3 Reasons Why Your Need Your Profit & Loss Statement
If you aren’t actively using your Profit and Loss statement to manage your business, you are likely overlooking some key areas of your business that with some oversight could take your business to the next level.
Here are 3 reasons why you as the owner of a Restaurant, Salon or Specialty Shop need to be managing your business by your P&L.
Your margins will tell you a lot of what you need to know to increase the net income of your business while reducing costs. Without knowing your margins your likely won’t know if your costs are over or under 50%? Are you spending too much or possibly not charging enough for your products and services? Only your margins will tell you all of this and more.
This is why you need a reconciled and balanced Profit and Loss statement monthly that include your margins.
Cash flow is often king in your business. When cash is plentiful times are good, but when cash starts to dwindle stress and panic may start to set in. Knowing your Profit and Loss over a period of time will show you what your specific trends are for your business so you can forecast and plan. Using some of that plentiful cash to help you ride out times when cash flow dips.
This is one of the reasons you should have a year to date or even a full 12-month Profit and Loss by month monthly so you can review and analyze your trends.
Your Profit or Loss
Are you making money or are you losing money? Where are you losing money? Only your Profit and Loss will answer these questions for you. You need a P&L though that is accurate and gives you the correct information. Often businesses are shocked to see what their actual bottom line is and where their money is going. Everything month you should be analyzing your P&L for ways you can make your business better. Compare it to the same period the prior year to see how much growth you have accomplished and use it to help budget for the upcoming year.
The Profit and Loss statement is one of the financial statements that you as the business owner should know and understand.
At Bookkeeping Solutions 5280 we have over 15 years experience supporting small businesses including helping to produce timely and accurate Profit and Loss statements while educating and advising business owners in using these statements to become their most successful!
Let us do your bookkeeping, so you can get back to focusing on what you love to do.
Contact us today for your Free Consultation.