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Management information system sounds very grand, but it need not be. It should just provide you with enough information to make timely and sound decisions, such as when to drop a particular program from your portfolio. I have dropped a number of affiliate programs in past because their return, if any, did not justify amount of time and expense being dedicated to them. I was only able to do that because I had enough information to make decision, sometimes very soon after joining a program.
2. Try to set aside a time each week or month to review your finances. Prepare a monthly profit and loss account covering whole business to see overall position. Also, try to break that down in a way that helps you see profit and loss of each product or online program which you may be marketing. Use that as a time, but not only time, to consider decisions about increasing activity in, or dropping, a program or product, or to alter their marketing mix..
3. When setting up your expenditure records, consider which costs will be fixed each month, and which are variable. A fixed cost is an overhead such as power for your home office, or your internet and computer expenses. A variable cost is more under your control in short term, for example advertising costs.
4. If your business comprises more than one online program or product, (for illustration A and B) try to allocate as much expenditure as possible to either A or B. This becomes part of your management information. You can use it to see if A and B are profitable. If you cannot allocate expenditure precisely between A and B, use your best guess. If you cannot do so, then consider if expenditure is really a fixed cost.
5. Ensure your income records keep track of where income has come from. This will be used with expenditure records in 4. to track profitability of different products.
6. If you are dividing your time between A and B, try to jot down each day time spent on each in particular. This information may one day help you to make an important decision. Time is a limiting factor. You need to make use of it. If your time comes under pressure, there will come a day when you will need to decide how your time is most profitably spent.
You may find some surprising results. I once had an advertising sales business, and my partner and I sold space in 7 specialist magazines. One of them only brought in a few hundred pounds each month, and my partner wondered if we should drop it. When I checked back a year for times spent on that and other magazines, one she wanted to drop actually brought in most revenue per hour of all of them. So we kept magazine going, and it later expanded. Without those time records, we would have made a bad decision without ever knowing.
7. From start of your business activity, try to formulate a plan and a budget. This will help structure your financial management. Do not worry if your first forecasts are wildly out. As you gain knowledge of your business and its market environment, your forecasts may improve. The important thing is to keep in management way of thinking. That will help you keep your finger on financial pulse. Your business will be more profitable in long run.
8. In conjunction with 7. prepare a cash flow plan and keep it updated. This could be a saviour for your business, and avert unnecessary pressure on yourself later.
The above has only really been an introduction to subject of financial management of your home business. You will be doing yourself a great favour if you try to learn bit more each month about different elements mentioned.
Roy Thomsitt is the owner of the home online business website, http://www.change-direction.com