What measures do you have in place to ensure that your business succeeds in this competitive world? It is sad to note that almost half of businesses started in a particular year never see their fifth anniversary. Tracking expenses is one of the main challenges that face business owners, irrespective of the venture size.
Having a CRM is the most common approach for tracking expenses and revenue in a business. What happens if you do not have such a program? Do you let your business face a slow death? No, your business can still track expenses through the following approaches in the absence of a CRM.
Pre-plan your expenses every month
This is more of budgeting, but it works wonders. You can analyze the nature of expenses that you incur in the first few months. You are also likely to expect the same for the rest of the year. Assigning a monetary value to every expense will thus make it easy to track your spending habits.
The type of customers that you target will determine the expenses you are likely to incur. Understanding the decision-making process of the target group is the key is to create correct customer profiles. Some of the expenses you are likely to incur include promotion and delivery fees.
Ensure that you check the expenses incurred against your budget. It will thus be easy to determine if you are on the right track or not. You can thus know the areas that need more attention and those that don’t.
Open a separate bank account
Tracking your business expenses can be hard if you shop for your personal use and the business from the same card. The modern world recognizes business owners as different entities from the business itself. You can thus open a bank account under the name of your registered business.
You need a dedicated bank account where you can draw a statement at the end of the day. You can decide to pay for all the expenses from this account. You will also be paid through this bank account and make it easy to track your revenue streams. However, when you have to pay on a cash basis, you need to ensure that you have a cash register. Remember to bank revenue generated in cash so that you can have a healthy bank account.
Maintain a journal
It is one of the best approaches when you are just starting out. You may not have enough money to buy a good CRM, but you can afford a book to journal your expenses. Most small businesses enjoy recording revenue generated but always forget to track down the expenses. Ensure that you note down all the expenses in this book promptly. You can also direct your employees to note down the expenses as they occur within your business premises.
Have a page for every new day. That way, you will know the days where you seem to spend more than expected and come up with ways of reducing the expenses. Auditors will also find such journals worthy as they come to balance your books of account. You may find that journaling will no longer be effective as your business grows, and you will be forced to adopt other approaches.
Take advantage of spreadsheets
You can use the spreadsheets on your computer to track your expenses. You can still download a similar program on your smartphone and track these expenses. The beauty of a spreadsheet is that it contains many mathematical formulas that you can apply.
Start with the simple computations, as some of the functions on a typical spreadsheet requires advanced training. Take advantage of online resources and learn how you can make the best out of these spreadsheets. Ensure that you learn something new every time you interact with a spreadsheet.
Have a dedicated bookkeeper
It is the best approach if you want to be accountable. You must provide the bookkeeper with a reason to release the funds. It is a bookkeeper’s work to ensure that your book of accounts are in order. A bookkeeper should be someone with basic accounting skills, but the skills needed will depend on your business’s complexity.
Having an external auditor may be quarterly, semiannually or annually, will supplement your bookkeeper’s records at the end of every year. Periodic reviews make it easy to determine the areas that are consuming the most funds in your business.
Summarize expenses in chunks
A typical business set up will have different types of expenses. For instance, you can have advertising costs that will include billboards, posters, radio ads, newspaper ads, and online ads, to mention a few. Summarizing all the advertising ads every week will make it easy to have a rough idea of what you are likely to incur.
You can also categorize expenses based on the occurrence cycles. For instance, you can have recurring expenses such as electricity bills and rent on one side. On the other hand, you can have irregular expenses such as a machine breakdown on the other side.
Plan for every day
The first step will be to note the cash at hand, credit cards, and bank accounts even before starting work. You can then note down what you have in different accounts at the end of the day. If this seems tiresome, then you can have it done weekly. However, this will only work if you have dedicated business accounts, and you don’t withdraw money for personal use.
We are living in a digital world where digital banking and other digital payments are taking over. It even gets better when your suppliers and target customers prefer digital payments. You can download mobile apps that will help you track expenses and revenue generated. You can then generate reports to indicate the areas where you spend the most.
Tracking expenses is easy when you follow the above tips. Ensure that you come out with lessons when you analyze your expenses periodically. Research on the different ways of reducing expenses in your business without comprising the quality of products or services.