The Treasure Hunt: Tracking Your Business Finances

Before we dive into our Vision, let’s talk money. Knowing where your cash (your Treasure!) is flowing is crucial, because it tells the story of our business in terms banks and investors understand (and need to know).

It can be helpful to think of our expenses as “fixed” or “variable”, because in future articles we may find that we can be more efficient with our variable expenses. There’s not a lot we can do about our fixed expenses, but it’s always worth taking a look at them anyway.

  • Fixed Expenses: These are your non-negotiables, like rent, your sales (CRM) system, phone/data plan, etc.
  • Variable Expenses: Think raw materials and other fluctuating costs, like the things it takes to make your product. For a service business, this number might be very low or nothing at all, because your biggest variable cost is your Time.

This is pretty straightforward, and for most businesses (whether product- or service-based) this is oftentimes cash in your bank account. Think of revenues as payments for services and products you’ve sold.

Time to get out your shovel and perform a Treasure Audit! Here’s how:

  1. Review Last Month: Check out all transactions to spot patterns.
  2. Create a Tracker: Whether it’s a spreadsheet or good old pen and paper, start tracking.
  3. Top-Level Overview: Note down all revenues (money in) and expenses (money out).
  4. Categorize: Break down these revenues and expenses into more detailed categories for clarity.

If you have a bookkeeper or accountant (or your own QuickBooks account), this is work they are already doing for you. Sit down and categorize your expenses into Fixed and Variable, and take a look at your revenues with them as well.

All your business’s money (Treasure) gets logged in your tracker. Need help setting up your Treasure Audit? Reach out to us for help.

Photo by Dariusz Sankowski on Unsplash

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