Find out how to best keep track of company finances. In this post, we'll go over the best practices and methods of tracking expenses for your self storage business.
As with any other businesses, the success of your self-storage company will be primarily determined by your bottom line. Given that, it’s extremely important to keep track of your cash flow, which incorporates your profits, revenues, expenses, and any other spending. While some managers might think this to be an afterthought, keeping good track of your company’s expenses is vital to making sure your business is running as efficiently as possible, and that you are maximising your profits. Here, we’ll discuss why it’s so important to keep good track of your expenses, as well as some best practises for your business to follow.
Many managers might question the need for such meticulous tracking of your businesses’ expenses. After all, as long as you’re getting consistent customers or new tenants, you can’t be losing money right? While that might be true, it doesn’t mean your business is running the most efficiently it can, and thus it isn’t generating the maximum amount of profits it could. Tracking your expenses carefully lets you gain an insight into how your business is doing financially, showing you whether your business is on track, and also gives you a much firmer understanding of how to improve.
Consistently tracking your expenses will also mean you have a complete understanding of your company’s finances, and importantly this means you can make decisions as to whether you’re spending your money effectively. If you see that there are recurring payments to a software or service you don’t use anymore, you can easily shave off your expenses to keep your profits as large as possible. Also, looking through your bills carefully might reveal certain issues on your facility you weren’t previously aware of. For example, an unexpected rise in your water bills might signal a problem in your plumbing you had not found yet. At the end of the day, there are many side benefits to keeping track of your cash flow, but as a business owner it is essentially just good practice to know where money is coming and going.
Categorise your spending
Splitting your spending up into different categories makes it much easier to see which areas you’re spending the most and least money in. Leverage this when you’re making key budgeting decisions. While there are many different ways to categorise your spending, most common categorising examples are:
Rent, utilities and phone costs
Outsourcing services, e.g accounting
Payroll and benefits
Office expenses, e.g supplies
Have effective systems and procedures for staff
Perhaps the biggest way managers fail to track their expenses properly is when their staff don’t know what procedures are in place to do it properly. Make sure that you have an established system and that all staff members are appropriately trained. Key mistakes are charging personal expenses to the business, forgetting to keep receipts, or not submitting receipts for bookkeeping.
As with many other aspects of business, you can and should use technological solutions to help you keep track of your expenses more easily. Accounting software can basically do most of it for you. It will categorise your spending automatically and log expenses when connected to a bank account by itself as well. Alternatively, even a simple Excel spreadsheet is extremely helpful when you know how to use it. Furthermore, cloud storage services are a really good tool to help you and your staff keep track of receipts. Simply upload them and they’ll be there when you need them.
Set monetary and budget goals
We’ve mentioned multiple times that having goals and tracking your goals is the most effective way to keep your business on track. When it comes to your expenses, it’s no different. Make sure that you set measurable and reasonable goals that are also time-limited. These might be to increase spending in a certain area, or to cut down funding in another by a certain time. Having these goals will help you conceptualise where you are in terms of progress. Tracking them knows where you’ve potentially gone wrong, and thus can let you plan on how to correct it.
Tracking your expenses is vital to an efficient well-run business. While it might be an afterthought to some managers, we hope that we’ve convinced you to keep a closer eye on your cash flow, and train your staff to do the same.
Related Article: 10 metrics every self storage business owner should be tracking