worked with a mid-sized construction company that was struggling to stay afloat financially. Despite steady revenue, their profits were razor-thin, and cash flow was always a headache. The owner couldn’t figure out what was going wrong.
Their question was simple: “Where is all the money going?”
The answer, as it turned out, was hiding in plain sight—within their Profit & Loss (P&L) statement. The problem was, they only reviewed it quarterly, which was far too infrequent to catch small issues before they became big problems.
A Simple Weekly Habit: The Game-Changer
I proposed a straightforward solution: review the P&L every week. This wasn’t about turning the owner into a finance expert but about developing a regular rhythm to identify patterns and act quickly.
We broke the P&L into three core areas
- Revenue: Where the money was coming from.
- Fixed Costs: Rent, salaries, and insurance.
- Variable Costs: Materials, overtime, and subcontractor payments.
Each week, we dedicated 30 minutes to analyzing these categories and asking one key question: “Does this make sense?”
Week 1: Catching the Overtime Leak
In our first weekly review, we found a glaring issue: overtime costs were out of control. Instead of accounting for 10-15% of payroll, they had ballooned to over 35%.
Upon investigation, we discovered that crews were working overtime on small, unapproved tasks that weren’t tied to billable projects. By tightening overtime approvals, we cut these costs immediately.
Savings: $3,500 in the first week.
Week 3: Fixing Cash Flow Bottlenecks
By the third review, we noticed a troubling pattern. One major client—a consistent revenue generator—was paying invoices 90 days late instead of the agreed 30 days. This delay was forcing the company to rely on credit to pay vendors, adding unnecessary interest costs.
We addressed this in two ways
Introduced a late payment penalty.
Offered a 2% discount for invoices paid within 10 days.
The client started paying on time within two weeks, significantly easing cash flow stress.
Impact: $1,200 saved in interest fees monthly.
Week 6: Spotting a Hidden Revenue Opportunity
A surprising insight came in week six. Their equipment rental service—a sideline business—was quietly outperforming some of their core construction projects in profitability. However, the rental rates were significantly underpriced compared to competitors.
We raised the rates by 15%. Customers continued to rent the equipment, but now, each transaction was far more profitable.
Revenue boost: $5,000 monthly.
The Results: A Business Transformed in 12 Weeks
By the end of three months, this weekly habit delivered massive results:
- Overtime costs were reduced by 40%.
- Cash flow issues were resolved, saving $14,400 annually in interest fees.
- Revenue increased by 10%, thanks to better pricing strategies.
Most importantly, the company, which had been barely breaking even, was now generating a healthy 10% net profit margin.
What You Can Learn
Reviewing your P&L weekly isn’t just a financial task; it’s a business strategy. Here’s how you can implement this in your business:
Set Aside Time: Block out 30 minutes weekly.
Focus on Key Areas: Break your P&L into revenue, fixed costs, and variable costs.
Ask Critical Questions: Look for unusual spikes, consistent delays, or underperforming areas.
Take Immediate Action: Adjust processes, renegotiate terms, or reallocate resources.
The sooner you make this a habit, the faster you’ll uncover hidden inefficiencies and growth opportunities.
Start Today
Your P&L holds the key to better financial health. Start reviewing it weekly, and you might be surprised at what you uncover. Whether it’s cutting unnecessary costs, fixing cash flow issues, or discovering hidden revenue streams, the results can be transformative.
Have questions or want help with your P&L analysis? Let’s talk!
