PART 1

Profit

Since you are still looking at the book, it probably means that you have a small business and/or are about to start one. That’s great. One of the things that I have experienced is that when you own your own business, it gives you a sense of independence and means that you have a passion for what you are doing. It also means that you are probably going to work harder than a person who works for another corporation, and in doing so, you want to make more money than you would by working for a large corporation. Warren Buffett was once asked by a reporter why he kept the present management and gave them some ownership at some of the companies he bought. His reply was that ownership is critical. “Have you ever seen anyone wash a rental car?”

The purpose of this book is to give you some very factual and real points to work with in order to improve the profitability of your company. We are going to analyze, review, and attach sample sheets of items that you have to work with in order to be able to make a simplified profit and loss statement (P&L) work for you. One of the reasons you want your own business is to make money. Consequently, we need to see if we are making money sooner rather than later. That is why I like a weekly home grown P&L that you will have if you follow the chapter on separating fixed costs from variable costs. After a few months of adjusting our weekly P&Ls to what we received from a certified public accountant (CPA), we, most of the time, were within a couple of percentage points from the CPAs. I will explain costs to the point, where you won’t cringe when your CPA returns your monthly statement. You will have an in-house P&L sheet that will allow you to judge your performance and make any necessary adjustments. The only math will be in the beginning and is simple enough that a seventh grader can handle it.