Is categorizing your income and expenses worth all the extra hassle?
How are you breaking down your categories for your financial tracking? I’ve heard many professionals and business owners say they rely on spreadsheets. Although, there is absolutely nothing wrong with that, it does become tedious to input everything, especially when you’re handling several accounts, loans, etc. Adding more tracking categories into the picture turns this process into a monthly nightmare, with even more room for error. If you’re using a software, you have the ability to break down categories in a way that will benefit you (and obviously comply with tax season). It still requires work, but technology is a big bonus in this option.
As a business owner, you’re wearing, what it feels like, a million hats all the time to make sure all the working pieces are running smoothly. The thing is, those working pieces run on money. You need internet connection, a computer, softwares, monthly subscriptions, pens, gas for your car, you name it. All those things cost money, including your time!
When you group those expenses into large pools, you’re increasing your chances to miss money leaks. Did you sign up for a free trial and forgot to cancel it? Do you really need all those extras perks in your softwares? How much money are you spending on gas a month to meet with clients? Are your expenses consistent year-round? If you have lower months, what else could you do with that budgeted amount instead?
Same thing goes with your income, ESPECIALLY if you have more than one income stream.
Additional income streams have grown more and more common in the past year. There are so many ways to incorporate that, whether it’s an entirely new business, a new service, or a new product, you can probably agree that it took a lot of effort to get it in place.
In my opinion, these are a 2-part success. The first one is actually getting it out there readily available to the public. That in itself is a victory, and I applaud you for that. The second part is making the sales happen and seeing the benefits of all that work. If you’re not tracking these independently from each other, there’s no way you can tell if it’s working or not. How much revenue comes from your live sessions vs. pre-recorded? How much are you making from your most expensive service vs. the cheapest ones? Did your new digital course make enough to cover for the investment you made to learn it and set it up? Those answers can help you take better decisions to keep the sales coming in, or deciding to stop altogether.
Sure, we all want a smooth transition into tax season. The quicker and easier way to get there the better. BUT, part of the reason you’re in business is to MAKE money. Creating the right categories for your business and actually categorizing every single transaction will help you see HOW PROFITABLE your business is. Are you able to answer that question right now? Do you have the ability to create or run reports with your current data to answer that? How would you feel if you could? What would that mean to you?
Scaling is a common goal amongst business owners. But getting there requires actionable steps with measurable results. Those numbers, if up-to-date and accurate, are your measurable results.
So, what do you think? Is it worth the hassle? I think it is. Understanding where you’re currently standing financially, and the result of your work up until this moment can help you analyze the ins and outs of your business with clarity.
Now what?
Analyze your current financial tracking system. What do you like about it? What would you change?
Start implementing right away. Making moves, even if they’re slow, are much better than making no changes at all.
Book a call below to chat with me. I’d love to help you create a process for you that you will truly benefit from.