Know Your Numbers

"If you don’t stay on top of your numbers associated with your business you will fail" - Dave Ramsey

How to Read a Profit & Loss Statement (Simple Guide for Business Owners)

Most business owners work hard every day… but have no clear idea if they’re actually making money.

That’s where your Profit & Loss Statement (P&L) comes in.

This simple report tells you:
👉 How much you made
👉 What you spent
👉 What’s left over (your profit)

If you can understand this one report, you can make smarter decisions and grow your business faster.👊

What Is a Profit & Loss Statement?

 A Profit & Loss Statement shows your income and expenses over a period of time.

Think of it like a scoreboard for your business.

The 5 Key Sections You Need to Know

1. Revenue (Income)

This is all the money your business brings in.

👉 Example: Sales, services, products

2. Cost of Goods Sold (COGS)

These are direct costs tied to what you sell.

👉 Example: Materials, labor, supplies

3. Gross Profit

This is what’s left after COGS.

Formula: Revenue – COGS

👉 This tells you if your pricing makes sense

4. Expenses (Overhead)

These are the costs to run your business.

👉 Rent, software, payroll, marketing

5. Net Profit

This is your bottom line.

Formula: Gross Profit – Expenses

👉 This is what you actually keep

Why This Matters for Your Business

If you don’t understand your P&L:
❌ You might be losing money and not know it
❌ You might price your services too low
❌ You might overspend without realizing it

When you DO understand it:
✅ You make confident decisions
✅ You increase profit
✅ You gain control of your business

Simple Takeaway

If you want to grow your business…
you must understand your numbers.

And it starts with your P&L.