The business man should have his expenses divided into as many classifications as possible. His payroll should be separated into various departments, office, salesmen, workmen, accounting, and so on; through all the items of expense the division should be made as finely as possible.
The proprietor should have a statement each week on his desk showing how every cent was expended. These items should be summarized monthly, and constant reference made to the items of expense in comparison with items of expense for the previous month, as well as items of expense for the same month of the previous year.
One of the pit-falls in nearly every business is "general expense" or "sundry expense." This department is a catchall for a lot of items, and it hides a lot of leaks and wastes in business.
You can't divide your expense items too minutely. The finer the divisions, the easier you can detect a waste of money.
The business man who has a statement of both receipts and expenses is in the position of the first engineer of an ocean steamer; he does not seem to be doing much and does not worry unless something goes wrong, then he shows his training and ability to mend breaks and repair weak places.
If the business man analyzes his sources of income into several divisions the same as he does his items of expense, he will find it an easy matter to correct errors that creep in the business. He does not have to worry about those items of expense which show minus, nor about those items of receipts which show plus.
With a finely divided sheet of both expenses and receipts you can quickly determine where the profit is coming from and where the leaks appear.
If an expense item shows plus, you can run down that item and see reasons for it and endeavor to bring down that expense. If a receipt item shows minus, you can run down that item and endeavor to increase the receipts.
The writer has a little printed card on his check book and it reads "Drive the axe into expenses." It is a constant reminder to stop the wastes.
The only real success that comes to the business man is the profits at the end of the year, that is, the amount of money he makes net.