Do your numbers scare you? Are you phobic about finance?
Could you tell me how much your business earned last month, last week or even last year? If you are only looking at your business finances at tax time, you are not running a business but you are running an expensive hobby.
The more we know about the numbers in the business, the more we understand about it. I know that the thought of getting out the bank statements and checking them against invoices and receipts can seem like a terrible job, but if you are to know the health of your business it is essential.
Hiding away form the numbers will probably leave you feeling worse about your business than you need to. I know from the experience of my clients, that they often think their financial situation is much worse than it really is.
So you need to embrace the numbers and do it frequently. Leaving it all to tax time means you are already out of date by the time you get them.
Here are some easy steps to take to get up to date with your numbers:
- Block out an afternoon in your diary
- Gather all of your bank statements and receipts
- On a big piece of paper or a spreadsheet, enter all of the money that came in each month.
- Add that up, as that is your income.
- Then underneath that all of your receipts, debit card and credit card bills and put those in each month – that is your expenses.
- Simply take away the expenses from your income, and you will see very quickly how much money you are making every month.
- Do the same exercise each Friday afternoon to keep on top of it.
This is a rough way of seeing your income at a glance – sure there is a bit of grunt work to do at the start, but then if you do it weekly, it becomes so much easier.
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