Running a small business can be a challenging task, especially when it comes to managing your finances. If you're having financial troubles and want to try different accounting methods to control your spending, you're not alone. As an accountant who loves to help small businesses with their growth, I'm here to share some tips on what reports you should look at, what calculations are helpful, and how long it may take to start making money. Reports to Look At The first step in controlling your spending is to understand where your money is going. To do this, you should look at your financial reports. Here are some reports that are helpful in analyzing your spending:
Profit and Loss Statement - This report shows your revenue and expenses for a specific period. It will help you see where your money is going and identify areas where you may be overspending.
Cash Flow Statement - This report shows the money coming in and going out of your business. It will help you understand your cash flow situation and identify any cash flow issues.
Accounts Payable Aging Report - This report shows the amount of money you owe to your vendors and suppliers. It will help you prioritize your payments and avoid late fees and penalties.
Calculations to Help Once you have identified areas where you may be overspending, you can use some helpful calculations to control your spending. Here are some calculations to consider:
Gross Margin - This calculation shows the percentage of revenue that is left after deducting the cost of goods sold. It will help you understand the profitability of your products and services.
Breakeven Point - This calculation shows the minimum amount of revenue you need to cover your fixed and variable costs. It will help you understand how much revenue you need to generate to cover your expenses.
Return on Investment - This calculation shows the amount of profit you make relative to the amount of money you invest in your business. It will help you identify which investments are most profitable.
How Long Will it Take to Make Money? The amount of time it will take to start making money depends on several factors, including the industry you're in, your business model, and the actions you take to control your spending. Here are some steps you can take to speed up the process:
Cut unnecessary expenses - Identify areas where you can cut costs and reduce your spending.
Increase revenue - Look for ways to increase your revenue, such as offering new products or services, or increasing your marketing efforts.
Improve efficiency - Look for ways to improve your processes and become more efficient, such as automating tasks or outsourcing non-core functions.
In conclusion, controlling your spending is a crucial part of running a successful small business. By looking at your financial reports, using helpful calculations, and taking the necessary actions, you can start making money and growing your business. As an accountant, I'm here to help you every step of the way, so don't hesitate to reach out for assistance.