Most people know about the Profit and Loss report and that’s really exciting to them because it shows you how much revenue you’re making, and supposedly how much profit you’re taking home.
So that can be exciting, and a bummer. You can feel like you’re doing terribly because there’s no cash in the bank, and then look at the revenue and realize you’re bringing in all this money and just need to figure out where it’s going and plug the leaks.
The Profit and Loss shows how much you’re spending on payroll, rent, technology, etc. in terms of percentages of total revenue. So if I know that I want my payroll to be 35% of my revenue, I can see where I’m at, and start working the payroll into the right percentage.