11 Dec Your most important business tool, Part 3
How to map out your annual Expense Strategy
Following on from my last blog, by implementing a clear cash flow plan for my accounting firm I was able to turn it around, double it in size and sell when the time was right.
Today I will map out step two of this strategy for you (and if you have missed step 1, please check out my blog here).
Step 2: Develop an Annual Expense Plan
The second step of developing your annual cash flow plan is to map out your annual outgoings. Outgoings include every dollar that is paid out of your business, and I mean EVERY!
All the expenses, loan repayments, tax obligations and cash outflows that you would incur for the full year.
This step is not quite as challenging as the first step as it is easy to look at previous years and make estimates for the coming year. However, it does take ACTION on your part to make sure that it gets done and becomes a tool you can use to manage your business.
Step-by-Step Guide to create your Annual Expense Plan
- Export a detailed General Ledger report from your accounting software, for the full previous year, (If you are not sure how to do this ask your bookkeeper or accountant to assist you),
- Review all of the expense accounts and any other account that shows the cash out flows, such as loan repayments and tax obligations, (omit your bank accounts/credit cards from this report as they will match up to an item in your expenses or other accounts),
- Use this information to prepare a spreadsheet to map out the outgoings for each month of the year.
By developing your annual expense plan and reviewing all of your outgoings from the previous year, you will easily see where you could reduce costs for your business.
While doing this step in the Cash Flow Plan analyse each outgoing and determine if the expense was absolutley necessary to run your business, or it saved you money or time. If the answer to these questions is NO then cancel these expenses immediately.
Remember every dollar you spend in your business is one less dollar that you are able to support your family and live the life of your dreams.
You can create your cash flow plan at any time of the year, you don’t need to wait for end of year or the end of a quarter to implement this strategy.
If you would like assistance in preparing your business Annual Expense plan, please get in touch, this is my absolute passion and I know firsthand just how important this one tool is in helping you to transform your business.
Dream big and create the life you want to live!
Hi, I’m Phoebe. I love business, especially the Numbers! As a sought-after qualified accountant, I come from a place of experience, with over 15 years of running my own accountancy firm, MGA Accountants, I scaled the business to double the size before successfully selling in 2015. Now I am focussing on what I love, helping female entrepreneurs create business success by understanding their business numbers so they can make smart, savvy business decisions to live the life of their dreams.