Spring is here! New grass is coming in. Perennials are starting to bloom. You might even be motivated to do a bit of cleaning (or pay someone else to do it).
You’re probably getting outside more, perhaps starting practice on your softball team, prepping your garden, or using the extra daylight for evening walks. Springtime inspires a universal sense of starting new activities and taking a fresh look at the world. Why not include your business in that fresh look?
Spring cleaning your finances can boost your small business profits. It will be quick, easy, and unlike cleaning, I promise it won’t make you sneeze.
First Step to Spring Cleaning: Lose Expenses That Don’t Deliver Value
When was the last time you evaluated the return on your subscription to “The Widget Makers Magazine?” Do you just pay the bill out of habit? Perhaps you even have the subscription set to auto pay.
It’s easy to fall into a routine, doing things because you’ve always done them. While it delivered value in the beginning, the tool or resource may no longer meet your need. The business world is always changing and evolving, you need to be sure you change with it.
Here’s a quick and easy way to spring clean your expenses:
- Print out a list of your expenses from your accounting or bookkeeping system
- As you read each line answer the following questions yes or no. If the answer is yes to any of the questions, cross out that line.
- Did this expense produce any new leads, customers or revenue in the past three months?
- Is this expense necessary to keep my business running? This may include items such as your office rent, business filings, or attorney fees.
- Is this expense necessary to service my clients?
- Take a hard look at the expenses that are left on your list. Is it something new that is still being tested? Imagine having to defend the expense to a stranger (or me if that helps.)
- Eliminate the expenses that aren’t still being evaluated or you can’t objectively defend.
Doesn’t that feel good? You’ve cleaned up your expenses, saved some money, and reinforced the right places to be investing your hard earned cash.
Second Step: Lose Activities That Don’t Deliver Value
Time is money. Time is actually your most precious asset. It can’t be saved up, rolled over or even purchased from someone else. Every person gets 24 hours in a day and seven days in a week.
Getting rid of activities that don’t produce results is just as important as getting rid of underperforming expenses. The review process is very similar.
Start by writing a list of all your common activities, there are no write or wrong answers, just brainstorm. You can do it in word, on a piece of paper, a white board or even borrow your pre-schooler’s crayons. Just get a list put together.
Once you’ve got all your activities down on paper it’s time to do a review. Ask yourself the following questions. If the answer is yes cross out that activity:
- Did this activity produce any new leads, customers or revenue in the past three months?
- Is this activity necessary to keep my business running? Paying taxes doesn’t generate revenue but it does keep you out of jail. That makes it a necessary activity.
- Is this activity a necessary part of servicing my customers?
Just like you did with the expenses above, take a hard look at the activities left on your list. Is it something new that is still being tested? Imagine having to defend the activity to an investor or colleague. Eliminate the activities that aren’t still being evaluated or you can’t objectively defend.
Doesn’t that feel good? You’ve cleaned up your expenses, saved some money, streamlined your activities, opened up time on your schedule and reinforced the right places to be investing your assets.
Final Thoughts on Cleaning Up Your Small Business Finances
Do you have a spring cleaning ritual for your business? What does it involve? After doing these exercises, what have you discovered or changed in your company?
It’s getting to be that time to evaluate what’s working, what’s not, and de-clutter. Thanks for the Spring Cleaning Tips, Nicole!
You’re welcome. While spring cleaning may seem daunting before you start, it feels great when you finish.
I recommend business owners to review & understand their accounts: not do them, but understand them. It helps identify any issues very early on and nip them in the bud before they have time to fester and turn into a big problem. So it should be a monthly spring cleaning!
Hi Siu, for a company’s key metrics I agree monthly is best. I wish we all had time to look at everything every month, however that is often not the case. If I can inspire even an annual full out review I’m happy.
Thanks a lot, Nicole.
I’m on the lookout right now!
(For expenses that are not bringing me value.)
Thanks for the reminder.
The Franchise King®
You are right on! I just wrote a blog too about spring training for my business. Great minds think alike!!!