Go ahead and sit down, pour yourself a tea or coffee or potion of your choice because we are going to get into the nitty-gritty of maximizing your profits with spending audits.
We’re here to help you tap into your money-making superpowers to become the badass business owner you are.
Okay, you are done feeling like you’re broke because you have no idea how your money is escaping your bank account. Like, how is your cash Shawshank Redemption-ing like it’s not even a big deal? Listen up, it’s a brand new world out there. You are a multi-dimensional business owner who takes nothing from nobody.
Spending audits can empower you to make better decisions. When your spending is aligned with what’s important to you and your company, your business can flourish. It’s basically like getting your money chakras all in line. If that’s a little too other-worldly for you, then think of it this way—when you know where your money goes, you can make sure your business grows. Boom.
BUT WHY SPENDING AUDITS?
If you are like many business owners, you think that you need to get more clients through your doors in order to maximize cash flow. Yes, we all love raising revenue, but there are other, even better ways to grow your bottom line—starting today. Why better? Because the ways we’re talking about don’t add more work to your plate! It all starts with a spending audit, so you know exactly where your cold, hard cash is going. Okay, hear us out before you get stressy thinking about all the numbers you need to crunch.
We deeply believe that this works to help clear your money path, but it’s going to take a little bit of work on your part to get there. Sorry, but not sorry. There are no shortcuts when it comes to attracting more bees to your honey.
Do you imagine one of those old dudes wearing round wire glasses and a green visor you hear the words, “spending audit?” Does it bring up feelings of fear, shame, excitement, or hunger? Those are all great! Honestly, it’s straightforward—a spending audit is a deep dive into your financial records to figure out what you are spending your money on. Phew, that was earth-shattering. It may seem like a simple thing to do, but the business benefits are what we are all about. Stay with us.
BUT WHAT WILL A SPENDING AUDIT DO THOUGH?
Oh, look, you’re still here! You’ve made it this far along, so that means you have the wherewithal to learn more about how a spending audit will maximize your profits. Love making more money? Us too. Have some healthy skepticism about spending audits? No problem. Let’s break down some real-life benefits for you.
1. SIGN OF THE TIMES
So how have you been holding up? 2020 has been a major shake-up, and I don’t mean the tasty lemonade kind you get at a fair! Although the world looks a little grimmer than what we are used to, that doesn’t mean your business needs to feel the pains. COVID-19 has had a major impact on the economy and will probably be this way for like, years to come. The thing is, you are in control of your own destiny, and that is especially true with maximizing profits. If you are consistently on top of your money game, you’ll be prepared for any pandemic, predicament, project, or party.
2. HOARD MORE MONEY
With a spending audit, you’ll forge a new money path so you can redirect your cash towards more positive outcomes. When you give your business bank account some love and attention, you can figure out what you’re spending on and whether or not it’s worth it. Well, that set of hand-embossed pens are totally worth it in your heart and soul, but maybe not when it comes to maximizing profits. In the end, you’ll be able to pay yourself, pay your bills, and save a little extra for the matching hand-embossed pen holders in the future.
3. GO FORTH AND PROSPER
Ahhh, yes. The force is strong with this one. Because you are getting a better understanding of cash flow, you’ll also understand whether or not your spending is ultimately working in your favor. You want to grow your business, grow your wealth, and grow into the you-est version of yourself. Brava. Spending audits will help you reallocate the money you’re spending on things that make a bigger impact.
BUT NOW I HAVE TO DO THE AUDIT THOUGH?
Yes, yes, you do. Before you even think about logging offline, we’re going in…
STEP 1 – BECOME A GOAL DIGGER
Think about what your financial goal is for doing a spending audit. It can be as simple as “I want to save $100 a week” or “I want to lower my expenses to $600 a month.” No matter what your goals are, we support you. Define them, write them down, say them out loud, and then make it happen, cap’n.
STEP 2 – GET THE OFFICIAL 4-1-1
This will be super easy, promise. We recommend going back for three months since you should be doing spending audits at least every quarter. That way, you are clear about what you’re spending on and how each item will bring you closer to your short-term and long-term goals. Login and download the following:
• Business bank statements
• Reports from bookkeeper or bookkeeping programs
• Credit card statements
• Invoicing platforms like PayPal, Venmo, etc.
STEP 3 – LOOK FOR THE PATTERNS
As you go through your statements and look for recurring expenses, write them down or stick them in a spreadsheet. Include:
• What the expense is
• How much it is
• When you are paying for it (First of the month? Mid? End of the month?)
• What goal (you hope) it is helping you achieve
Put it all down and be amazed by your spending knowledge. What are your biggest expenses? Any surprises? We bet there are!
STEP 4 – DO YOU NEED THAT?
Be the best version of yourself right now and get honest. Looking at your list, and make a note of how important each item is, such as:
• Essential – Your business would come crashing down without it (Wi-Fi, task management program, delivery truck, etc.)
• Non-Essential – Your business does not need it (tubs of ice cream, bedazzled hangers, hand-embossed pens, etc.)
• Not Needed – Your business is super into it, but it could live without it (music subscription, kombucha, six different types of highlighters, etc.)
STEP 5 – BALANCING ACT
Now, go through your list and address how you’re going to take action. Would it be better to cancel a subscription or buy pints of ice cream instead of tubs? Is having the lights on more important than looking good in a business-branded tracksuit? What expenses are sucking the life out of your company? Once you start crunching the numbers, you can get a good idea of your overall financial health and implement a more strategic approach to spending. You are now officially a badass.
WHERE SHOULD I BE SAVING?
You are on fire with the good questions today. For most businesses, the five biggest expenses are typically staff, office space, equipment, development, and cost of goods (or your inventory). Although each business is different, here are some expenses we recommend you reconsider as you get control of your expenses and, ultimately, maximize profits.
- Office space
We’re in a weird time, so most people are working from home. Can you continue this practice permanently?
Be good to them. They are the heart and soul of your operation, so losing them can come at a great cost. However, are there ways you can minimize some of their perks as a way to keep everyone in work?
- Technology pivot
We’re all doing our best, and you’re doing great. The world has shifted, and exploring new ways to utilize technology is a great money maker—task management programs, invoicing, delivery, etc. But keep a handle on how many bells and whistles your business really needs. Don’t buy a Ferrari when a Ford will do.
- Vintage is cool
Equipment that has been gently used can be just as good as the new stuff. Buy vintage when it makes sense. Check out “like new” items on Amazon, for example. Many times, someone returned the item without ever using it. They can’t resell it as “new,” so you get the savings!
- Avoid interest
Small business credit cards can be great, but debt is literally your enemy. Every cent of interest you’re paying is a cent that hurts your bottom line. And no one wants that.
- Bulk up
It might sound like the counterintuitive thing (okay, we did say tubs of ice cream might not be business beneficial), but buying in bulk can make a difference. Stocking up on non-perishable items or products you often use when there’s a big sale can make your money go further.
- Shop around
Okay, you really love your cleaning lady, but she charges 15% higher than the new guy on the block. Try negotiating with your beloved lady or make the hard call of going for what benefits your business.
Pretty straight forward stuff, right?
These are all simple tips and tricks you can do right this moment… well after you’ve done your spending audit. As a business owner, it is incredibly significant for you to know what’s going on with your money. What it’s doing, where it’s going, and why is it staying out so late at night when literally everything in the world is closed?
To make it work, you’ll need to get a grasp on spending. We know it’s a buzzkill, and maybe you don’t have the time or patience to do it on your own. You know, that’s why we exist in the first place. We want to empower you to take your money matters into your own hands, but we’re also here for you too. Whether you’re doing it on your own or you have us come in and have a real talking to with your bank accounts, that’s all gravy. Just make sure that it’s getting done. We are so proud of you; look how far you’ve come. No, literally, this is the end of the article. Bye, for now!