Welcome to Week 2 of planning for a profitable 2013! If you missed our goal setting session, start there and then come back to join us! Disclaimer, there will be numbers this week… please don’t run away! It’s so important to know your numbers and be familiar with the financial side of the business.
There are many programs that allow you to manage your books. While you can simply create a spreadsheet in excel to keep track of expenses; that will quickly become unwieldy as your business grows. I have used Quickbooks for the past two years and have been very happy with it. There is a bit of a learning curve to set up your accounting within the program but it’s really easy to use once you get the hang of it.
However you decide to manage your numbers, PPA recommends managing them in a managerial accounting manner. This allows you to see the breakdown of your expenses and learn if your costs of goods sold are in line with industry standards. In a nutshell, it helps you make decisions that will lead you to a profitable business.
Simply reference the line items that you will find in the FREE photography budgeting sheet below to set up your accounting for your business!!
This week’s homework is to create a budget for 2013, something that I recommend you do every year. It reinforces your goal setting from last week and allows you to really see if the numbers add up. It also allows you to track your progress by printing out a standard profit loss statement at the end of each month and comparing the two.
I recommend that you separate out all of your revenue streams for easier planning and tracking. Simply fill in your numbers and off you go!
One important thing to keep in mind when you are filling this worksheet out is to be mindful of your cash flow. While I’m feeling pretty good right now with the balance in my checking account, I just received the largest credit card bill of my life with my lab expenses from last month. I also owe multi-thousand dollars to the PA Department of Revenue for this quarter’s sales and use tax, which will be paid monthly next year due to the amount I submitted last quarter. I also need to save a nice portion of that balance to continue to pay myself a salary through the slower first quarter. By seeing what is coming in and going out on certain months, as well as tracking your income and expenses in accounting software, you can be sure not to be unpleasantly surprised next month.
Don’t forget to stop back next Friday for Week 3 of Planning for Profit!