Start by, assessing your Profit and Loss Statement. This gives you a snapshot of what you have earned, as well as any losses.
This means you can easily spot any areas you need to cut back on to get your take home in the green.
Ask yourself these questions:
- Where am I spending money?
2. Do I need these costs to operate efficiently?
3. Who benefits from this expense?
4. Do we use this expense on a regular basis?
5. Does this expense help us better serve our customers or increase revenue?
We had this client....
Our client Ashley came to us last month lost and confused because she had no idea what to do with all the numbers in her profit and loss statement and she had no idea why she cannot take home a bigger paycheck.
We walked Ashley line by line through her profit and loss statement. Ashley discovered that she was actually making more money from the service line that she thought was not profitable, it is incredible what you can find when you look directly at the data.
Next, we reviewed with Ashley where she was spending money so that we can determine what expenses we needed to eliminate.
We found out that Ashley was actually spending several hundred dollars every month on subscriptions she was not using!
After this discovery Ashley changed her marketing and sales strategy and canceled those subscriptions, today Ashley is seeing the highest profits she has ever seen in her business.
Analyze Where You are Making Money
Don’t forget that just because a product is selling, it doesn’t mean that it is your most profitable product, and it doesn’t mean you are making money from it. Analyze what products you make the most money from and market those products.
Project Your Profits for next month/year
Reviewing your Profit and Loss Statement also helps you make estimates in order to establish short term and long term goals. Your numbers are trying to tell you a story, listen to the story.
If you are not sure how to use these reports or need help creating these reports, book a call and you can discover the ways that a high-level bookkeeping firm can help you uplevel your finances and help drive better business decisions.