Profit and Loss: Some Hard Truths!

Every business owner has heard of a profit and loss statement at some point. The number of business owners who fully understand them is much smaller. The number of business owners that understand them and regularly have theirs up to date is significantly smaller still.

Having a full understanding of what money is coming in and what your expenses are can help business owners understand their financial health and spot new opportunities. An accurate understanding of your company’s profit and loss statement can and should have an impact on most decisions you will make for the future of your business. Avoiding some common mistakes businesses often make can be the first step in making sure you are making informed decisions for the future of your company.

Duplication of Revenue

While everybody would like for their revenue to be higher, duplication of revenue isn’t the way to go about accomplishing that. There are many ways that revenue can accidentally be duplicated at various stages of the business cycle and making sure that there are checks and balances in place to prevent it is an important step to take.

Duplication of Expenses

Nobody would purposefully increase their expenses, but just as easily as revenue can be duplicated so can your operating costs. Some expenses can easily fall into several different categories, and often this is where mistakes can happen. Placing an expense into more than one category, even if it could belong in several, is an easy way to duplicate expenses.

Lack of Expense Tracking

Modern business owners have many different expenses and operating costs that need to be tracked and categorized to fully understand their profit margins. This can be a very daunting task but failing to accurately track expenses can lead to recurring expenses that are inflated or completely unnecessary. A great example of this for many modern businesses is software license costs. Few businesses accurately track the cost for all of the software licenses they use which can lead to large amounts of overspend.

Recurring expenses aren’t the only ones that need to be tracked closely to keep your business healthy. All expenses and operating cost should be considered when setting prices for goods and services. Failing to understand all of your expenses can lead to selling at a loss, or pricing yourself out of the market when you could be far more competitive.


Many of the consequences that arise from not having an accurate profit and loss statement, or failing to understand it, are fairy self-explanatory. Obviously it can effect your ability to accurately price your goods and services, but this is only the tip of the iceberg.

Important growth decisions like investing in an expensive piece of equipment, opening a new branch or location, or even hiring additional staff should never be made based on inaccurate financial information. Planning for growth should be based on a solid understanding of your financial health and projected future is the only way to set yourself, and your business, up for long term success.

The Deitz Difference

All of these concerns are things of the past for Deitz Consulting customers. Our clients receive monthly reports detailing exactly how much money came in, how much went out, and what your margins were for the past 30 days. While this information alone is enough to put you in the driver’s seat, our team also is also available to you for regular consultations to discuss those reports and what they mean for you and your company.

Get expert advice about your current operating costs and revenue to better understand where you can improve, or where you need to cut costs. Don’t guess about whether you are able to grow or invest, have our team help guide you in the right direction based on the financial history of your company rather than guesswork. Deitz Consulting can and will give you the peace of mind about your financial health so that you can confidently move forward in the best direction for you and your company!