Better Information Retention

 

 Tracking For Profits

What are the best things in life? Love, laughter, and unicorns? No. Profits. And nothing's better than profits that you can track! This article will go over how to track your profits on your own so that you don't need a CFO or anything. There are detailed instructions on how to do this, and even videos of the process in action.

But first, let's get down to brass tacks. There are a lot of ways to track your profits and losses, including spreadsheets. I say that's what the little people use. That's why you're reading this article - because you want to get rich! And there are a few fundamental things that all successful businesses must do:

1) Have clear goals so that your employees and customers know what you want them to do.

2) Calculate how much money you make and spend so that you know if your business is making a profit and if it can afford more employees or larger products/services . . . or if it needs to lay off some employees so that it doesn't go bankrupt.

3) Spend time working on your business and not doing something else, like sitting in a cubicle or sleeping. You have 24 hours in a day - use them wisely!

4) Track your profits so that you know what the real status of your business is. You can make all the goals in the world, but if you aren't making money, then it doesn't matter!

That's why I've created this article for you. It'll tell you how to track profits with ease and even give you some video demonstrations of the process. Enjoy!

"I am currently tracking your movement." - Your mom while watching over your shoulder as you read this article on the toilet at work.

The first thing to do is that you need to choose a method of tracking your profits. There are a few things you can do, but for the purpose of this article, we'll go through just two:

1) Track by Activity Tracking - Charge up and charge down with a fancy spreadsheet that creates detailed reports - this is pointless if you're already tracking tons of data.

2) Track by Vendor Tracking - Use simple spreadsheets or even Google Sheets to track your money and expenses so that you don't manually look at every single transaction. This is great for small businesses as it saves time and is pretty easy.

So which method should I use? The best method is probably the first option. Activity tracking can be very useful - and is commonly used by large businesses. But for the purpose of this article, we're going to use the second method. It's easier, it uses a simple spreadsheets, and you don't have to worry about any hidden fees! It's like using a word processor instead of a typewriter to write this very article!

You will start off by creating an Excel document - so download Excel if you haven't already. There are other options for spreadsheet users that are linked at the end of this article. Once you have your spreadsheet open, it's time to start tracking your income and expenses! This can be a little tedious at first but gets easier as you go on.

INCOME

First, you will create a list of the things that bring you money. For example, maybe you make money from selling items on eBay. In this case, there are 4 basic steps:

1) Make sure that all your income is accounted for. For example, if someone returns an item to you because they don't like it and doesn't refund the item to you right away, then it's not an income until they do so. In that case, just keep track of what they've returned and when they refund it back to you.

2) Make sure that you are charging your fees. For example, eBay charges fees for selling some items on its site. You may make a profit from the item, but if you don't deduct eBay's fee from the item, then you will have a buffer of income that you can use in case of an emergency. If you wait till later to take out eBay's fee, then there might not be enough money for a rainy day! So it's better to deduct it as soon as the payment comes in.

3) Calculate your expenses. Once again, it will be handy to write down everything you spend on the items you have listed before. You can also use a simple spreadsheet that lets you calculate back your income and then deduct these costs to see how much money is left over.

4) What about sales taxes? Are there any? There are in most states, which means that you need to add a cost in addition to the item price. For example, if an item costs $10 and the state adds $1 of tax, then it's effectively $11.50 so that profit can't be $10 anymore - so add another dollar for this example.

These four steps are how you can track your income from most sources. It may take a few minutes to get used to, but once you understand the system, it's easy! Let's move on to expenses.

EXPENSES

Tracking expenses is simple. You just need to list everything that you spend money on (or anything that costs money). For example, let's say you changed the oil in your car. You have the receipt, so all you have to do is list it in your spreadsheet - just like any other item with a price! The only thing that might be hard is if your business buys specific materials for a job and then returns them afterward (for example, purchasing nails and returning them afterward).

In this case, you need to continue the system that you started with income tracking. For example, you might write down the information on the receipt and wait to subtract any materials that are returned. This way, when they return the materials, you already know what they cost and can deduct it from your income!

An easy way to track expenses is to use a spreadsheet like our free Profit Tracker (download below), which lets you list all your expenses and shows you how much money you spend each month on each of them.

DEDUCTIONS

Now that you've tracked your income and expenses, it's time to take a look at how much money is left over each month. If you just write down every item and their cost, then it might be hard to figure out where the money is going to! So how do you do this?

The best method for deducing the profit is to use a simple spreadsheet like the one we've already created or by using an app like Mint.com. These tools will let you calculate your net profit, which includes all your income and expenses together.

Conclusion

In summary, tracking your revenue effectively is not that complicated. If you're using this article to help you out, then it should be a lot easier! Don't worry about hiding fees or overly complicated processes - just create a simple spreadsheet that you can use to track everything. It's easy and straightforward so don't worry about it being too easy!

NEXT STEPS: Spreadsheet options and advanced tips >>

RELEVANT LINKS: Free Profit Tracker spreadsheet | Free Excel spreadsheets by creator

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