Is your company making progress? Comparative Profit & Loss’s are the best method to determine whether you are gaining, holding or losing ground. Although most P&L’s give you a year-to-date figure, with an option to do a 2-year comparison, sometimes it’s better to look at a 3-month comparison, drilling down into the particular months and percentages:
Start by creating a Standard Year-to-Date Profit & Loss Statement:
Change the dates to This Fiscal Year then arrange the Columns by Month:
You can easily spot trends. If you are a Retail Store or a Restaurant, you can even drill down to the Days. Great information – helps you anticipate and prepare for your slower sales cycles.
An even more powerful report is to do this same drill-down analysis of trends and sales cycles by generating this same report (month or day) and compare it to this time last year:
The report shows changes in dollars and percentages. The percentages are where we concentrate most – our revenues may be up or down in any given timeframe but if our cost of sale remains stable and our expenses are remaining equitable to the amount of the sales, then life is good!
These percentages are critical to keeping a handle on your business.
By its very nature, a Profit and Loss is after-the-fact accounting; however, you can generate this report for the entire year to see how your company performed each month throughout the previous year. You can then attempt to control costs or anticipate slower periods before they occur this year.
Use a Profit & Loss Previous Year comparison to compare apples to apples – focusing on the percentages.
If you would like help running your business by the numbers, give me a call. We are happy to take a peek at your reports to help you spot trends and anticipate costs.
Barbara Rogoff opened the doors of Synthesis in 1994 with one client and a great idea: give high-touch detailed service with integrity and consistency. After spending 20+ years in corporate as right-hand to three different CEOs, Barbara learned the importance of organization and keeping a sense of humor!
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