Franchise Owner's Guide to P&L Statements
Did you know that 40% of small business owners consider themselves financially illiterate?
That’s right, and over 60% feel unsure about the financial state of their business.
If you’ve ever looked at your Profit & Loss (P&L) statement and felt confused…you’re not alone.
At Franchise Resource, we believe every franchise owner should feel confident when reviewing their numbers. That starts with knowing how to read and use your P&L.
What is a Profit & Loss Statement?
A Profit & Loss statement (also called an Income Statement) shows your business’s revenue, expenses, and profit over a set period, usually monthly or yearly.
It answers the big question: Did we make money this month?
But Here’s the Catch … Profit Doesn’t Equal Cash
Let’s say:
Your P&L says you made $5,000 in profit last month.
But you had to pay a $10,000 equipment bill and a $3,000 loan payment.
Even though your business looks profitable on paper, you’re actually short on cash. This is where cash flow comes in. A different (but critical) financial statement.
Why does the P&L really matter?
Your P&L shows performance over time.
Understanding your Profit & Loss helps you:
Make informed decisions about spending and hiring
Spot trends (Are your costs going up? Is revenue seasonal?)
Track how fees like royalties and marketing fund contributions are impacting your bottom line
Prepare for tax season with confidence
Identify areas to cut costs and increase profit
Franchise-Specific Tip: Watch Those Fees!!!
Many franchisor fees are based on gross sales, not profit.
That includes:
• Royalties
• Brand fund contributions
• Required tech subscriptions
These fees hit your P&L before you see your net profit. If you’re not tracking them closely, they can sneak up on your bottom line.
At Franchise Resource, we:
• Break down these fees monthly
• Ensure you’re charged correctly
• Help you plan and forecast with confidence
Ready to Take Control?
You don’t need to be an accountant, but you do need to understand your numbers. Watching a 20-minute video like this one could be the best investment you make this month.
Franchise Accounting You Can Count On
Based in Omaha, Nebraska since 2013, we have been providing professional and reliable bookkeeping services for franchise owners.
Our bookkeeping services are designed to make your life easier so that you can focus on what you do best!
