Running your small business is no easy task – and when you have a million things to do at any given moment, you tend to look for the bottom line. How much will that cost us? How much will we make? So maybe when you go to review your profit and loss statement you don’t take full advantage of everything it’s really telling you. Below you’ll find some tips on what to look for to make sure you get the most out of your statements.
- Respond to Fluctuations in Sales– Everybody can anticipate to a certain degree how their business will react to big events like holidays, but let small trends fall through the cracks. Looking at the data, you may notice that the performance of certain products or services you offer hanges fluctuates in predictable ways. Knowing when demand for your business will be high will help you prepare to meet that demand and Increase your overall profitability
- Check Your Expenses – Your profit and loss statement will show you not only how much you’ve made, but how much you’ve spent to make that money. Compare profit and loss statements from quarter to quarter to make sure that you understand any increase in expenses. This will also give you a chance to evaluate whether or not it is possible or necessary to omit any expenses from your bottom line.
- Continue Growth – Of course your bottom line will tell you if you’re profitable now, but it won’t tell you whether that growth will continue. Much like checking in on your expenses, looking at your profit and loss statements over a period of several quarters will give you an overall idea of the “health” of your business and allows you a chance to course-correct if necessary.
RSS Feed
