As a business owner it is important that you understand the expenses in your business and the easiest way to do this is with a well thought out expense template.

So what is the first number that you think of in your business?

For most business owners it is sales. Somehow if we are to succeed we gravitate to income and customers which is entirely correct.

The most difficult thing for a growing business is to find enough customers and income to make the business successful.

However, often business owners with a focus on bringing income into their business find it disappearing just as fast in expenses so that they have little for themselves at the end of the day.

So to combat this I believe it is mandatory for a business owner to understand and monitor their key expenses and how to keep them to a minimum.

It is often incredibly easy to let expenses get away on you particularly those that are necessary to service and keep your customers satisfied.

The context of the business owner is often different to the employees who work for you. The person who does your book keeping will not normally be thinking like a business owner.

Their focus is on getting the bills paid and stopping suppliers ringing up for their money rather than making a profit and developing a sustainable and successful business.

This means that even if you get them to prepare the expense template for you, it must be at your direction.

They may be far better skilled than you at using Microsoft Excel and be able to prepare figures much faster than you but they will never have the business perspective that you have.

This means that the format, order and style of the expense template that really works for the business owner must be determined by you.

Many business owners that I know wait for the book keeper or administrative person to come to them rather than going on the front foot and determining and instructing on how the figures should be presented.

Never assume that your administrative people know all about your business.

They normally get their perspective from seeing the figures come through the creditors invoices and never have the overall context and perspective that you have of your business.

So my encouragement to you is to get involved on go on the front foot designing the expense templates in your business.

What’s your experience on this?

In your business have you been guilty of getting stuck in the detail and not being able to get a helicopter view and see things from the right perspective?

Can you get lost in the woods and forget to climb a tree and see where you’re going?

Remember you’re not alone in this. Many business owners get so caught up in the day to day management that they never have a strategic view of the future direction of their business.

As a result they surge from one cash flow crisis to another and wonder why they never seem to get ahead.

With that in mind, do you think you should concern yourself with an extremely detailed expense template?

Do you think it might be possible to get lost in the ‘bowels’ of your organisation and forget why you’re down there?

Is it possible that you’re working really hard on something that has lost its relevance to the overall direction of your business?

Most business owners spend their time on customer interaction and leave the administration side of their business to other people.

As a result the direction and context of their administration comes from other people and it is up to the business owner to bring the right direction and context to this aspect of their business.

Do you think that any one in your business can work without some overall direction and input from the business owner?

Would you allow someone to do the marketing in your business and never refer back to you for direction?

Unfortunately this is the case around administration and the reporting of expenses in many small businesses.

The administration is completely taken care of by people who do not have a feel for the overall direction of the business and therefore the context from which they would prepare a detailed expense template may be incorrect.

So as the business owner you must keep an overall business perspective to everything that you do and provide that context and oversight to all aspects of your business.

Do you have any experiences on this you would like to share?

>What do you do in your business when you feel as though your expenses are out of control and there just isn’t enough money to go round!

It’s an amazingly frustrating place for a business owner because it always seems as though everyone leaves it up to you to get everything fixed and you’re not sure quite how to fix everything.

One of the skills that is really helpful for a business owner is to learn how to create a useful expense template.

Now you might say to me that you don’t really understand the figures or numbers in your business so you have hired a bookkeeper or administrative person who does all this for you.

You may even find that they are really great at their job and bring you reports all the time so you know exactly what’s going on in your business.

Now cast your mind back to the last time you heard about a fraud in a business.

Was it performed by a burglar who just came into the business?

Was it performed by someone new to the business?

Was it performed by the worst behaved employee in the whole business?

Usually not…

Fraud is usually performed by a TRUSTED employee!!

What this means is that every person is subject to temptation and vulnerable to doing something that they’re not proud of.

Every person I know has moments in their life when its possible for them to do the wrong thing and if it is not picked up quickly they can easily move to more and more bizarre behaviour

So my point is that it is important for the business owner to be able to create expense templates so that they can do a second check on what they think is going on in their business.

This does not mean you’re turning into the administrative person for your business.

Far from it because as the business owner you have a different perspective and a different context for looking into your business.

If you descend to becoming the administrative employee then it will be impossible for you to have a big picture look at the business and use your gut instincts for finding where something isn’t quite right

You must learn the skill of looking at expenses from many different angles to get a perspective which is different from others because when you do this you can bring the value that only a business owner can.

From your position you are able to connect parts of the business and look for trends that don’t occur to people looking from their more narrow perspective.

So how can you go about creating a decent expense template when you think there might be something going wrong in your business?

Step 1: Big Picture
When you think something is wrong with the expenses in your business you must clearly work out the context that you’re dealing with.

If you are looking at only a small section of your business then the expenses might be hiding somewhere else in the business because of a mis coding or mis allocation to the wrong area.

This will involve looking at the total expenses for the business and ensuring there is an overall issue.

Once you have established where the problem exists you can move on to step 2.

Step 2: Context of the problem
Once you have established that there is a really expense issue in your business you need to decide the context of your problem.

What type of expense is it?

How is it normally accounted for?

Where would something likely have gone wrong?

Step 3: Different angle
Once you have established the context of the problem you’re ready to build a superior expense template.

The most important consideration is that you look at this problem from a different angle to the normal.

You have to believe that someone else in your business has already made their own expense template and if they are part of any fraud they will cover it up in all the usual ways.

The key for you is to take a different look. A different perspective on the issue.

It’s hard to prescribe something that will work in every case but make sure you follow your intuition or gut feel. In these circumstances it will often be your best guide.

What’s your experience on this?

Over my career I’ve had to build hundreds of different templates, starting with Lotus 1-2-3 and then moving onto to Microsoft Excel.

During this process I have found that to build an expense template that will last for more than a couple of months I’ve had to do some thinking about the overall shape of a template before rushing in to get it completed.

So here are five tips that you may find useful on your journey to building incredibly powerful expense templates.

1. Add down and across
   This may sound very basic and simple but you would be surprised how often this is forgotten and the expense template lacks the integrity of being correct. May be it is my anal accounting background but I’ve always found that if I make check totals by balancing figures down AND across as I work on the spreadsheet, it is far easier to balance everything in the end and also ensure that nothing is left out of the template.

 

2. Carefully choose the context
   Headings and the naming of sections of the template will assist people to read the information. If you simply have a string of numbers without any explanation then readers won’t have a clue what you’re talking about. Make sure you clearly understand the context and put it as a heading on your template. E.g. Sales Expenses for the period ending 30th June 2010.

 

3. Don’t miss the wood for the trees
   Finding the right level of detail in an expense template is critical because if you go for too much detail, the template can become so huge that no one other than you can understand the content. On the other hand if you miss out important detail the template can point to conclusions which may be wrong.

 

4. Think communication more than data collection
   It is very easy when putting numbers into any template to focus heavily on collecting the data and making sure it is all balanced and correct arithmetically. However, if you are to be an influencer of others then it is the communication of the information which you must focus on in preparing your template. Who is going to read this other than you? What do you think they are looking for from the template?

 

5. Think of the flow of information
   This last point is probably my most important in the construction of an expense template. Remember that others may want to read your template and how the information flows down and across the page will either make this very easy or incredibly difficult. Most people read from left to right BUT accounting convention is from right to left. Think about this when constructing your template and make it as easy as possible for non financial people to follow the flow of your information.

What’s your experience in constructing templates?

Are there any particular formats that you’ve found really work?