💡 What?

<aside> 💡 Learn to confidently high level navigate a P&L statement from your accountant or create your own one, to get transparency over your financials.

DISCLAIMER: Some nuances and accounting rules may vary depending on the jurisdiction. The overall structure and logic although is very similar, at least in all the P&L’s we took a look at.

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❓ Why?

<aside> 💡 As a business owner, you need transparency within your financials to derive a variety of strategic and operational measures, reach overarching goals and act with “number backed” confidence.

Learning how to read a P&L is a good first start.

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💪 How?

General thoughts/checklist

• [ ] Start by identifying the key revenue streams in your SaaS business. This will help you understand how the revenue is generated and which products or services are most profitable.
• [ ] Analyze the revenue growth trends in your P&L statement to understand if your business is growing at a steady pace or if there are any fluctuations.
• [ ] Look at your gross margin to understand the profitability of your core products or services. This will help you identify areas where you need to focus your attention to increase profitability.
• [ ] Analyze your operating expenses to understand where your money is going and identify areas where you can cut costs.
• [ ] Understand your cost of goods sold (COGS) to know how much it costs to produce or deliver your products or services. This will help you price your products appropriately and optimize your margins.
• [ ] Analyze your sales and marketing expenses to understand how effective your marketing efforts are and identify areas where you can reduce costs.
• [ ] Understand your research and development (R&D) expenses to know how much you are investing in product innovation and development.
• [ ] Analyze your general and administrative expenses (G&A) to understand how much it costs to run your business and identify areas where you can reduce costs.
• [ ] Understand your EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) to know your company's profitability before factoring in non-operational expenses.
• [ ] Analyze your net income to understand your bottom-line profitability.
• [ ] Use financial ratios such as gross margin, net margin, and return on investment (ROI) to benchmark your business against industry standards.
• [ ] Compare your P&L statements from different periods to understand how your business is changing over time.
• [ ] Analyze the impact of changes in pricing, marketing, and operations on your P&L statement.
• [ ] Understand how your revenue and expenses are affected by seasonality and other external factors.