Fripperies - Small Spending in our BusinessNov 27, 2022
What are Fripperies?
Commonly known as small spendings in our business. These items may not be in our budget and when not taken care of, they can eat into the profits quickly.
How can we stay in control of all those tiny expenses?
It's something that often gets overlooked in our business finances. We may have a budget and know exactly where every dollar is going but sometimes little things sneak in. Sometimes those unexpected smaller expenses can add up quickly, and before we know it, they have turned into a yearly amount we didn't budget for.
One of the biggest things that I've noticed is that people usually don't have a line for general expenses. I call them fripperies, but you might have them down as something else. You might not have them down at all, and this is where we can fall into a little bit of a trap.
Although they're only small, it might only be a $5 cup of coffee. It might be a small meeting where we've taken a client out to lunch. I'm not talking about subscriptions or recurring payments because they should be on your schedule already. I'm talking about something new that may pop up, particularly in the meeting space.
Perhaps your business went online during the great freeze of 2020. Perhaps now that the world has returned to somewhat normal, and maybe still in some businesses, you've got little expenses popping up that weren't part of your budget before. Maybe it is just a lunch, a little breakfast meeting. It's those tiny expenses, that aren't part of our budget, that can add up quickly.
My recommendation is to have an additional line in your finances to allow for these things. You might know exactly what's happening in your finances and already have them down as meeting expenses, but we need to make an allowance for them.
Another thing I want to highlight is that it's okay to add things to your budget. This is the purpose of having a budget in pencil. When we start a new financial year, we might sit down, do our budget and lock everything in. But it can actually create a mindset of, that's it it's set in stone, now, I just need to monitor that spending. But here's where I want you to change that mindset and be prepared to update your finances as these smaller purchases come along.
Things do pop up. Our businesses change, we change, and our client's needs change. So get out your pencil and paper, or your spreadsheet or accounting platform. Whatever you are using for your finances, make sure that you've got a line for ‘The Fripperies’.
Make an estimate and make sure you're popping that into your total expenses. It may be $10 a week, $20 a week, it may be $50 a month. This will help us keep better track of our total expenses.
Another good way to approach this is to have a general line on your budget. Don't even call it anything, it doesn't need to have a name. Just pop a figure in there, even if it's just $2 a week. If you're anything like me, you might be watching every single dollar in your business. And with this extra knowledge of knowing where the money is being spent you might decide, you know what, I'm not actually going to make those purchases any longer. You can put the boom gate down on anything you like in your finances.
You are in total control, it's your money and it's your decision to make. Knowing how you operate, as an individual, with your finances and your spending is a key factor to knowing whether you need to put this into your budget. One thing I've seen time and time again is it just gets overlooked and depending on the size of your business, it can have a major impact on your bottom line.
So I want you to do me a favor.
Think about whether this is something you need in your business budget and just be honest with yourself. That's the purpose of this conversation. If we have fripperies in our business, if we have those tiny expenses occurring, that's okay. Just make sure you're allowing for them.
And if you don't, that's okay too. You don't have to put it down. Just know yourself, know your spending, and most importantly, know how you are operating your business so that you are in control.