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Experience has shown that most small businesses have a profit and loss statement that is arranged in a format that was determined by their accountant. While that arrangement may work for the accountant, it is not a format that allows the small business owner to understand the information so that they can make better decisions about their business. This calculator allows you to use our sample data, or input the information from your profit and loss statement to see how our suggested format can give you more insight to your busienss. In the traditional format you know your gross profit, gross margin, operating expenses and net profit. However, you do not get a clear image of how your operating expenses are being spent. After you look at the data in the traditional profit and loss statement, there is a bottom of that profit and loss statement which will allow you to move your data to the new format we are suggesting. In the new format, your operating expenses will appear in groups; advertising, occupancy, payroll, and 'other operating expenses'. Each of the groups are subtotaled as well as expressed as a percentage. There are additional columns in the new format where you can enter the data for 'year to date', 'same month last year', 'year to date last year' and 'budget'. This new format will give you the percentages and totals for each of the groups as well as give you a comparison for the 'year to date' and 'budget'. Again, the experience from having worked with many small business owners and having taught this in many educational sessions has shown that this 'logical profit and loss statement' allows the owner to better understand what has happened in their business as well as make decisions about the operation of their business. |
MAY 2024
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With over 25 years of frontline experience Tom Shay is America's leading Small Business Management Expert. He's a "Must Have" for your next event.
Small Business
The May Small Business Advisory is titled "Planning for a successful accountant" and is appropriate for many with the April 15 tax deadline having passed.
Did you work with your accountant? Or, did you just give them a bunch of papers and wait to receive a completed tax return?
Successfully working with an accountant requires a partnership. This month's Small Business Advisory gives suggestions of how to make this happen in 2024.
Small Business
We see that many small business owners have too much of a focus on the "top line" of their income statement.
Increasing revenue is great, but it is not a cure all for any challenges your business is facing. And sometimes, incresing revenue can create a challenge.
Who is your customer? Some small businesses have no focus. Their customer is whoever calls or walks in the door.
And some small businesses have determined which customers, in sufficient numbers, they should spend their efforts to attract.
The article of the month shares an old Southern rhyming couplet about business; "The bertter you niche, the more you get rich."
Lean Startup by Eric Reis is our suggested book for May.
As the title suggests, the reader of the book would be someone that is starting their business. However, we see more value than just that.
Perhaps you have been in business for many years. We think this book could give insight to items, and methods, that a small business owner should think about with their business today.
