Bite-Size Chunks of Wisdom

March 2015

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The first time (or, to be honest, even the fifth or sixth time) you look at your profit and loss statement, if your background isn’t in finance or accounting, it can be a bit confusing. Don’t be discouraged. All you need to do is learn the accounting jargon, and approaching your P&L (also known as an income statement or revenue statement) will get easier every time.  
A P&L’s job is to give you a clear, overall picture of your business’s net income. How do you figure out what the net income is?
Subtract all your expenses from the total revenue you’re bringing in. But, it is not always that easy.
P&Ls can be more complicated depending on your business model. For a sole prop consultant, it could be very straightforward. But, a retail store with employees, suppliers, and more could have an incredibly complex statement.
P&Ls can be produced for any period of time, such as monthly, quarterly, or annually. The more often you generate them, the better.
Obviously, the profit and loss statement is incredibly important. In fact, most businesses are required by law to complete them. But, even if you weren’t, this is a practice your business should be religiously following. They help influence your future business decisions and provide a real idea of what is going on with your business finances. Profit and loss forms are also incredibly important if you plan to apply for a small business loan.

Diagnosing Your P&L

Here’s a little cheat sheet of the various terms that make up your P&L:

  1. Revenue – We know you know this one, but it is always good to review! Revenue includes the total sales that you make, along with money you receive from things like selling equipment or perhaps even receiving a refund on your taxes.
  2. Expenditures –  You know exactly what type of information is contained on the total expenditure line, but there may be specific types of expenditures you aren’t as familiar with.
  3. COGS – COGS stands for cost of goods sold. Long story short, just because you sell a cup of coffee for $4, you’re not making $4. You need to account for the cost of materials and time it takes to produce that singular cup of coffee.
  4. OPEX – OPEX stands for operational expenditures. These expenses include any other costs associated with running your business that are not included in the cost of goods. For example: workers’ wages, travel, training, leases, utilities, equipment purchases, hardware and software, advertising, cell phone, and internet service. The list can get quite extensive, depending on the size and type of business you operate.
  5. Depreciation – You already know that if you drive a new car off the lot, it immediately loses some of its value. This is depreciation — and it doesn’t just apply to cars. Equipment, machinery, and other items in your business can lose value over time, and this is something that can be counted as a loss at tax time.
  6. Profit – Profit is the “bottom line” on a profit and loss statement. It’s what’s left after you subtract all your expenses from your total revenue. And it’s probably the most important line for you. After all, your end game is to be profitable (and then once you reach that goal, increase that profit). However, if you dig a little further, you’ll find there are actually different types of profit represented on your statement.
  7. Gross Profit – This number is what you get when you subtract the cost of goods sold from your revenue. Business expenses like wages, utilities, and more are paid from your business’s gross profit.
  8. EBIT – This stands for earnings before interest and tax, and this number comes from subtracting both COGS and OPEX from your total revenue. The EBIT is a great indicator of business performance.
  9. EBITDA – This acronym stands for earning before interest, tax, depreciation and amortization. While this line can also be good for measuring profitability, the fact that it includes non-cash items (depreciation and amortization) means it doesn’t seriously impact your cash flow for the moment. But, it’s still important to understand. (However, most likely not as useful to you in the grand scheme of things.)

Understand your P&L is an important step to profitability (or increased profitability). Run your profit and loss statement frequently, identifying what is keeping you from your goal. Do you need to increase revenue, cut expenses, or both? Compare and contrast your most recent statements with past statements for a better picture of your current position and to help you make the most educated decisions going forward.

Need a profit and loss statement template? You can download one here for free.

A version of this post was originally published on the Fundera Ledger.

Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness, and many more.

There’s a curious similarity between client acquisition and growing vegetables. Like planting sprouts and seeds in hopes to take part in the full bounty of vegetables, entrepreneurs perform a very similar action when acquiring new clients. And, like gardening, our efforts often produce unexpected surprise.


Farming in the Dell

Having grown up in farming country, I had a front row seat to the complexities of planting and harvesting. My grandmother’s farm, famously known as the IDeal Farm, was the epicenter of a variety of farming activities.
From furrowing, planting, fertilizing, and growing a variety of grains, the hands of every available grandson and granddaughter was needed. And, when it came to time to harvest, a “thrashing crew” appeared to assist.
With the large number of “hired hands” to feed, the farm was the “ideal” place to produce a bountiful vegetable garden to feed everyone. As an urban farmer, I continue to employ my gardening prowess.
What recently happened amazed me!

Late Bloomers 

I planted a variety of vegetables last summer. Even though I had missed the ideal window for planting, I enjoyed a nice harvest of several vegetables including green beans, cucumbers, peas, swiss chard, and bok choy. It was fabulous!
After several weeks, the growing season ended. Then, this happened…
Following a well needed, albeit small amount of rain in southern California, seeds germinated from the earlier planting season. Carrots, bok choy, peas, and swiss chard seeds, planted 5 months earlier, began producing. Shocker!

Be Patient With Client Acquisition Seeds

My “late blooming” veggies were a good reminder of our lead generation and client acquisition efforts as entrepreneurs – and how they produce.
We plant, and nurture our marketing seeds. After a short time, we harvest the bounty of our efforts. When the immediate yield is less than expected – or anticipated – it can be discouraging. As evidenced by many a vegetable garden, it doesn’t mean that lead generation efforts weren’t productive.
Seeds planted – on a farm, in a garden, and in business – continue to incubate. Take time. Be patient. And, allow your efforts to yield results.

Before writing this blog, I set my timer at two minutes. I placed my fists on my hips, spread my legs, lifted my chest, and gazed to the heavens. I struck the Super-Hero pose.

At first, I questioned if I had it right. Then, I felt calmer. The calmness transitioned into confidence. I thrust my chest out just a bit more as if to signify that I am, indeed, strong and confident. Then, frankly, I started to laugh thinking how funny I must look to anyone passing my business.

 It didn’t matter, however. I wanted to find out if the research was right.

Gray Chatter
During a recent episode of my guilty pleasure, Gray’s Anatomy, Amelia was preparing to perform an unimaginable surgery on Dr. Herman. The stress was palpable. One little slip and Dr. Herman’s illustrious medical career would be over.
While preparing to “scrub in” for the long and dangerous surgery, Amelia struggled with a mini-meltdown. To regain her confidence, she struck a super-hero pose. Stephanie, her loyal assistant, questioned her behavior until Amelia shared that research shows that striking a super-hero pose improves ones confidence when doing a super-hero thing.  (Click to Tweet)
Really?!  Okay, I was skeptical. It’s Hollywood, after all. Yet, deep down, I wanted to believe that I, too, possess super-hero powers.
Gray Matter
Researchers wanted to know if assuming a certain pose would alter the brain’s chemistry. Would the super-hero, high-power pose, alter the brain’s testosterone-cortisol balance? Their answer was “yes”. Study participants experienced an increase in testosterone (power hormone), with an accompanying decrease in cortisol (stress hormone), when assuming the super-hero pose.
Additionally, researchers wanted to know if assuming the super-hero pose triggered an accompanying change in behavior consistent with that of a super hero. Again, the answer was “yes.”
In as little time as two (2) minutes, the superhero stance elevates confidence. It alters hormone production; lifting the power hormone and reducing the stress hormone.
As science demonstrates, body posture influences our brains and, consequently, our feelings. According to science, if you pose like a super-hero, you’ll think like a super-hero, and act like a super-hero. 
Seems like good advice for any business owner. Plus, who am I to argue with science?

Women have made significant progress since the days of suffrage. Today, women not only have the right to vote, but also play a vital role in the economy. In addition to holding high-power positions, females have taken the entrepreneurial world by storm. In fact, an average of 1200 businesses are started by women entrepreneurs each day, an increase of 740 more per day than last year. (Click to Tweet) And, this trend shows no signs of slowing down! The growth pace of women-owned businesses exceeds the national average.

What sets women entrepreneurs apart from their male counterparts? Simply put, a desire for better work/family balance. As the price of living has increased over the years, so has the need for women to work outside of the home. It’s nearly impossible for families to thrive financially on one income these days. That presents a huge problem for many women who are born nurturers.

For this reason, more women than ever are creating their own enterprises and seeking ways to either work from home or be in charge of their own schedules so that they can still devote 100 percent of themselves to their families.

If you’re in business for yourself, check out these five tips for succeeding as an entrepreneur:

  1. Don’t Be Afraid to Dream BIG – If you have a dream, don’t limit yourself. With more than 9.1 million U.S. firms owned by women and $1.4 trillion in sales from these firms, nothing is impossible. If other women are doing it, so can you. The first step toward success is to open your mind to the possibilities. Don’t limit your dream.
  2. Never Stop Believing in Yourself – This is a big one. Going into business for yourself is not easy; no one’s saying it is. In fact, the opposite is true. But a common phrase comes to mind when thinking about women entrepreneurs: Anything worth having is worth working for. You have what it takes to achieve your dream. Tell yourself this every day.
  3. Seek Trusted Support – With the number of women entrepreneurs increasing daily, there’s no shortage of support. Some of these very entrepreneurs, like the founders of In Good Company and Passion Planner, have even built their businesses with the goal of helping others. It’s crucial to your success that you seek guidance from trusted advisors who can help manage and achieve your goals.
  4. Get Educated on Entrepreneurship – Although you’ve managed a team in “another life,” entrepreneurship is different. Being an owner of a business is a different ball game, which requires a unique market outlook. Read educational materials, talk to other successful women entrepreneurs, and seek answers to any specific questions.
  5. Don’t Give Up on Your Dream – Failure is a natural part of life, and entrepreneurship is no exception. It’s challenging – but not impossible – to manage business and family. That’s what makes success even sweeter. Women in business often need to be tougher than men, but they combine that toughness with a sense of femininity and respect. Just keep on keeping on.

No matter your goals, remember – lots of women are making their dreams a reality. There’s no reason for you not to join the ranks of the successful woman entrepreneur.

Did you know that March is National Women’s History Month? (I must live under a rock, as I hadn’t seen it publicized.) Although I personally believe that every month should be National Women’s History Month, alas, we’ll celebrate when we can! 


This year’s theme, “Weaving the Stories of Women’s Lives,” reminded me of the women whose stories are woven into the fabric of my life and, subsequently, into my business.
My Grandmother – known in the community as “Ma” – taught me about overcoming overwhelm; something every small business entrepreneur benefits from knowing.
My mom, rest her soul, left an indelible influence on how to treat others respectfully through common sense and practical advice like “wear clean underwear”.
My Jewish great-grandmother, disowned by her family when she married a Lutheran, taught me courage of conviction in the face of controversy. She imparted lion-heatedness and tender-heartedness when, as a young woman in the early 1900’s, she immigrated to the Unites States from what was Prussia, purchased land, and donated it to the church.
My aunt, who never had children of her own yet nurtured her nephews and nieces, taught the significance of attention to detail through weekly cleaning of window frames and baseboards – which is why you’ll never find a round corner in my house.
Another aunt who imparted the value of enjoyment, laughter, and happiness when she taught “dirty” phrases in Russian when my parent’s back was turned. She may have been my very first “coach.”
Why It Matters
Although their courage, common sense, humor, and influence will likely not be published in a history book, like those of Susan B. Anthony or Rosa Parks, their influence is indelibly published in my history book.
The National Women’s History Project says it best:

“By walking history’s pathways, we learn to step forward with confidence. The legacy of how others shaped society sparks our own longings to contribute. Everyone needs role models — footsteps enough like our own to inspire us. 

History must tell the whole story. For girls, knowing women’s achievements expands their sense of what is possible. For all of us, knowledge of women’s strengths and contributions builds respect and nourishes self esteem — crucial to all children and adults now, and in the years to come.”

What women influence your small business achievements?

As an entrepreneur, strategic business coaching is a powerful tool to help you focus on your goals, enabling you to define, prepare, and achieve them. In order to achieve success with this tool, resources such a time and effort must be allocated and success must be measured.  

This tool, when used correctly, reduces the complexity and noise that surround you as you drive business forward. It allows you to experience improved lead generation, enjoy greater revenues, and enhance your work-life balance…all while building your self-confidence. Without a doubt, maximizing the return from this investment is a must! 

Driving the Coaching Relationship

With other kinds of development or learning process you are often a passive observer, active only in the directions of the process. However, the coaching relationship is very different.  You are the driver of ‘your’ goals and objectives.

The importance of getting the most out of the coaching relationship cannot be emphasized enough. Achievement in improved lead generation, revenue, and life-work balance requires dedication and drive.  (Click to Tweet)

The Quality of the Coaching Relationship

A strategic business coaching relationship has an element of any quality standard within a business. The same rules apply. When meetings are booked, they have an agenda. The number of actions that you and your coach plan together need to be prepared for in advance. These agreed upon actions move your business forward and are important for your progress. Your commitment to them is paramount.  Therefore, plan these actions into your schedule of business deadlines to ensure full completion. 

Making the Coaching Relationship Convenient

At Synnovatia, we make the coaching relationship as accessible and convenient as possible. In addition to accessibility by phone and email, we provide a recordable means of communication using Evernote.

By accessing a form within Evernote, you’re able to prepare for your meeting with your coach at your desk or on the go with your mobile device. You can also take advantage of those in-between moments to keep a record of any valuable insights, ideas or observations so you’re ready for your next coaching meeting.

Managing your Time for Maximum Progress

When the number of agreed upon actions exceeds your capacity, over-commitment rears its ugly head. Be aware!

This is where good time management and planning comes in. Knowing how much time an action requires, and your availability to complete that action, is an important skill.

Learn to maximize your coaching ROI by ensuring that you complete the actions you agreed to in the last coaching meeting. This enables your coach to have the expected results on time, and to prepare and allocate resources for the next meeting.

Learning to Go with a New Flow to Reach Goals

Sometimes a path to a goal looks fixed, and may appear as if it is achieved through a conditioned set of actions. This is normal. In fact, it often simply narrows down to a set of common beliefs within your business or industry.

However, through strategic business coaching, a set of alternative actions may be developed that are better suited to where you currently are in your business. Be open to these ideas. Often they are the experience of someone with the ability to look objectively from the outside-in.

The actual process of coaching helps maximize your efforts – especially when you prepare, implement, and stay committed to your actions. 

Core Business Assessment


Brooke Billingsley

Vice President
Perception Strategies

Synnovatia is a strategic coaching firm that is detailed and knowledgeable about business. i have a small business that grew from $150K to $750K because of the goal setting and resources that Synnovatia provided. It saves me years of learning on my own.

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