When many people start their business they often put aside thoughts of record keeping thinking they don’t have enough transactions to worry about for the time being. I am here to tell you that if you start keeping a track of your budget and keeping an eye on your expenditure from day 1 you will make life a lot easier for yourself and provide yourself with more flexibility.
You may have read my last case study about my client who got so far behind with her accounts that she couldn’t work out how to catch up. If you haven’t you can read it here
It is vital that you not only have a good record keeping system but also that you have a solid budget and track your income and expenses as early in your business as possible.
My client Jean* has been mindful of keeping accurate records in her business but she hadn’t understood the importance of analysing and tracking those figures. She thought she was doing enough just by having all her transactions in a neat system that she could access as needed.
Unfortunately for Jean there were a few items that slipped under the radar because she assumed everything was ok without looking at it too closely.
Jean first noticed an issue when she just couldn’t get ahead on her increasing debts. Her income was substantial and at a point where she had aimed to be when she began her business but her credit card and personal loan debt seemed impossible to reduce.
Even though Jean assured me everything was fine with her spending I encouraged her to take some time to track her expenses. Not only so we could create a budget to help her reach her financial goals but so we could find any hidden ways to save her some money.
And we did straight away! Jean, like many of us loves her skinny lattes but those 2 coffees per day were costing her in excess of $2000 per year. Of course, no sane accountant would mess with her clients by suggesting they give up coffee but I had another idea. For just $700 Jean was able to buy a decent coffee machine and save herself a heap of money on purchasing take aways. It’s a saving we never would have discovered if we had not looked at her spending and budgeting.
This is just one small change, by tracking your own expenses and creating a personalised budget where would you make savings? It may be on take out food or newspaper purchases that you could get discounted with a subscription. Wherever it is I am sure you can think of a better place for those funds to go.