Bonus way to use your P&L (that’s actually super productive)
If we don’t pause to see what’s working and what’s not, the things that are holding us back or that are “messy” will continue to grow as our business grows. This is why taking a moment to analyze the nitty gritty of the boring daily life of your business operations can really help you discover areas that need to be addressed.
So, how can your financial reports help you get here? All your revenue and your expenses are listed in some way or another in your reports. By looking at the categories listed in your reports, you will ensure you cover all the areas involved in the ins and outs of your finances.
Here’s what you can do:
Start with your P&L.
Look at a chunk of the categories listed there. We’re not looking at the actual numbers right now. Just at the categories.
Then ask yourself,
What apps are involved in this area?
Do I have a simple and effective workflow to accomplish the tasks involved?
If this is client facing, how is the client experience working out so far?
If this is needed for my operations, has it been worth it?
Do I need to exclude something or someone in this area in order to get closer to my goals?
Should I exclude something or someone in this area in order to get closer to my goals?
Do this until you complete all of the categories listed, and then move on to the Balance Sheet. This one is going to feel a bit different because you’ll see you other types of accounts listed in this report: bank accounts, liabilities, and equity. But you can still apply the same principles. For example, is this bank working for me? What pain points do I feel by this specific bank, credit card, etc. Or, how is this debt affecting my business? What do I think about the amount I’ve paid myself so far?
This guide can help you uncover even more questions, and answering those questions creates momentum. We tend to mistakenly think that confidence in our business comes after spending endless hours learning, or after we hit 6-figures, 7-figures, etc. But the truth is that confidence comes with practice, with actual doing. The more we do something, the better we become at it, and when we are part of that process, then we become more confident in that area. Your P&L can help you get there by providing you the numbers you need to be in-the-know of your business, but also by providing you a comprehensive guide of areas to monitor. This momentum doesn’t have to end. Keep it up year round, for example, by doing a quarterly check-in.