Recent studies have shown that half of all companies cease their activities after just four years. What’s the relationship between this fact and the need for expense spreadsheets?
Simple: a lack of organization on the part of some entrepreneurs is often the determinant factor in the poor performance of their companies. Entrepreneurs still frequently don’t pay attention to basic things such as preparing a detailed business plan, for example.
However, this lack of planning comes at a high price, because it means that entrepreneurs don’t have a clear idea of their businesses’ true economic situation, which compromises their decision making. To avoid this problem, we’ll see which items are vital to an expense spreadsheet. Let’s get started?
Make an analysis of your company before you create an expense spreadsheet
The first step in creating an expense spreadsheet is understanding your company’s current financial situation. Does your company have outstanding loans? Has the market growth rate fallen? Are there positive prospects for earnings over the next few years? These are some of the important questions that you need to answer before making your analysis, because they help you understand how your business’s financial processes function.
Define your revenues
This isn’t a simple study of accounts payable and accounts receivable, but rather an analysis that shows the main sources of your business’s income over the short, medium and long term.
This field in your expense spreadsheet should take into account your earnings forecast so that you can see, in a clear manner, your company’s ability to honor its commitments and make investments.
Specify your expenses
In defining your expenses, you have a chance to reevaluate them. Spending on one product that offers few profits can hurt your business in the near future. At the same time, operational costs can be reconsidered in order to save your financial resources.
This is exactly where many Brazilian companies fail. By not understanding where they are spending their money, business leaders lose the opportunity to gain efficiency and generate savings.
Create a cash flow projection
A fundamental task in guaranteeing the financial stability of your business is establishing a cash flow projection that can help you avoid financial problems.
This way you’ll gain time to renegotiate your debts or make strategic decisions to cut spending before your business can’t meet its obligations. Considering the high mortality rate for Brazilian companies, we can obviously see that many business leaders are caught by surprise because they don’t have a detailed and efficient idea of their cash flow to create their expense spreadsheets.
Remember that your expense spreadsheet doesn’t have to be made in Excel
All of these tips of items to include in your expense spreadsheet are not a recipe for creating a file in Excel; they are tips for items that shouldn’t be ignored in an important financial study.
It’s important to remember that you can’t lose time when the subject is managing your financial processes. That’s why it’s becoming more and more common and recommended to use software to control your information in an automatic fashion. MyABCM, for example, offers innovative, reliable and accessible solutions for a wide variety of business segments.
Don’t let your business become one of these companies that make up these mortality statistics. Get in touch with MyABCM to understand how technology can help you make better decisions, because the bottom line is that your company needs a reliable expense spreadsheet.