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As an owner you have major responsibilities.
You control the future of your business.
You assure your clients are cared for properly.
You make sure your employees get paid.
You cannot let go of the tiller.
It’s your ship to sail . . . or sink.
Is your bookkeeper often late with your P&Ls?
Do you have to ask for them?
Make it policy that your P&Ls come on time.
Good bookkeepers are proud of their work.
They run the profit and loss statements on time.
Expect the P&Ls the day the month closes.
That does not mean two weeks later.
It means the first business day of the new month.
We close the books for the month right after lunch.
We then prints out our cash and accrual P&Ls.
We print out and check our balance sheets.
They tell how our company performed right away.
P&L statements and balance sheets are critical.
They cannot be ignored.
They should be comparative.
Each line item should show this month’s gain or loss.
A second column should show this month last year.
A third column should show percentage changed.
Were your income lines up over last year?
If not, why not? This is a danger sign.
Were your expense lines up from last year? This may be a warning sign or something else.
It may be only that it cost more to produce more.
Rising revenues often raise expenses.
So what do you look for?
Your margins. Are they consistently profitable?
How do you know? What’s standard in your industry?
Is a 10% margin an industry standard?
Then aim for 12% to 15%.
Aim higher than competitors in your industry.
Next week we’ll discuss your balance sheets.
You do check your balance sheets, don’t you?
