Customize Your Statements to Show Key Numbers

Every business has key numbers that directly affect its bottom line. These numbers can vary from industry to industry, company to company, and even between departments.

For example, food costs are important to a restaurant while a landscaper needs to track the cost of owning and operating garden machinery. A company that has both a software development division and a consulting division has different expenses and revenue streams for each, and needs to break them out so they can be monitored individually.

Make sure you know which figures are critical to the success of your business. Then make sure you customize your profit and loss (P&L) statement so you can follow them closely. You'll benefit by knowing exactly where you're making - and losing - your money.

Case in point? A restaurant owner had two locations but only one set of books. Although the owner had the feeling that one of the locations was not doing very well, it was only by formally splitting the two that he discovered the true magnitude of the problem. One location was very profitable while the other was losing money. After careful consideration, the owner decided that the right answer was to close the money-losing operation and give his full attention to the profitable location.