Business Expense Tracker
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INTRO
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• This is the exact template I used to track my business cash & expenses when I was starting out, and I highly encourage you to use it as well
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• It'll give you a clear snapshot of how your business is doing and let you know from a glance if you're spending too much in one area, if you need to cut down on overall expenses, etc.
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PROFIT FIRST RULE
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• I operate my business following the "Profit First" methodology explained in great detail by Mike Michalowicz in his book of the same name
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• A brief explanation of the idea behind "Profit First" — Cash is king (while I firmly believe that it takes money to make money, I also strongly believe in paying that initial investment off asap and then operating based off of business cash flow — if your business can't pay for itself within a few months/your first year, that is not a business). You don't operate your business by paying for expenses first and then taking what ever is left over as your profit. Instead, you pay the PROFIT first and then the remainder is what you can use for expenses. This way, you have to be much more disciplined about your expenses, and the focus is on profitability first instead of as an afterthought
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• Mike recommends breaking monthly cash inflow into 4 percentages - Profit, Taxes, Business Expenses, and then your pay. The %'s differ based on your annual revenue — I've set up a basic % breakout in columns T & U of the "MoM Cash" tab. Feel free to adjust
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NOTE: When starting your business, it's OK to be spending more than you're making, within reason. (If you're not making anything, well,....any number is larger than 0, and it does take money to make money. Don't stress — just remember that your goal is profitability within a few months, and for now, just track your #s. Trust me, this will make your life so much easier!)
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MOM (Month over Month) CASH TAB
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• This tracks your monthly booked and banked income — HUGE difference b/w booked vs. banked: booked = sales, banked = CASH in the bank
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• Each row represents 1 person/sale
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• Column E: The sale $ you made to that person (see example in row 5)
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• Column D: The date you made the sale
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• Columns F-Q: How much CASH came in from the sale that month
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• Column C: How much cash left is owed to you from the sale (Sale $ minus cash $ you've already been paid)
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• Rows 4, 18, 47: When you start using this you'll probably only be selling one product. That's OK, and normal! As you create more products, you'll track them in these other sections
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• Get into the habit of inputting a sale/payment here AS SOON AS you get it
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NOTE: As you can tell, the focus of your tracking is always on your CASH amount — it's great to make a $5K sale, but it doesn't mean anything if that client defaults (which sometimes happens even if you have a contract) and you make $0 cash. Many new biz owners get into the habit of focusing on Sales instead of cash and end up with much less money in the bank than they thought they would — that is NOT going to happen to you on my watch
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MOM (Month over Month) EXPENSES TAB
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• This tracks your monthly expenses — cash out. Get into the habit of inputting an expense here AS SOON AS you make it
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• Expenses are divided into 3 sections — recurring monthly expenses, recurring annual expenses, and one-time expenses. This way you can tell right away where the majority of your expenses are coming from (when you're starting out, most of them should be in the one-time expenses section), and where/if you're overspending
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• As your business grows, you'll want to use your business income to pay yourself, your savings, etc. That's what rows 5-8 are for. However, in the beginning, your #1 focus is on just profitability, so don't stress too much about these
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MOM (Month over Month) SUMMARY TAB
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• This is your at-a-glance Month over Month summary of your sales, cash in, and cash out
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• Get into the habit of filling out the previous month's summary ASAP — on the first day of the following month
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• Column C: At the beginning of each month, set an income goal that you want to hit. I've found that my goals feel much more realistic to me if I input a number like $1,073 vs. $1,000 (See example in row 4)
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• Column D: Total sales (booked $) you made that month
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• Column E: Cash you banked from sales you made that month (This is not the total cash that came in — just the cash that came in from new sales THAT month. This way, you can keep an eye on your banked % every month and make sure that it's not too low (MINIMUM ~30% banked)
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• Column F: TOTAL cash that came in that month, from sales that month and sales in previous months
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• Column G: TOTAL cash out
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• Colunn H: Row 4 has a formula in it, so simply copy and paste for the other rows. This is your profit or loss for that month — how much you made in cash from that month's sales vs. how much you spent to make it that month. Note that it's BANKED - EXPENSES, not total cash in - expenses, because we're focusing on that month's profitability only (this way, you won't miss a potential flag that you're overspending just because you had a lot of cash coming in from previous months)
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• Column I: Another formula. This is total cash in vs. cash out
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• Column J: Total sales calls/discovery sessions you had
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• Column K: Total sales you converted from those discovery sessions
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