Monday, December 18th, 2017
Have you ever heard the saying “you’re only as good as your last P&L”? What it basically means is there are typically 12-13 reporting periods in the business year and your business’ performance must be monitored closely to help ensure you put as many points on the scoreboard (profitability) as you possibly can before the whistle blows at year-end.
You either have 12 months or 13 four-week periods. For accounting reasons, most businesses use 12 reporting periods. For this article we will discuss “business performance” as it pertains to 12 report cards we call P&Ls.
What is a P&L? If you own a business surely you know what a P&L is, right? Well, not so fast. We have encountered businesses who have not yet created their P&L. What goes into a great P&L? Your P&L should summarize your company’s ability, or lack thereof to generate profits while monitoring and measuring all revenues, expenses and costs associated with operating your enterprise. Here at ShaBro Office Solutions we can help you build your P&L while taking into consideration every measurable financial facet of your company.
A well-constructed P&L will include a line of accountability for every penny of inflow and outflow for your company. As we move through this article you are going to learn your one and only true friend on your P&L is “top-line sales”. Of course, “bottom-line profit” is what you may “think” matters most but let’s look at the key areas of any well-constructed P&L:
Your P&L may include up to 80, 90 or more lines of information. There are sections for your “fixed” and “variable” expenses. An example of a “fixed” expense would be a monthly rent / lease payment as secured by a rental agreement or lease while an example of a “variable” expense would be your energy bill which can fluctuate from month-to-month.
Once your P&L is built you will be able to objectively look at every area of your business and determine where your strengths and weaknesses exist. BUT, you need to have benchmarks and goals.
Here are some things to consider:
Remember when we said your best friend on your P&L is your top-line sales? Well, it’s true and here’s the good news – with a well-built P&L powered by Shabro Office Solutions we can help you and your best friend month after month throughout the year!
Call us today and let us help you build your P&L.