How to Decide What to Spend Your Money On

Before I start, a note to clear up something from my previous newsletter.

When I said to pay by dateline, I meant that ALL bills are paid by date.

Paying your bills by due date

Take ALL the bills you have and sort them by Due Date. Pay the oldest first, then the next oldest, and so on.

So that is all your bills together, not just the oldest from each supplier.

Work out how much money you have to pay bills. Start from the oldest bill and work towards the present, paying all the bills you have money for right now.

Next week or month, you do exactly the same. Keep doing it each week or month until you have caught up.

I did this with a company I worked for many years ago. It took me 6-8 months of diligently working through the bills every week until we were all caught up and every bill due had been paid.

By all means, let me know if you need any help doing this in your company.

The one question for every expense

So you now do your Income Planning each week or month, and you make a plan for how to spend the money you took in. How DO you spend it?

There is one key piece of data to apply.

HOW WILL THIS EXPENSE HELP ME MAKE MORE MONEY?

Ask yourself that for each expense. If you want to buy a new computer, ask how that computer will help you earn more money.

If the answer is no, I do not spend it.

Look at all your expenses that way and you will probably be amazed how quickly you can get rid of waste, and put your money into purchases that help your company grow. It is a fantastically easy way of deciding whether to buy something or not.

Where your advertising money goes

For outflow, meaning advertising and promotions, the biggest amount of money goes to the general public. A lesser amount goes to existing customers. The least goes to loyal customers.

The general public are not your customers yet, and you want everyone to know about your products and services so they can become customers.

Your loyal customers do not need much outflow, as they are already loyal to you. Just send them a regular newsletter to keep them up to date with developments.

That does not mean ignoring them, not by any means. They deserve to be rewarded for their loyalty. Many bigger companies overlook this nowadays, and it really upsets me.

You can be a loyal customer somewhere for years and years, and do they care? Nope. You ask them for a favour and they just shrug and ignore you.

Loyal customers deserve your thanks and attention, but they will not need much advertising and promotion.

As always, keep it simple and... Flourish and Prosper

Lisa

I learnt the management technology I use in my business at the Hubbard College of Administration.