If you’re running your own small business, you’ve probably thought of just about everything – products, marketing, along with about a thousand other things. However, one thing a lot of small business owners can overlook is their expenses. If you want to be successful in business, you can’t just keep track of how much money you have in the bank, it’s important to also keep track of what you’re doing with your money.
Why is it so important to track your expenses? If you know what your expenses and profits are, you can see ahead of time if you’re going to be in trouble financially. This way, you can take action to solve the problem before it’s too late.
When operating a profitable business, the first thing to do is set up a realistic budget. This includes your start-up money, expenses, and a plan for spending on future products and developing growth in the company. Just remember that this budget can’t be static. You need to be able to change it based on changes in profit, business expansion, or other foreseeable and unforeseeable circumstances.
It’s simple to get started tracking your expenses. The fist step is simple – keep your receipts. While it’s easy to keep a receipt, it’s also easy to lose them. It’s a good idea to have somewhere you can put them to keep track of them, like a receipt drawer or filing folder. If you don’t make your business purchases through the computer, you may want something to take with you as well so you can keep the receipts safe till you get back to your home or office.
Most word processing software programs come with at least a simple spreadsheet program. You can set up a simple sheet for your spending and what money is coming in. Once you get that down, you can start getting more complicated by tracking specific types of expenses like contracted workers or office supplies, and specific profits. Most programs also have simple math functions to help you add, subtract, and average columns.
Just tracking your expenses isn’t enough, though. After you figure out what you’re spending, review it to see if there are any changes you need to make. Maybe you should look for a cheaper provider for office supplies, or more energy-efficient appliances. Tracking expenses means you need to work with them; that way you can make good use of all your hard work.
If your expenses are more complicated, you may consider hiring an accountant. Just because you’re starting out small, doesn’t mean you can’t afford an accountant. You don’t necessarily need someone full time, just someone to get you started along your way. They can not only help you save on expenses, they can also help you find extra deductions and other profitable breaks on your taxes.
Getting started budgeting and tracking expenses is a very important first step, but if you don’t keep it up it’s going to do little to no good. You have to remember to not only keep track of your budget regularly, but also to spend at least a small amount of time each day checking your receipts and recording expenses.
To learn more about how to keep your books in order to improve your odds of business success, get in touch with Patrysha to find out about our training and consulting options.