Hey there! Sue here.
Last week, I had three different business owners sit in my office, and when I pulled up their P&L statements, they all did the exact same thing. They nodded politely while their eyes glazed over like I’d started speaking ancient Greek.
One of them—a contractor from Cheyenne—finally laughed and said, “Sue, I just look at my bank balance. If there’s money, we’re good. If not, we’re not.”
I get it. Most of us didn’t start businesses because we love financial reports. We started them because we’re good at what we do, whether that’s running a ranch, managing rental properties, or providing professional services.
But here’s the thing: your P&L isn’t some boring requirement your accountant invented. It’s literally the story of your business, written in numbers. And once you learn to read it (which is way easier than you think), it’s like having X-ray vision for your business.
Your P&L Cheat Sheet: The Only Parts That Really Matter
Let me break this down the way I wish someone had explained it to me 20 years ago. Your P&L has three main characters in its story:
The Hero: Your Revenue (Top Line)
This is all the money coming in. Simple enough, right? But here’s what it’s really telling you: Is your business growing, shrinking, or stuck? I always tell clients to look at this number compared to the same month last year. Up is good. Down needs investigation. Flat might mean you’re ready for something new.
The Villain: Your Expenses (The Middle)
Everything you spend to keep the doors open. But not all expenses are created equal. Some are investments (that new equipment saving you hours), others are just costs (did you really need three software subscriptions that do the same thing?).
The Plot Twist: Your Net Profit (Bottom Line)
Revenue minus expenses equals profit. Except sometimes it doesn’t feel that way, does it? You can have great revenue and still feel broke. That’s usually when your P&L is trying to tell you something important.
Red Flags Your P&L is Waving (That You Might Be Missing)
After reviewing hundreds of P&Ls for Montana and Wyoming businesses, I see the same warning signs pop up:
Revenue Up, Profit Down
This is like working harder to make less money. Usually means your costs are growing faster than your sales. Time to play detective.
The 30% Rule
Any single expense category eating more than 30% of revenue needs a hard look. Exception: cost of goods for retail or equipment-heavy businesses. But if office supplies are 30%? We need to talk.
The “Miscellaneous” Black Hole
If more than 5% of expenses are labeled “miscellaneous” or “other,” you’re flying blind. Those hidden costs add up fast.
Seasonal Surprises
Your P&L from last August should look similar to this August. Big swings mean something changed—and you need to know what.
What “Normal” Looks Like for Your Industry
Every industry has different “normal” profit margins. Here’s what I typically see across Montana and Wyoming:
Construction & Contractors: 5-10% net profit (higher for specialized trades)
Professional Services: 15-30% net profit
Agriculture/Ranching: 10-20% in good years (highly weather dependent)
Retail: 5-10% net profit for specialty shops
Energy Services: 10-15% net profit
Real Estate/Property Management: 6-12% net profit
Tourism & Hospitality: 8-15% net profit (seasonal businesses vary widely)
Below these ranges? Time to dig deeper. Way above? You might be missing some expenses (or doing something really right).
Turn Your P&L Into Your Business GPS
Here’s my simple system for actually using your P&L to make decisions:
The Monthly 10-Minute Review Every month, ask these three questions:
- Is revenue growing compared to last year?
- Which expense increased the most?
- Is my profit percentage steady or declining?
The Quarterly Deep Dive Every three months, look for trends:
- Which revenue streams are strongest?
- What expenses could I reduce without hurting quality?
- Am I paying myself enough?
The “Something Feels Off” Check Trust your gut.
If your P&L shows profit but your bank account doesn’t, something’s off. Usually it’s one of these:
- Accounts receivable piling up
- Inventory or equipment purchases eating cash
- Owner draws exceeding profit
- Loan payments (principal doesn’t show on P&L)
Your August Action Plan
Since we’re mid-month, here’s what you can do TODAY:
- Pull your P&L for July (or June if July isn’t ready)
- Circle your net profit percentage
- Find your biggest expense (besides cost of goods)
- Compare to the “normal” ranges above
That’s it. Four steps, maybe 15 minutes. But now you know more about your business than most owners do.
The Bottom Line on Your Bottom Line
Your P&L doesn’t have to be intimidating. It’s just your business story, told in numbers. And like any good story, once you know what to look for, it gets a lot more interesting.
Some of you reading this just realized your profit margins are way off. Others discovered you’re doing better than you thought. Either way, knowledge beats guessing every single time.
And if you looked at your P&L and thought “I have no idea what I’m looking at”? That’s okay too. That’s what we’re here for.
Remember: August is the perfect time to get clear on your numbers. You’ve got enough 2025 data to see patterns, but plenty of time to make adjustments before year-end.
Your business has a story to tell. Time to start reading it.
Sue and the team at Abundant Skies help Montana and Wyoming business owners understand their numbers without the headache. If your P&L might as well be written in hieroglyphics, let’s translate it together. First consultation is always free—and always in plain English.