It’s time for a financial check-up
As you approach the mid-year mark, it’s a good time to do a quick assessment of your financials. I encourage you to resist the temptation to wait until tax season to file those receipts, download your payment transactions and review your bank statements. If you act now, you might be surprised to find items that can increase your net income this year.
This process starts with having a solid accounting system in place, that will automatically download all your bank, Paypal & invoicing transactions. I recommend WaveApp for anyone looking for intuitive software with a modern flare. The second step is creating a monthly reconciliation to validate income and expenses. Finally, on a quarterly basis, conduct a review of your finances to identity opportunities to reduce costs and explore repeatable income sources.
In 2009, when I first started Vegan Mainstream, I use to manage my financials based on the balance in my bank account. If I had money in the bank, I thought it was a good week. But, I’ve realized this is a very primitive way to look at the financial health of my business. I didn’t have enough information to reduce costs, nor a way to identify new opportunities for my business. Since 2010, I’ve been using accounting software.
In 2013, I wanted to take my financial analysis to a new level. I spent 2 hours analysing my expenses. I found under-utilized accounts, trial accounts that hadn’t been cancelled and inactive memberships. Because most of these charges were $10 – $25 a month, they were small enough to avoid the scrutiny of my typical return-on-investment analysis. By measuring expenses based on utilization vs. ROI, I was able to cancel an average of $400 per month in charges. Ultimately this became a $2,400 savings over the year since I would have paid these recurring charges for another 6-months had I not done this analysis until my annual tax review.
This might not sound a like huge number to some people, but consider that it took only 2 hours to add $2,400 in net income. So, take some time to do your mid-year assessment – you just might find it puts money back into your pocket.
Tool Recommendation: WaveApp