Why Every Business Owner Needs to Make Monthly P&Ls a Habit (Yes, You Do!)
As both a business owner and coach, I can tell you one thing for sure—staying on top of your Profit & Loss (P&L) statements can completely transform how you manage your business. And let’s be honest: whether you’re a seasoned entrepreneur or just starting out, you’ve probably had that moment where you hope your bank account is keeping pace with your ambition (spoiler alert: hope is not a strategy!). Monthly P&Ls are the reality check you didn’t know you needed—trust me, you do. Let’s break down why reviewing them every month is critical, and why it doesn’t have to be a snooze-fest.
1. It’s Your Financial Reality Check
Without monthly P&Ls, you’re basically running your business with a blindfold on, hoping you don’t trip. And let’s face it, no one wants to find out they’ve been accidentally hemorrhaging cash when it’s too late. Your P&L lays everything out—your revenue, expenses, and whether you’re swimming in profit or dipping dangerously close to red ink.
• Why It Matters: Regularly checking your P&L means you catch those sneaky expenses (hello, unnecessary software subscription you forgot about), and you can adjust before things get out of hand. It’s like checking your fridge for expired milk—nobody likes surprises, especially sour ones.
2. No More Guessing Games—Informed Decisions Only
Back when I started my first business, I was all about gut decisions. Sometimes they worked. Sometimes…well, not so much. Now, thanks to the magic of P&Ls, you don’t have to rely on your gut alone. Your numbers are right there, telling you exactly where you stand.
• Personal Example: Once, I noticed my marketing spend was through the roof, but the ROI was… let’s say, meh. My P&L revealed the mismatch before I dumped even more money into campaigns that weren’t working. Being able to adjust mid-course saved me from a financial freefall.
• Why You’ll Love It: With clear numbers, you’ll know exactly when it’s time to invest, cut back, or pivot. No more guessing—just smart decisions backed by data.
3. Keeping Cash Flow in Check
Ah, cash flow—the ever-elusive unicorn that every business owner chases. Even if your sales are killing it, poor cash flow can drag your business down. A monthly P&L keeps you in the loop about how much cash is coming in versus how much is going out, and whether you’re secretly hoarding unsold inventory or just overstocked on office snacks.
• Pro Tip: Use your P&L to check if those office supply orders are getting a little too “generous” (do you really need the fancy coffee machine right now?). Small changes here and there add up to big savings on your cash flow.
4. Track Your Progress—Without the Rose-Colored Glasses
We’ve all set ambitious goals—“I’m going to double my revenue this year” or “I’m cutting expenses by 20%.” Great goals, but how do you know if you’re on track? Monthly P&Ls are your accountability buddy, letting you compare actual performance to your financial goals.
• Why This Matters: It’s one thing to dream big and set goals, but it’s another to know when things are (or aren’t) going to plan. Seeing the numbers lets you know where you’re winning and where you need to course-correct.
• Pro Tip: Don’t wait for the end of the year to figure out you’re off track. Your P&L gives you a clear month-to-month view to avoid those “I’ll fix it later” regrets.
5. Taxes—Making April Less Terrifying
Look, nobody likes tax season (unless you’re a CPA, and even then I’m skeptical), but P&Ls make it a whole lot easier. If you’ve ever found yourself frantically scrambling through receipts in April, you know what I’m talking about. A well-maintained monthly P&L means you’re ready to file those taxes with minimal stress.
• Bonus: You might even discover some tax deductions you didn’t think of, which means more money in your pocket. Who doesn’t love that?
6. Spot Red Flags Early (Before They Get Costly)
When you’re reviewing your P&L monthly, you catch issues before they spiral out of control. Rising costs, shrinking margins, or mysterious expense categories that seem to be creeping up—your P&L will highlight them all. It’s like the check engine light for your business.
• Personal Story: A few years back, my labor costs were rising month over month, but it wasn’t clear why. By diving into my P&L, I discovered overtime hours were eating into my profits. I made some scheduling tweaks, and just like that—problem solved.
7. Yes, Even a Coach Needs a Mentor (And P&Ls Help)
Here’s something I don’t talk about enough: even coaches need guidance. Yep, I had a mentor who insisted I get serious about my financials early on—and I’m so glad I listened. Your P&L isn’t just a tool for you—it’s a tool for anyone mentoring or advising you on your business.
• Why It Helps: Having a mentor, coach, or even an accountant regularly look over your P&L gives you an outside perspective. You’d be surprised how much they can spot just by reviewing your numbers. My mentor once pointed out that I was spending too much on a particular marketing channel that wasn’t yielding results, something I might have missed on my own.
Even if you’re running the show, it never hurts to have someone else looking at the numbers and holding you accountable. As they say, two heads (and sets of eyes) are better than one.
Final Thoughts: Make It a Habit (You’ll Thank Me Later)
If you’re not already reviewing your P&L every month, it’s time to start. It’s not just about crunching numbers; it’s about running your business smarter, avoiding pitfalls, and making data-backed decisions that help you grow. And yes, a P&L habit can even help you sleep better at night—because knowing exactly where your money is going is a whole lot better than guessing.
Need help getting started with your P&L or setting financial goals? At Led to Lead Consulting, we offer personalized coaching to help you understand your numbers and grow your business with confidence. Visit us at Led to Lead Consulting to learn more.
