you grow your business.

Got A Question You Need



Ask me your business question here by hitting the “Start Recording Button” 

We respect your privacy. We do not SPAM & promise to only send you helpful content to help you grow your business.

Progress Bar
Almost There 90%



12 Simple Tips

Will Be In Your Inbox


We respect your privacy. We do not SPAM & promise to only send you helpful content to help you grow your business.

Almost There

Your Most Profitable Customer Cheatsheet

Will Be In Your Inbox


We respect your privacy. We do not SPAM & promise to only send you helpful content to help you grow your business.