April 30, 2025 • 8 mins
Your Profit and Loss Statement (P&L) isn’t just another report—it’s the financial roadmap to your business success. If you’re not looking at it every month, you’re missing key insights that could help you increase profit, cut unnecessary expenses, and make better decisions.
In this episode, we’re breaking down:
✅ What a Profit and Loss statement is and why it matters
✅ How to analyze your revenue, expenses, and net profit
✅ The red flags to watch for in your P&L
✅ How to use your P&L to improve pricing and spending habits
✅ The simple habit that will make tracking your business finances way easier
If you want to take control of your business finances, start by understanding your P&L statement—this episode will show you exactly how.
🎧 Hit play now and learn how to use your P&L to build a stronger, more profitable business!
Resources & Links
Website: https://www.firestormfinance.com/
Instagram: https://www.instagram.com/firestormfinance/
Threads: https://www.threads.net/@firestormfinance?hl=en
LinkedIn: https://www.linkedin.com/in/samantha-e-8796b6176/
Newsletter: https://firestormfinance.myflodesk.com/podcastnewsletter
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Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Samantha (00:00):
Welcome to CreativeMind Smart Money, the podcast where
creativity and business smarts collide.
I'm your host, Samantha Eck,bookkeeper, business coach, and
your go to guide for building thecreative business of your dreams.
Whether it's mastering your money,streamlining your systems, or growing
your business, I'm here to shareinsights that empower you to thrive.
Plus, I'll be bringing in industryexperts to dive into all aspects
(00:22):
of entrepreneurship, so you canturn your passion into profit
without losing your creative spark.
Let's get started
You are listening to the CreativeMinds Smart Money Podcast, and
today is the first in a series offinancial statement deep dives.
Today we're looking at your profitand loss, and we're taking a deep
dive into your profit and lossto help you as a business owner
(00:44):
have a baseline understanding ofwhat it is that you're looking at.
I've said this before, butfinancial education is.
So limited, and as business owners we'rekind of just tossed into things and
expected to know things, which is why Iwanna be a resource and helpful for you.
However, if you have found that youare missing something, a specifically
(01:04):
a topic or someone you wanna seeon this podcast, please check the
description box for a topic, suggestionform that you can fill out and we can
hopefully get your topic on the podcast.
You are also free to leave any sortof questions you have in there, and I
might eventually do a q and a episodefilled with questions from listeners.
(01:27):
But let's get right into yourprofit and loss statement.
Your profit and loss statement isprobably one of the most important
statements to look at, and it'sliterally like the tea on your business.
I actually look at three differentversions of the profit and loss
with my clients every month, andit's because a lot of it gives you a
lot of different information and ifyou don't know what you're looking
(01:50):
for, you can be kind of confused.
So understanding your profit and loss.
We'll help you to make smarter decisionsand avoid certain financial headaches.
So what is a profit and loss statement?
A profit and loss or p and l or incomestatement is one of the most important
financial statements that you shouldbe looking at every single month.
(02:10):
There are three different set, well,sometimes four, but there's usually
with us service providers, there'susually three different sections.
You have your revenue, yourexpenses, or potentially your cost
of goods, and then your net income.
So when you're looking at all of these,they make up your profit and loss.
When we look at a profit and lossthough, the question we wanna ask
(02:32):
ourselves is, what was my net income?
Now, of course, you don't justwanna look at your net income, but
you really do wanna understand whatyour net income was, because it
either is a net loss or a net gain.
So.
Utilizing this to understand your numbers,you're going to take a look at your profit
loss by saying, okay, I am going to lookat my profit loss and say, okay, I brought
(02:57):
in $10,000 in revenue, so that's great.
Now, you know, especially if you havelooked at your chart of accounts and
you've set up a really cool custom chartof accounts, and you have all of your
different revenue streams listed out,whether that's digital products or your
services, and then you have your expenses.
Now your expenses are goingto be the next section.
That has all of your expenses andbased on how you categorize them,
(03:21):
you can have like your subscriptions,your insurance, things like that.
It's going to help youdetermine kind of what is there.
And then the, of course, the finalsection is your net income, so that's
at what's left after your revenueand your expenses are deducted.
If you have a. Netincome, that's fantastic.
If you have a net loss, then ofcourse that's where you want to
(03:42):
take a look at this and readjust.
So of course this matters becausewhen you look at this, it helps
you to determine your pricing.
And when we talked about intentionalspending and everything like
that a couple weeks ago, one ofthe things we talked about is
understanding what your expenses were.
So if you're starting to think aboutbeing intentional with that, the
profit loss is one of those placesyou can start, where you can look at
(04:03):
your spending and see your habits sothat you can start to prep for that.
If you are a sole prop or a single member,LLC as well, the p and l is most likely
the place where all of your businessactivity happens and where people will
be looking at, unless you're buying like$30,000 trucks and cars and going out
and spending all your money in differentplaces, the IRS is usually only looking
(04:26):
for your deductibles because you don'thave a lot of assets, and usually with
a lot of smaller businesses, we don'tconsider your purchases assets unless
they're over $2,500 because it's morebeneficial for you to deduct that.
Asset immediately, rather than do itover the lifetime of however long it is.
(04:46):
Like if you're spending $10,000on a truck, of course that's
gonna be more beneficial foryou to deduct that over time.
And the IRS will actually requireyou to, but usually if it's smaller,
we don't need to worry about that.
So.
Of course, again, it matters becauseyou wanna see what your net income was,
and it's gonna help you to determineif you need to make some adjustments,
whether in spending or in pricing.
(05:07):
But this is where you wanna check forred flags because you wanna look at
where your expenses are your highest.
Usually we look at what the, the topthree categories that are your highest is.
You have low margins now.
If you're someone who sells products,when I'm talking about low margins, you're
gonna look at your cost of goods and thenyou're gonna look at your gross profit.
(05:27):
And your gross profit is gonna determinelike what you have after the money,
the, the funds that you've spentdirectly on your products have come out.
And it's always good to take a lookat that and say, okay, well, hmm,
I only have 60% after I've spentwhat I need to make my products.
So that's a really goodspace too, as well.
(05:49):
And then it's also a great placeto see if you're like, okay,
my cash flow is inconsistent.
Why is it inconsistent?
Because you can kind of look at when yourincome is coming in on your profit and
loss and, and analyze that in that sense.
So it can really be used to youradvantage because it can identify trends
and help you to set those financialgoals that I'm always talking about.
(06:09):
Because when you look at that, ithelps you to make those data-driven
choices, which sets you up for thatintentionality that I'm so keen on.
So when you take a look at thisevery month, it really does just.
Bring to light all of those areas whereyou're overspending, but it also can help
you see if maybe your pricing too low.
(06:29):
And that's why this is one thatis such an important report.
And usually I always suggest thatyou go back and you compare your
current month to your previous month.
And if you have enough data, you shouldalso look at it year over year as
well as year to date, because it'lljust really give you that insight.
So how often should you renew it?
(06:50):
Now you already know I've talked aboutdoing monthly coffee dates so that
you can stay ahead of any sort ofdata or stuff that's coming your way.
This should be one of thosethings that you're looking at
during that monthly coffee date.
And I know you're probably like, oh mygosh, Samantha, why do you keep talking
about these stupid monthly check-ins?
But they're so important, and I knowthat you're like, oh, I don't have time
(07:10):
to check it in monthly, but make it fun.
Even if you have to doit on a weekend for.
30 minutes just to check in on things.
Put on some music.
Watch a TV show.
Grab your favorite, drink your energy.
Drink your chocolate coveredpretzels, whatever it is, and sit
down and look at your numbers.
Even if you have a bookkeeper,it is so important.
For you as a business owner, to beas informed as your bookkeeper is.
(07:33):
You need to know what'sgoing on in your business.
You are the decision maker.
You are the person making the decisions,and looking at these, in addition to
looking at everything is so important.
When I send my clients theirfinancial breakdown, yes, I walk
them through their profit and loss.
I walk them through their balancesheet, but I fully expect them to also
be looking at that and saying, oh,Samantha, like I noticed that this
(07:54):
was higher on my profit and loss.
How do we get that down?
And that is exactly what you shouldalso be doing, regardless of if
you have a bookkeeper or not.
You should be analyzing that.
I want you to remember that a pand L isn't just for tax time.
It's a tool that every business ownerneeds to use to grow sustainably.
I want you to start today by takingyour most recent p and l and analyze it.
(08:18):
Look at those, the income.
Look at the expenses, andlook at your net profit.
Is it where you want it to be?
And if you haven't startedsetting those financial goals yet,
then you definitely should be.
I'll be talking about that later thisyear when we get closer to the end of the
year about setting more intentional goals.
'cause I know I did talk about thata little bit last year, but I really
wanna go into a deep dive for that.
(08:40):
If you found this episode helpful, pleasesubscribe, leave a review, and share it
with your fellow, fellow entrepreneurs.
As always, I wish you the best weekever and we'll see you next week.
Farewell fellow travelers.
Welcome to CreativeMind Smart Money, the podcast where
creativity and business smarts collide.
I'm your host, Samantha Eck,bookkeeper, business coach, and
your go to guide for building thecreative business of your dreams.
Whether it's mastering your money,streamlining your systems, or growing
your business, I'm here to shareinsights that empower you to thrive.
Plus, I'll be bringing in industryexperts to dive into all aspects
(00:22):
of entrepreneurship, so you canturn your passion into profit
without losing your creative spark.
Let's get started
You are listening to the CreativeMinds Smart Money Podcast, and
today is the first in a series offinancial statement deep dives.
Today we're looking at your profitand loss, and we're taking a deep
dive into your profit and lossto help you as a business owner
(00:44):
have a baseline understanding ofwhat it is that you're looking at.
I've said this before, butfinancial education is.
So limited, and as business owners we'rekind of just tossed into things and
expected to know things, which is why Iwanna be a resource and helpful for you.
However, if you have found that youare missing something, a specifically
(01:04):
a topic or someone you wanna seeon this podcast, please check the
description box for a topic, suggestionform that you can fill out and we can
hopefully get your topic on the podcast.
You are also free to leave any sortof questions you have in there, and I
might eventually do a q and a episodefilled with questions from listeners.
(01:27):
But let's get right into yourprofit and loss statement.
Your profit and loss statement isprobably one of the most important
statements to look at, and it'sliterally like the tea on your business.
I actually look at three differentversions of the profit and loss
with my clients every month, andit's because a lot of it gives you a
lot of different information and ifyou don't know what you're looking
(01:50):
for, you can be kind of confused.
So understanding your profit and loss.
We'll help you to make smarter decisionsand avoid certain financial headaches.
So what is a profit and loss statement?
A profit and loss or p and l or incomestatement is one of the most important
financial statements that you shouldbe looking at every single month.
(02:10):
There are three different set, well,sometimes four, but there's usually
with us service providers, there'susually three different sections.
You have your revenue, yourexpenses, or potentially your cost
of goods, and then your net income.
So when you're looking at all of these,they make up your profit and loss.
When we look at a profit and lossthough, the question we wanna ask
(02:32):
ourselves is, what was my net income?
Now, of course, you don't justwanna look at your net income, but
you really do wanna understand whatyour net income was, because it
either is a net loss or a net gain.
So.
Utilizing this to understand your numbers,you're going to take a look at your profit
loss by saying, okay, I am going to lookat my profit loss and say, okay, I brought
(02:57):
in $10,000 in revenue, so that's great.
Now, you know, especially if you havelooked at your chart of accounts and
you've set up a really cool custom chartof accounts, and you have all of your
different revenue streams listed out,whether that's digital products or your
services, and then you have your expenses.
Now your expenses are goingto be the next section.
That has all of your expenses andbased on how you categorize them,
(03:21):
you can have like your subscriptions,your insurance, things like that.
It's going to help youdetermine kind of what is there.
And then the, of course, the finalsection is your net income, so that's
at what's left after your revenueand your expenses are deducted.
If you have a. Netincome, that's fantastic.
If you have a net loss, then ofcourse that's where you want to
(03:42):
take a look at this and readjust.
So of course this matters becausewhen you look at this, it helps
you to determine your pricing.
And when we talked about intentionalspending and everything like
that a couple weeks ago, one ofthe things we talked about is
understanding what your expenses were.
So if you're starting to think aboutbeing intentional with that, the
profit loss is one of those placesyou can start, where you can look at
(04:03):
your spending and see your habits sothat you can start to prep for that.
If you are a sole prop or a single member,LLC as well, the p and l is most likely
the place where all of your businessactivity happens and where people will
be looking at, unless you're buying like$30,000 trucks and cars and going out
and spending all your money in differentplaces, the IRS is usually only looking
(04:26):
for your deductibles because you don'thave a lot of assets, and usually with
a lot of smaller businesses, we don'tconsider your purchases assets unless
they're over $2,500 because it's morebeneficial for you to deduct that.
Asset immediately, rather than do itover the lifetime of however long it is.
(04:46):
Like if you're spending $10,000on a truck, of course that's
gonna be more beneficial foryou to deduct that over time.
And the IRS will actually requireyou to, but usually if it's smaller,
we don't need to worry about that.
So.
Of course, again, it matters becauseyou wanna see what your net income was,
and it's gonna help you to determineif you need to make some adjustments,
whether in spending or in pricing.
(05:07):
But this is where you wanna check forred flags because you wanna look at
where your expenses are your highest.
Usually we look at what the, the topthree categories that are your highest is.
You have low margins now.
If you're someone who sells products,when I'm talking about low margins, you're
gonna look at your cost of goods and thenyou're gonna look at your gross profit.
(05:27):
And your gross profit is gonna determinelike what you have after the money,
the, the funds that you've spentdirectly on your products have come out.
And it's always good to take a lookat that and say, okay, well, hmm,
I only have 60% after I've spentwhat I need to make my products.
So that's a really goodspace too, as well.
(05:49):
And then it's also a great placeto see if you're like, okay,
my cash flow is inconsistent.
Why is it inconsistent?
Because you can kind of look at when yourincome is coming in on your profit and
loss and, and analyze that in that sense.
So it can really be used to youradvantage because it can identify trends
and help you to set those financialgoals that I'm always talking about.
(06:09):
Because when you look at that, ithelps you to make those data-driven
choices, which sets you up for thatintentionality that I'm so keen on.
So when you take a look at thisevery month, it really does just.
Bring to light all of those areas whereyou're overspending, but it also can help
you see if maybe your pricing too low.
(06:29):
And that's why this is one thatis such an important report.
And usually I always suggest thatyou go back and you compare your
current month to your previous month.
And if you have enough data, you shouldalso look at it year over year as
well as year to date, because it'lljust really give you that insight.
So how often should you renew it?
(06:50):
Now you already know I've talked aboutdoing monthly coffee dates so that
you can stay ahead of any sort ofdata or stuff that's coming your way.
This should be one of thosethings that you're looking at
during that monthly coffee date.
And I know you're probably like, oh mygosh, Samantha, why do you keep talking
about these stupid monthly check-ins?
But they're so important, and I knowthat you're like, oh, I don't have time
(07:10):
to check it in monthly, but make it fun.
Even if you have to doit on a weekend for.
30 minutes just to check in on things.
Put on some music.
Watch a TV show.
Grab your favorite, drink your energy.
Drink your chocolate coveredpretzels, whatever it is, and sit
down and look at your numbers.
Even if you have a bookkeeper,it is so important.
For you as a business owner, to beas informed as your bookkeeper is.
(07:33):
You need to know what'sgoing on in your business.
You are the decision maker.
You are the person making the decisions,and looking at these, in addition to
looking at everything is so important.
When I send my clients theirfinancial breakdown, yes, I walk
them through their profit and loss.
I walk them through their balancesheet, but I fully expect them to also
be looking at that and saying, oh,Samantha, like I noticed that this
(07:54):
was higher on my profit and loss.
How do we get that down?
And that is exactly what you shouldalso be doing, regardless of if
you have a bookkeeper or not.
You should be analyzing that.
I want you to remember that a pand L isn't just for tax time.
It's a tool that every business ownerneeds to use to grow sustainably.
I want you to start today by takingyour most recent p and l and analyze it.
(08:18):
Look at those, the income.
Look at the expenses, andlook at your net profit.
Is it where you want it to be?
And if you haven't startedsetting those financial goals yet,
then you definitely should be.
I'll be talking about that later thisyear when we get closer to the end of the
year about setting more intentional goals.
'cause I know I did talk about thata little bit last year, but I really
wanna go into a deep dive for that.
(08:40):
If you found this episode helpful, pleasesubscribe, leave a review, and share it
with your fellow, fellow entrepreneurs.
As always, I wish you the best weekever and we'll see you next week.
Farewell fellow travelers.
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