View Full Version : Do you really keep track?
01-09-2004, 02:26 AM
Do you keep track of your expenses and income on a regular basis. Like, sit down once a week or month and go over what is actually going on?
What about each account? Do you know how profitable each one is? Or keep a log of what you did each day, things just as reminders for the next season?
Or do you just blunder through the year putting receipts in one box and checks in the bank?
01-09-2004, 06:34 AM
Yep, I keep up with everything. I can tell you exactly what my expenses or income was on any particular day/week/month of the year. Before my wife started helping with the books I would log everything daily or sometimes every few days depending on my time. Now, I give my wife the receipts and tell her what they are charged to. Same with the income. Every dollar has a name. This helps me to be more aware of where my business is financially. I can also compare to last years sales and set budgets easier with past information. Makes tax time less of a hassle also.
If you wish to run a profitable business. You need to keep track of where the dollars are going and coming from. Start on a program like Quickbooks. It will tell you everyhting you can possibly want. Not keeping trakc of things might mean the money you are making on a good account is probably just paying for money you lost on a bad one. Reigning in your expenses is a very smart move.
01-09-2004, 09:07 AM
I blunder through the year.
01-09-2004, 11:58 AM
Absolutely! There's a HUGE difference between what you bill out, and how much you actually make. Though I would like it to be every week, it is just a logistics nightmare to do it. We sit down once a month and put all our costs in the computer. Doing it this way we can run reports at any given time. Gotta see what makes money, and see what costs. :cool:
01-09-2004, 12:00 PM
You do Not have to keep up monthly to be successful.. But it sure helps save time/work during tax season. I have 12 month Folders for everything and I put everything in them at the end of the day. I am going through them this week and I will finish today or tomorrow since the snow is flin.
01-09-2004, 12:16 PM
Size of your company would have some affect on how you may keep track. When I first started I could keep track of everything in my head just about. Now I need to look at it on paper and see where the dollars are going and coming from. Helps weed out jobs that were costing you money that might not have been real clear to you just by performing them weekly. Gives you an idea on what tasks may need to be looked at as to why profit percentage is down when it should be higher. Adjustments can be made or that work eliminated. Any sizable company needs to track these things closely.
01-09-2004, 12:48 PM
If you don't track your expenses how do you know where you are making money. Maybe you on making money on 7 accounts and losing money on 3. In this case you could make MORE money doing LESS work if you dropped the 3 losers.
01-09-2004, 01:58 PM
I know the hourly costs of running each mower,as well as costs for other particulars.I already know when the job is finished or after the third mowing on a new account how profitable it is.I don't get into the minutia......It's not worth my time.
01-09-2004, 02:10 PM
QuickBooks Pro does it all for us...P & L's, Cash Flow, Balance Sheet, Income Statement, etc. The key is making sure you log in EVERYTHING that is business related, no mattter how small or trivial.
01-09-2004, 05:03 PM
I look at it once a month.
01-09-2004, 05:18 PM
We have a big appointment book (Mead, at a glance), and each day after the log sheets are brought inside, we write down what we did, how long it took, who worked, how long incl. lunches, etc. Once a week, we input the info into our books: for overall incl employees(Dome,simplified monthly bookeeping record book), and customers (4 column acct sheet). Once a month, around the first, the customer info is put into the puter and bills go out. Then, of course we have the occasional appts w the accountant for corp taxes, etc. This has worked well for us.
I have quick books, but I am intimidated by it.:(
01-09-2004, 06:13 PM
No reason to be intimidated by QB. When first loaded it will walk you through an interview that will help set you up. Very user friendly. Give it a shot. Keep doing things as you currently do but also enter info into QB. If you don't pick up on it, you still have all your info on paper. The really nice thing about QB is the ability to slice and dice your info in all different ways. There is also a QB forum exactly the same as this from which you can get help.
01-09-2004, 06:37 PM
I buy all materials bulk and use a company credit card for that and all other expenses. That way I get an itemized statement each month on what I have spent. I track all materials used on each job so I know what I have used and where it went plus it lets me know how much I have on hand. I use Peachtree Accounting software and enter every expense and deposit when they occur. It also lets me make payments automaticly and prints checks & balances my checkbook for me. If theres any money left at the end of the month my wife spends that.
01-09-2004, 08:47 PM
Being a solo operator that only does mowing, it's very easy for me. Everything I buy comes outta the checking account. All my money goes into the checking account. I enter all that into QB and whenever I feel like it I can check my stats through reports. I try to pay attention to expenses and not buy too freely. I don't have to worry about labor or material costs. It's pretty simple, and as long as I bring in every month what I've predicted I should bring in at the beginning of the year, I'm good.
Besides which, taxes are not necessarily a good indication of your profitablility, etc. There are lots of deductions we get to take that really don't reflect on the amount of $$ I bring home.
01-09-2004, 11:30 PM
:) Yes Sir i run a daily summary sheet and keep track of it all....Marks Mowing Service
01-10-2004, 01:43 AM
Yes, on a monthly basis. A "must do" for any business, I believe.
01-10-2004, 05:46 AM
every receipt, everyday, is filed in a category folder.
EVERY job, eveyday in logged in a daytimer that lives in the truck. No matter how long I've been doing a property(mowing or landscaping) I keep these detailed records. Now at this time of year when I'm planning for next year, this daily data is invaluble to analyze each account to see if any changes are needed to pricing/contract. As far as posting to a ledger, I;d like to do it every month but honestly it gets done about every 2 months.
Also in the daytimer log, we record the non-billable time everyday...basically if we start at 730, there is a running diary for that day until the truck is parked. In this way, I know how much non billable time we have and where we need to make changes.
I know 3 different guys here in my town who dont record ANYTHING in a diary. And then they wonder why they aren't as profitable...you gotta have your numbers.... and you gotta know them like your name
01-10-2004, 06:00 AM
Phishook, I feel you're pain. If I read between the lines correctly, you haven't really been keeping good records, it seems like a major pain in the butt to you, and you wonder if it's really all THAT important and you're hoping it's NOT all that important because you kind of enjoy things the way they are now.
If I am way off, that's fine. My response isn't in vain because I know there are lots of guys who will read this who DO feel that way. I know. I was one of them. So to all those who are thinking this way, here's my response;
I struggled with these kinds of feelings for years. I resisted like you wouldn't believe. To my detriment, even. But finally I came to realize (via the school of hard knocks - I even had to repeat the school a few times) that it's crucial to keep good records of your exact income, expenses, profitability, etc. As much as you'd like to think, "It's been going fairly well so far without keeping very good track of everything." It probably hasn't - you just didn't notice because it was all such a mess. You were able to pay most of your bills, live a comfortable lifestyle, etc. and work for yourself. Everything seems to be going good, right?
Let's be honest. Not you, specifically, Phish. But many reading this. Is it really going so great? Think about it. Are you always able to pay every bill that comes in right when it arrives? Are you financially where you planned to be at this point in your life? Are you able to afford all of the important expenses? Do you have ALL of the necessary insurances, bond, licensing, etc.? Are you reporting all of the income you make? Do you have health insurance? Life Insurance? A nest egg (e.g. decent sized savings account to get you through hard times for a few months if necessary)? Are you debt free? Was buying Christmas presents a breeze for you? The list could go on. But if you can't answer YES to most or all of the above questions then you have to admit that maybe you aren't doing as good as you thought. Hey, listen, I am not being critical. Lots of people are in this boat. I am just saying wake up and realize that maybe you SHOULD begin to figure out how much you're really making and spending. Because only then will you be able to figure out how to control it.
Now I suppose there are some situations where not keeping good records could still lead to success. If you're a solo op. and always plan on being one till you die and are a very frugal person, then perhaps you'd be fine just depositing checks and writing checks for expenses. But I don't think that's most people. For the rest of us, record keeping is the only thing that will keep you honest - and out of trouble.
First, I firmly believe it's essential to separate business from personal. It requires a great deal of discipline to do this as a sole prop. So I recommend everyone be incorporated. Now I am not a CPA or Attorney. So take my advice with a grain of salt. But I think you'll find that most CPAs and Attorneys will agree with me. It's very important to separate business from personal. And one of the simplest ways to do this is to form a wholely separate entity like a corporation. I personally prefer a corp. because it is very stringent. It FORCES you to keep everything separate. If you fail to do so, you will forfeit everything the corp. is designed for. In a lawsuit, the prosecution will easily "pierce the corporate veil" in proving that you didn't treat it like a real corp. and were mixing personal and business. So, knowing that, and not wanting to ever risk that, having a corp. forces you to do everything by the book. You HAVE to keep good records.
Forming a separate business entity is also crucial for you understanding how much "The Business" makes and how much "You Make". And with all of the data you'll collect by the good records you'll be keeping, you will begin to see insights into where you're wasting money, what accounts are profitable, etc. And then you begin to change for the better. It's inevitable.
I took the plunge a little while back - against my own will - and surprisingly, I've just loved it. I wish I had done it from DAY ONE.
Yes, it's more work. I will not lie to you. I spend a lot more time each day, each week, than I ever did before logging checks into quickbooks, filing receipts, creating charts, etc. But now I see things so much more clearly. Yes, you'll have to log in every check you write. Yes, you'll have to file away receipts (although if you categorize them correctly in QB, there's no need for sorting the receipts. Just a big box does just fine.) Yes, you'll have to balance the checkbook and reconsile it often. And then you'll WANT to begin looking at expenses, making charts, and figuring out where you can save $ and how you can make more. You'll have a much more rewarding business if you'll commit to totally separating expenses and keeping excellent records.
That's my 2 cents.
01-10-2004, 09:48 AM
Another great post by Jim Lewis.
How do you set up your charts? I have QB but I am still learning how to make it do more for me. I already look at the profit and loss sheets but to be honest I don't really think I'm getting the most I could be out of QB yet.
I reconcile my check book every month and I have my business checking account set so I can go on-line to my bank and check it when ever I want.
I might add don't forget to reconcile your credit card accounts as well.
01-10-2004, 04:44 PM
First of all, I don't have all of the answers. I still don't have this as refined as many people do. I am working on it. But I do my charts via Excel usually. I like the ones that Quickbooks does but I haven't worked with them much yet.
I'll make charts in Excel that spell out profitablility. Like list all of the clients each day, the total income for that day, devide it by hours worked that day, figure out how much time we spend on each client and figure out which ones are profitable, etc. Excel does amazing stuff.
I think the quickbooks reports are actually pretty handy too. They are very easy to manipulate. You can do a report and see exactly how much you sold last month, 2 months, 6 months, etc. in maintenance, installs, irrigation, clean-ups, etc. You can create pie charts breaking down your services, you can create pie charts showing your which clients were your biggest spenders for the year, month, etc. Tons of stuff. There's so much more. You just have to start messing with the reports section of Quickbooks. Under ever major category in Quickbooks (e.g. the Customer Job List, Vendor List, Employee list, etc.) there is a reports tab. Start messing with those. Then when you get to a report, begin manipulating the tabs at the top and then press the refresh button.
I don't know how to do all of them. Check in the "Elements of Business" forum and I am sure the guys there will be more helpful.
01-10-2004, 05:35 PM
Great post by Lewis.
Definitely want to separate business from personal. Talk with an accountant and discuss a legal entity for your company.
You also want to be looking at numbers at least on a monthly basis. Regardless of size. This will allow you to pin point where you are profitable, and not. So you can make adjustments before there are real problems.
01-10-2004, 06:04 PM
I keep track weekly, but I know when I am doing a job whether I am making money on it or not. I keep the books weekly just so I don't fall behind cause then it is a pain in the neck.
01-10-2004, 06:35 PM
this is a part of the biz that is vital to keep up with. if you dont...you could be running nagative and not even catch it for weeks. i would suggest that you get a computer program such as quicken. once you get this info on the computer...it becomes much easier than scribbling on sheets of paper and manually using the calculator.
make a different page for every account-that way you know what is coming in each week and for what service. then-at the end of the week...calculate when you have collected (your gross fig.) what you have spent (your overhead fig.) and what you have put in the pocket/bank (your net fig.)
this way you never have to guess as to what your making, spending and actually keeping.
01-10-2004, 06:49 PM
We use QB for the accounting and QXpress (Alocet) for job costing. We look at our A/R and PL statement every day. QXpress will give you detailed information on what you are making or loosing on accounts if you track time in and time out on every job. Most of our accounts are on contract. I use the information from QXpress to make sure each account is profitable. If we are not making at least 60% profit on a job we look at a rate increase when the contract is up for renewal. Get an accountant that uses QB and let them set up your QB accounts. QB is one of the best accounting programs you can buy for a small business.
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