How NOT to Read a Profit and Loss Statement

Are you intrigued by the title of this podcast - How Not to Read a Profit and Loss Statement?

You are!

Great! that was the objective.

Let me explain.

Most often you read about how to do something. it is the favorite way to share information. You go about explaining the steps needed in doing something.

However, it is sometimes boring to listen to how to do something.

What do I mean?

What I mean is that sometimes it is more powerful to show how not to do something.

It brings out the mistakes or errors in an approach.

That teaches you even more than just how to do something.

You know what they say about leadership. You learn more about leadership by watching a bad leader or how not to be a leader than to be a good one.

It is the same with reading a Profit and Loss Statement.

I guarantee you will learn much more by knowing How NOT to read your Profit and Loss Statement.

Read on for this exciting new approach...

Performance

Every business needs a measure to make some meaning out of its activities and to assess results.

The most commonly used statement for this is the monthly profit and loss statement.

Every hotel operations manager probably gets to read, review and in many instances interpret a Profit and loss Statement.

Interpret is a polite word for performance.

In all instances you are answerable to your Boss and the company for results in your department.

So, knowing your way through the various sections of the Profit and Loss Statement is a pre-requisite for survival.

Reading a Profit and Loss Statement is not just about reading about revenue, expenses and profits.

It goes way beyond that.

It helps tremendously to think of the Profit and Loss Statement as the Performance Statement.

This places focus on what it "reflects" rather than what it "contains."

What do I mean by that?

It means it is more effective to look at and understand a Profit and Loss Statement from what it means to your company and your Boss and you.

Did you do better than last month? Did you perform average? Did you lose money?

These are just a few of the questions that will come your mind if you keep the Performance Statement perspective.

The most important perspective of all will be the one relating to your decisions.

Did you take the right decisions?

Which decisions proved right? Which decisions failed (hence room to learn and adapt).

However, it is unfortunate that most times the profit and loss statement is read incorrectly and worse, decisions are taken based on such erroneous reading.

So, I am going to take this powerful but reverse approach to reading a hotel profit and loss statement.

By sharing how NOT to read the hotel profit and loss statement!

If you are an aspiring general manager, build The Ultimate 10 Tools in a Hotel General Manager Business Toolkit with the Mastering Hotel Finance Online Course.

Strap on your seat belts and hang on to something....

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