The Credit Counselling and Debt Management Agency, or commonly known as Agensi Kaunseling dan Pengurusan Kredit (AKPK), is an agency set up by Bank Negara Malaysia in April 2006 to help individuals take control of their financial situation and gain the peace of mind that comes from the wise use of credit.
Their services include financial education on the responsible use of money and credit management skills, financial advisory, as well as a debt management programme to assist consumers in regaining financial control.
It is aimed to nurture more financially astute and resilient individuals and SMEs through its services.
Below is an informative article by AKPK on how to do business budgeting in a fun way—linking every step to moving a chess piece.
Let’s Do Business Budgeting Like a Chess Game
When you think of a brilliant business idea, you get really excited. It is kind of like getting an adrenaline high. You feel energetic, confident, and even elated. You can go on for days with little sleep.
That is probably not the case when it comes to the nitty-gritty of having your business idea translated into a real enterprise. It is hard work that you must do to make your brilliant business idea a reality.
It is safe to say that not everyone is up to it, and those who do may not have a clear guide on how to do it right, let alone have fun while doing it. So, here is a simple set of ideas for doing business budgeting in a fun way—linking every step to moving a chess piece, i.e. the pawn, the knight, the bishop, the rook (castle), the king, and his queen. Here’s how you do it:
- Move your centre pawns
This first move is pretty much SCOUTING. In action movies (and in real life too), people send pawns to scout out the current situation before deciding on the next move. This is like warming up before actually setting up your business. Find existing businesses that are most likely doing what you plan to do, or close enough. Learn about the industry that your business should be in. Talk to business people, especially those in the industry. What you need to extract from all these searches and conversations is the real costs of setting up your business and running it. List them down and group them up.
- Develop your knights towards the centre
Next is where THE REAL WORK is. Knights in the medieval ages fought battles and cleared the path to victory. They did the hard work. And, real work is really hard work. At this stage, you need to be able to draw up and see the total costs of setting up (or running) your business like incorporation fees, inventories, equipment, marketing, and even payroll, taxes and insurance—and how much all that takes from your revenue. Work with vendors you know on all of these (knights did work with informants to gather intel).
All of these different costs will then be budgeted accordingly. For example, you need to budget on operations (similar to doing a profit and loss statement) where you study your business’s projected revenue and the expenses associated with it such as inventories and marketing costs mentioned earlier. Besides that, you also need capital at some point of your business life cycle. So, you need to factor in assets, liabilities, and stakeholders’ equity in your budget (similar to doing a balance sheet). The payroll mentioned earlier means you need to factor in how much expenses to allocate to staffing including part-timers in your budget. Don’t forget cash flow (this is really important) where you need to estimate in your budget the ins and outs of your money for and from the business so that you always have enough cash for operating. Tedious, huh? That’s why you need knights to do this.
- Develop your bishops
This next step is about WISDOM. You get these from bishops (a chess piece that moves diagonally). No matter how confident your knights are in their work, it pays to listen to your bishops. Knights are gallant but bishops are prudent and wise (of course there had been bishops who were envious of the knights). So, regardless of how certain you are in your ability to generate revenues and maintain costs, it’s wise to factor in things like unexpected costs or rise in costs as well as an unexpected drop in revenues and interruptions to your business (we all learned from what happened with COVID-19). What the bishops are trying to say here is that you should have more than enough money on standby before launching your business or taking it to the next level.
- Keep your king safe
This next move is BUSINESS REVIEW. In chess, at a certain point of the game, you may want to basically make your king and rook (both yet to move) switch places so that your king is relatively safer from attacks (being away from the centre). In business, you do that by making a review of your business. The more frequent you do it, the better. Business can be so unpredictable that your projection of costs and revenues just two weeks ago can prove to be a gross underestimation. So, it’s a king’s job to be able to scan the business environment as frequently as necessary to make adjustments so that the business remains stable and unthreatened.
- Develop your queen
This move is basically SHOPPING—what queens are good at doing. No puns intended. Queens are good at giving the ‘kingdom’ a breath of fresh air. So, decide if some things need to change, including suppliers. Spend more here and save more there. You can even do this when starting up the business and can definitely do it when you are doing your budgeting or reviewing the business (king and queen must have that mutual understanding, right?).
- Connect your rooks
This move is basically COST SAVINGS. Connecting the rooks in chess gives the rooks good flexibility and maximum control (no need to go into specifics). In business, flexibility and control come from cost-cutting measures. Super high costs can kill a business, but at times, businesses have no choice but to pay that crucial bill, step up on marketing or invest in a once-in-a-lifetime opportunity. But, if you think hard enough, you could actually see that some other costs can be cut considerably and some purchases can wait until the next financial cycle. You can also look for suppliers with helpful payment terms to manage costs.
There you go. Simple guides to help you start budgeting for your business or add to your current business budgeting practices. But, if it all seems too complex still, don’t worry; AKPK as your financial partner is here to help.
AKPK provides an avenue for current and potential borrowers/consumers―both households and Small & Medium Enterprises (SMEs) ―to enhance financial discipline via the Financial Education, Financial Advisory and Debt Management Programme.
Financial Advisory and Debt Management for households and SMEs are provided for FREE to individuals by AKPK, without the use of any third-party agent. AKPK services are available through an alternative online communication channel via Google form. Customers can visit services.akpk.org.my and submit the completed form to be contacted by AKPK’s financial advisors. AKPK also provides financial guidance through financial education modules at power.akpk.org.my. AKPK also uses its official social media @AKPKofficial on Facebook, Instagram and Twitter to convey information on financial management, including guides and links to the services provided. The public can use the medium provided, including contacting AKPK’s financial advisors directly online, if they are interested in learning more about AKPK’s services.
Sources of reference: Investopedia, Quora
Disclaimer: This article IS NOT written by a chess master.
