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Profits: You Manage What You Measure – Don’t Make This Mistake





Like many small business owners, I just sort of jumped in the deep end when I started, and I didn’t have a lot of business systems set up.

After a disastrous attempt at an upgrade of my online store that left me deeply in the red and needing to borrow money from our family finances, I had to get serious.

I had been tracking my revenue but not my expenses.

I also wasn’t paying myself a fixed salary, but just taking money out of the business when I needed it. I stopped doing this and began to track not only revenue but expenses.

I now have a tricked out spreadsheet that calculates profit after transaction fees and taxes. Fixed expenses (my salary, server costs, advertising, etc.) are built into the sheet. I diligently enter sales and expenses as they come in and am always delighted when I get to that point in the month where every penny I earn is pure profit. I also have a column that calculates the cumulative running profit for the year.

Getting a handle on what’s going in and what is coming out has been an excellent tool in helping me make decisions.

I reviewed a lot of the advertising that I ran and pulled almost 80% of it. It was scary. I saw a drop in traffic, but not profit. The simple fact is – and I could tell by using Google Analytics – many of the banners I had out there just weren’t converting.

I can also now forecast better about where I can make extra expenditures and I’m getting more ruthless about determining whether or not a certain activity will provide enough return on investment.

It is  important to experiment and take risks; measuring and managing your profits and losses helps to make sure those risks are calculated and understand how much risk you can afford to take.

Are YOU measuring your income and expenditures properly? If not, why not?


Image source: Death to the Stock Photo

Eleanor Mayrhofer

Eleanor Mayrhofer has written 6 posts in this blog.

Eleanor Mayrhofer is the 'e.m.' behind e.m.papers, a printable stationery business. Before striking out on her own she worked for over 15 years at digital agencies as a designer, user experience practitioner, project manager and process methodology expert. She shares how to apply the expertise she gained in project management and methodology to running an indie business at Steal This Process.



This is great! Ive got a spread sheet for expenses and the like and admittedly need to work more on keeping track of numbers. Do you guys have a post about how to set up an effective spread sheet? Like what colums to include and how to do basic excel work? I can’t afford a better tracking program right now as I’m just starting out. I’m a little lost on how to make a spread sheet that works for tracking expenses and income effectively…


Hi Jay, glad you liked it! I have to be honest, my husband is an Excel wizard, so he set up all the formulas. Having said that, it’s not that complicated. I have one tab where I track all income via sales and which channel (My own store, Etsy, etc.) and a second tab where I track all expenses, standing monthly expenses like hosting, service accounts etc. A third tab calculates all the outgoing against incoming, plus takes into account VAT and transaction fees and that’s how I know what the current stand is.


Thank you Eleanor!

What say you?