You have to know what you spent before you can figure out how much you actually made

A few years ago I did some work for a small clothing company. It was managed by a girl who had no idea what she was doing.

When she had money she would buy inventory. When she needed money she would run a clearance sale to get more sales, and then she would have money again to buy more inventory.

Only the problem with this is, she wouldn’t keep track of how much money she spent on her original inventory.

For example, if she spent $4 on a belt she would need to know that since she would want to make sure she sold it for more than $4 to ensure she made a profit.

However since she didn’t know exactly how much she was spending on each item and would sell them at whatever price she never really knew what she was making or losing.

Overall as you might have imagined, this system failed and the owner of the store stepped in and took over, as they fired the girl in question.

This same concept works for us internet entrepreneurs as well. If we don’t know how much we are spending to run our businesses then we don’t really know how much we are making.

Sure we may get a check for $300 from some affiliate program, but how much did we spend to make that money in the first place?

This is why record keeping is so important.

And it’s actually very simple. All you have to do is create a simple spreadsheet. Now I personally like to do this in Google Drive so I can easily¬†access it from any device and share it with someone I may be working with at the time, but you can also use Excel or something like that.

First column you write down every expensive you have. This includes domain name registration fees, and web hosting. If you hired a graphics artist to create some banners for you or if you hire a programmer to help you. All of those things must be included.

Now add those up. I do it by year and then at the bottom divide by 12 since most of my expenses are yearly except hosting so that works for me but you can do it however you want as long as you know exactly what you are spending. That is really all that matters.

Now it comes time to add up what you earn each month. I do this on a separate tab. I don’t know why, I just prefer this format since I track income per month.

I write down the name of every affiliate program I do business with in the first column. Next I write down what I earn per month.

Now this is the important part, you have to leave a spot for when you were actually paid. Sadly it has come to this. What you must do is note every time a company actually sends you a check and for how much so that you can easily see who isn’t paying you.

I was doing business with one affiliate program for years. Then one day I thought about it and realized, wow they haven’t paid me lately. So I logged in to find I had a balance of $1,454.49.

I contacted them, listened to their excuses as to why they didn’t pay me, filled out their newly requested paperwork and three days later I had my payment in full.

Had I been keeping track of when my payments came in prior to this, I would have caught that little problem long ago.