052 - Financial Statements Made Easy - profit & Loss Statement
Running a business without good books is like watching a foreign film without subtitles — you’re suffering unnecessarily! In Part 2 of our series on Financial Statements, we’re talking about the Profit and Loss Statement. We’ll cover what it is, how to get a good one, and how to use it to make better business decisions.
Show Notes
Overview: What is a P&L? (4:20)
5 questions your financial statements answer that you NEED to know. (7:04)
Where did the P&L start? (8:39)
Common problems people are experiencing if they have to ask, “Am I making money?” (10:34)
If you know you have BAD books, what can you do about it? (13:22)
Why you need the right kind of accountant. (PRO TIP: A tax accountant is NOT the one you want keeping your books.) (16:28)
What’s the difference between a “cost” and an “expense?” (19:53)
How should you arrange your P&L to get the most benefit from it? (25:10)
What’s your breakeven — You’ve GOTTA know this! (And we have a handy calculator in the show notes to help you figure it out.) (29:15)
How categorizing your INCOME can make your business better. (32:51)
When you have a GOOD P&L, what can you do with it? (38:40)
One Thing You Can Actually Go Do — Use our Breakeven Calculator (50:20)
Quotable Moments
“Most of the businesses I work with don’t know if they made money last month.” — M
“You need to know what the score is, and if you don’t like it, you need to know what to do about it.” — M
“Business owners who want to take their businesses seriously have to have good books.” — M
“[P&Ls] allow you to go into the month or year knowing what you need to accomplish. It gives you a target.” — K
“Better than looking just month to month is looking quarter to quarter, but also understanding the seasonality of your business... Compare quarter to quarter of the previous year. That’ll help you make better decisions.” — K
Resources
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The Profit Problem by Martin Holland
2 Second Lean by Paul Akers
Profit First by Mike Michaelowicz
Zeal Accounting with Lori Yearwood
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