One of the first and most important requests we always have for our new clients is that they print a profit and loss report from QuickBooks. While there’s no doubt that it’s good to let your accountant guide the financial end of the business, every business owner should be able to access, read and understand the business profit and loss statement. Your P&L, as it’s called, is a clear summary of the revenues and expenses of the practice. It begins with an entry for revenue, subtracts all the costs of running the business and the bottom line (literally the last line on the page) is the practice’s net profit.
By running this report with percentages, you can see how much you’re spending in each category and which categories are getting out of hand. Let’s look at an example of two very important numbers you’ll look at …… staff salary and supplies. Because these are the numbers that can race out of control very quickly, they need to be monitored regularly. If you start comparing quarter to quarter and year to year and see salaries and supplies going up and up with no proportional rise in revenue, you know it’s time to sit down with a good accountant or consultant and figure out what’s wrong and start planning strategies to fix the problem. Remember, hard work and money coming in is only part of the picture, tracking what’s going out as well is the only real way to stay solvent and your profit and loss statement is one of your best tools for increasing actual revenue by reducing costs.
