Simplistic Financials is all about helping the solopreneur get in the know of their financials ! It is very important to the success of your business to become a financial savvy entrepreneur! The sweetness of stepping into a new role of financial intelligence is that it doesn’t have to be difficult or hard at all! In fact, there’s one simple word that can help you get control of your finances rather quickly…tracking! Simply tracking your income and expenses as well as your cash flow gets you started on the path to understanding the numbers of your business!
How Can a Solopreneur track Income, Expenses, and Cash Flow?
Although I recommend using accounting software, it is not a requirement when tracking financial information. In fact, if you have Microsoft Excel or any other spreadsheet type program, you can easily use it to set up your tracking reports.
For the income report you want to track your revenue (sales). On the report list every possible stream of income that your business generates. For example, depending on your type of business your types of income maybe consulting services, seminars, training, e-books, affiliate programs, software programs, etc. To make things easier set up the sheet with 12 months worth of data. The idea is to have visibility into what income stream generates the most revenue, snapshot of the entire year, as well as a month by month monitoring mechanism.
You can follow the same set up for the expenses utilizing 12 months and by listing each cost that your business incurs. This ensures visibility into where you’re spending most of your money, provides a yearly view at your fingertips, and month by month monitoring. Some examples of common expenditures are rent, office supplies, website and hosting fees, subscriptions, membership fees, consulting fees, etc.
Guess what? If you consolidate both sheets, you will have a simple, but effective income statement! All you would need is a line item that will subtract the expenses from your income to show your net profit or loss! Gotta love the simplicity!
No matter the size of your business, the cash flow report is a must have. It doesn’t have to be a complex document, keep it simple! Again, you can use an Excel spreadsheet if you do not have accounting software to generate this information for you. Like with the income and expense reports, the cash flow report should be annual. As the name states, it shows the money that flows in and out of your business. The cash flow also reflects what you project the cash to be for the year. The spreadsheet can be set up in a way that the cash is automatically calculated for the current month (actual) and for the rest of the year (projection/forecast).
Tracking income, expenses, and cash flow will help to inform you of what’s going on in your business. Monitoring and reviewing these reports frequently (recommend monthly basis) will create a standard process in your small business while implementing simple financial controls.
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