A Profit and Loss Statement, or a P&L (as the cool kids like to call it) is a report that tells a narrative about your business over a specific period of time. ⁠Whether your business is big or small, it all comes down to numbers! The story of your business is told through reports like the Profit and Loss. ⁠ ⁠ Yeah, super cool Billy, but seriously, how can I actually understand all these numbers? ⁠ Geez, relax, I am getting there. You will generally have these three categories on your P&L:

  1. Revenue: Income
  2. Cost of Goods Sold: Your direct costs⁠
  3. Operating Expenses: Overhead⁠

After we add and subtract and subtract the above, we see your net profit or your net loss. You can then use these numbers to: ⁠

  • Plan for the future by using the past.
  • Make sure your business is profitable
  • See where you are overspending and where you have room to spend more.

Long story short, if you know how to read and understand your P&L, you can use it to as a tool to truly understand where your business stands.