Why Reading Your Profit & Loss Report Each Month Is Critical
About this episode
Robert has run his plumbing business for five years. His team is growing, cash flow is good and the bills are paid, so everything looks fine. But he’s never looked at a monthly profit and loss report, and deep down he wonders what he’s missing.
In the first episode of the Robert series, Kerry explains why so many successful-looking home service businesses run without a P&L, the questions you can’t answer without one, and why reading your P&L every month is the key to making informed decisions.
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Key takeaways from this episode
- Cash in the bank doesn’t tell you how profitable your business really is.
- Without a monthly P&L, you’re running your business blind.
- Your P&L answers key questions: are your prices right, and are your expenses too high?
- Focusing on growth is good, but you still need to step back and look at the numbers.
- Money getting tight can be a sign you don’t know how your business is really performing.
Show notes
Meet Robert
Kerry introduces a new four-part series following Robert, a plumbing business owner. Five years in, his business is growing, his team is expanding and his cash flow is healthy. What he’s missing is a monthly profit and loss report.
Why so many owners run without a P&L
It’s completely normal. When bills, rent and payroll are getting paid, it’s easy to assume all is well. But without a P&L you can’t answer simple questions: should you be charging more, are your expenses too high, and how much are you spending on things like fuel or meals?
The growth mindset trap
Robert has been focused on growth, which is exactly what an owner should do. But checking his bank balance on his phone has become his only measure. When money gets tight, he starts to wonder whether his profitability could be higher than it is.
Making informed decisions
Robert’s turning point is realizing he needs to read his P&L every month to understand what his numbers are telling him and what to change. Kerry explains how Abacus helps home service owners get accurate monthly reports, even if they don’t know QuickBooks or how to do a bank reconciliation.