Why did you start your business? Was it because you wanted more flexibility than a 9-5? Because you saw a need in your industry or niche? Because you wanted to help people or businesses in a more direct way? Because you wanted to support your lifestyle and/or family?
Those are all great reasons — and you may have more than one. But I also know that we, as small business owners, might feel guilty about wanting to make money.
I have good news for you, though: There is no shame in wanting to make money with your business.
You and I both know it’s not JUST about the money, but if you couldn’t make money doing what you’re doing, you’d probably go work for someone else.
Instead, I want to make sure that the business you dreamed of and created can last a lifetime — and support the kind of lifestyle or family you want to build.
Now, with that said, I’m going to tell you one of the BEST ways to make more money in your business. And it’s not adding a new offer to your website or working more hours or upping your rates.
Let’s dive into how basic bookkeeping can help you make more money in your business.
How can bookkeeping help your business make more money?
I know, I know. It sounds crazy, right? Just keeping track of your income and expenses and sorting transactions can help you make more money? Sounds fake.
Well, it’s true. I’ve seen it happen. First, let’s go back to the dictionary and look up the definition of “bookkeeping.”
Bookkeeping is the process of recording your financial transactions and categorizing them on a weekly basis.
You’re sorting through income you’ve received, expenses you’ve paid, outstanding invoices, and money saved for things like taxes or owner draws.
But… how does that make you more money?
Well, knowledge is power. The more you know about your finances, the more you can CHANGE your finances.
Basically, when you know your numbers, you can make smarter decisions with your money.
As a bookkeeper for brand and web designers, the first thing I do for a new client is look at their expenses.
Start by looking at your expenses
Is there anything in there that you don’t use? That’s just an automated payment you can cut?
Canceling recurring software subscriptions, for example, automatically keeps more money in your business, even if it’s just a couple bucks a month.
Next, we look at expenses by month and by quarter. Is there a time where expenses were higher, like a launch period or a busy season with subcontractor projects?
We look at those expense jumps and really dig into the revenue associated with those months.
Focus on months where expenses jumped
If you paid a subcontractor to help you on a client project, but you didn’t actually make a profit on that project, it’s probably not worth it to do that again. So you know next time that you should do the work in-house, or find a subcontractor with a rate in line with your needs. That leaves more money in your bank account in the future.
The next thing we do is look at revenue — but not just total revenue. We look at revenue by offer.
Look at your sales by offer
If you’ve only got 1 service package that you provide, this might not help you as much. But most business owners — even service providers — have at least 2 packages. One might be your high-touch, 1:1 web design package, for example, while your other one might be a retainer-based website maintenance service.
For some of you, you might have templates you sell, a membership program, or something else entirely.
Look at the revenue you brought in for each of your services, offers, or products. Does anything surprise you? Is there a CLEAR winner?
Now… look at your marketing. Are you talking about the offer people seem to book or buy the most?
This is an efficient way to get more eyeballs on your best-selling offer, and therefore get more cash in the bank. It’s also a great example of how simple finance tracking can help drive more revenue!
Look at your cash flow
Once you’ve taken your expenses and income into account, let’s talk about how all of that ebbs and flows out of your business. Cash flow, by definition, is the flow of cash in and out of the business.
You have your bank account with, let’s say $100. You get paid $100 by a client, so your balance becomes $200.
But then you have to pay a website renewal fee that is $150. How much do you have left in your accounts?
Yep, $50 is left. So that’s how cash flow works. But what happens when you don’t track your cash flow?
What happens when you don’t track cash flow?
To show you what happens when you don’t focus on cash flow, let’s bump up those numbers a bit and say you have $1,000 in your account.
You get paid $100 in the month of February, so your balance is $1,100. Right?
Well… if you had that $150 website renewal fee, you’re actually at $950. That’s less than you started.
And while this DOES happen sometimes, we don’t want it to happen all the time. This is why bookkeeping is SO important for business owners who want to make more money and have more money in the bank.
Because when you pay attention to things like your:
- Cash Flow
You can keep more of the money you make in the business. That means more profit left over and more money you can withdraw to do fun things like pay your bills or maybe go on a vacation once in a while.
The better you get at this? The more your money grows. Pretty neat, right?
Need to start tracking your online business finances better?
If you’re looking for a solution to help you keep track of things like your revenue, expenses, and cash flow, my friend Elizabeth McCravy has a bookkeeping spreadsheet I just love.
Luckily, she turned it into a template so other business owners could use it, and you can grab it right now!
This Google Sheet template is simple, easy-to-use and even comes with a video tutorial! It helps track:
- Revenue and expenses month over month
- Quarterly profit margins
- Retained earnings
- Tax savings and quarterly tax payments
- How much you pay yourself
- Average profit & expenses for the year
- Total annual revenue, expenses and profit
- How your numbers compare month-over-month to the prior year
This is the easiest way to start saving and making more money in your business, so go grab it.
[…] numbers — that’s revenue and expenses — determine whether your business is profitable. If you bring in more money than you spend on your business, you make a profit! If your expenses exceed your income, however, […]
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