For today’s show, I thought we’d take a little stroll down the path of profit and loss statements. Because nothing is better than understanding your hair salon’s numbers.
So, today I’m going to talk about some common themes when it comes to our P&Ls, and I’ve put them into six different categories. Now, some of you are probably doing more than this. But in most cases, I think six is a great place to start.
And I want you to keep in mind a couple of things.
Everyone has a different way of looking at a P&L statement.
A tax person, for example, only cares about your profit and loss because it helps them file your taxes, and your taxes tend to group a lot of things together. Yet when I’m looking at my P&L, the more information I have by category, the better it helps me understand what is going on in my business. So, sometimes my accountant will want me to put things in certain places that will benefit the tax return, but it really doesn’t help me understand my costs and my expenses.
The same thing holds true for any bookkeeper you might have. If a bookkeeper is trained in a certain way, they’re going to try and create your profit and loss statement the same way.
Now, there are some basic accounting rules that you must follow, and in many cases, they’re trying to follow a consistent flow. Most accounting programs like QuickBooks will default things to certain categories because of this.
However, every single program allows you to do things your own way. Anything is possible no matter what your bookkeeper may tell you.
My main point is you can set up your profit and loss statements to read however you would like as long as you follow generally accepted rules of accounting.
Ultimately, your P&L is just the flow of money through your salon. And it’s important that you capture it as it happens because that’s going to give you the best information to make the best decisions you can make in your hair salon.
So, with that, let’s jump into the six things you need to understand about profit and loss statements.
Episode Highlights
[03:33] What it means to trust your people but verify what’s going on.
[06:38] Why you don’t want your P&L to fall more than 30 days behind, especially at the end of the year.
[09:00] How inventory purchases can skew the month on your profit and loss statement.
[11:36] Why you should look at your monthly trends and not just your year to date.
[13:00] The insights your P&L statement provides into your hair salon business.
[14:40] Why your profit and loss will be skewed some months more so than others.
Looking for more tips for how to grow, scale, and ultimately sell your hair salon business? Check out our other Unchained From the Chair podcast episodes.
