You might have seen the news – you know, all those cheerful articles about interest rates, energy prices and now the cost of living…
The reality of what is coming really hit me last weekend as my husband and I were out house hunting. I was struck by how overinflated property prices really are!
Obviously, the current house price boom has been caused by the stamp duty holiday introduced during the height of the pandemic. Properties have been selling at the top end of the market and we are still riding high.
While not everyone is buying and selling houses, they will soon feel the effects of inflation as the cost of living is set to rise significantly.
In the news
The British Retail Consortium, which represents more than 5,000 businesses across the UK, said soaring household energy prices would mean consumers tightening their purse strings over the coming months, with a knock-on effect on high streets.
In fact, consumer goods giant Unilever, which produces brands such as Domestos, Marmite and Ben & Jerry’s ice cream, signals shoppers face further price increases as its own costs continue to rocket.
As a result, the Bank of England has said households will see their post-tax disposable income – the most comprehensive measure of the standard of living – fall by 2% in 2022. You can read more here.
What does this mean if you’re a business owner?
Well, unfortunately I believe we are on our own. The government helped many of us out during the pandemic which in a way, is how we’ve ended up in this position. As the things we buy increase, then so must our costs which we ultimately might have to pass on to our clients in the short or even long term.
But there are things we can do to watch the pennies and protect our businesses – and perhaps even our prices – to ensure we can ride out this storm while keeping our clients happy too. What’s more, I have the perfect little tool that can help you get started!
What is expense analysis?
Expense analysis is a number crunching exercise that can help you improve your overall performance and costs by simply analysing what it is you spend on a monthly or quarterly basis and assessing its necessity in your business.
It’s important that you pay attention to your expense trends as over time you might discover some expenses are slowly increasing. Spotting them early on means you can explore the reasons behind the increase and see if those expenses are benefitting your business at all?
Doing a thorough expense analysis once a month or once a quarter can help you spot the signs of a struggle early on and tackle it before you lose money you can’t afford to.
How to conduct a simple expense analysis?
- Download the PDF below
- Run your Profit and Loss Report (P&L) and look at each expense from the last month (or over the last three months if you want to do this quarterly).
- Put each expense into the column you instinctively feel it belongs:
- Nice to have
- Go back and ask yourself it that expense really is essential to your business, an investment that you will see a return on later, or something that is simply nice to have but won’t positively affect the function or success of your business.
If you find the system helpful because you’ve often felt overwhelmed when it comes to your business finances, The Profitable Solopreneur (TM) Program could be for you.
Feel free to get in touch and ask me any questions – or check the homepage for details of my next FREE masterclass.
Take control of your finances and don’t let what’s going on in the outside world affect your success.Download Your FREE Expense Analysis PDF