What is a P&L and Why Does it Matter?

You’re running a successful construction business, and you know you’re making money, but you’re not sure exactly how much. If you've gotten this far, you're not dumb. You have good business instincts. You know you need better accounting—you’re just not sure how to make it happen.

What you need is a reliable profit and loss statement, and it’s simpler than you think.

A Profit and Loss Statement (P&L) is your business’s financial scoreboard. It tells you whether you're making money, where your biggest expenses are, and where your financial blind spots might be. If you don’t have a P&L, you’re flying blind.

How to Get to a P&L That Actually Works for You

1. Run ALL Business Transactions Through Your Accounting Team & Software

A charge here, a Venmo there, a cash infusion into your business from time to time… they add up. To have an accurate P&L, you HAVE to start tracking these.

Your business finances should be crystal clear. That means tracking:

• Little Home Depot runs on your personal card.

• Venmo payments for subcontractors.

• Capturing handwritten receipts currently in a shoebox.

Every transaction—no matter how small—should go through your accounting system. If it doesn’t, you won’t have an accurate financial picture.

The easiest way to track these? Lean on your team. When they happen, snap a picture on your phone, text it to your assistant or other responsible party, and have them track it. You don’t have to create more work for yourself here. Just delegate this responsibility to someone on your team, either your assistant or bookkeeper, and get in the habit of snapping a quick pic and texting it to them.

2. Make Sure Delivering a P&L is in Your Accounting Team’s Scope

Many construction business owners assume their accountant is tracking their P&L. That’s a mistake. Unless it’s in their job description, don’t assume it’s getting done.

Before you do anything else, confirm with your accountant:

• Are they preparing your P&L?

• How often?

• Who is responsible for ensuring its accuracy?

If this isn’t already part of their scope of work, fix that now. (For help setting clear expectations with consultants, contact me for help. I’m always happy to exchange a few emails free of charge.)

3. Set a Weekly Accounting Meeting

If you want an accurate P&L, you’ll need to talk to your accounting team more often. A weekly accounting huddle works like magic to get everyone on the same page and keep your books clean. You should be doing something strategic with your accounting every single week. Not quarterly. Not “when things slow down.” Every. Single. Week.

During this meeting, you should:

• Review income and expenses.

• Answer your team’s questions about any transactions they’re having trouble matching.

• Flag any unusual spending patterns.

• Discuss cash flow and upcoming financial needs.

If you make this a habit, your finances won’t get away from you.

4. Start Reviewing Your P&L at Least Monthly

Your first P&L might be messy. That’s okay. Keep reviewing it anyway. Over time, the numbers will become more accurate, and trends will emerge.

Here’s why that matters:

What gets measured, gets managed.

If you track your numbers, you’ll start to see where things are getting out of whack.

Example: I had a client whose labor costs jumped from about 30% to about 50% of his expenses in a matter of months. When we pulled up the P&L, he immediately said,

“I know my guys are getting complacent. We’ve got to get more efficient on job sites. I’m paying too much in labor, and I need to let some people go. Seeing this in black and white just solidifies that for me.”

When you look at your P&L regularly, you start making decisions based on facts, not gut feelings.

Take Control of Your Business Finances

A P&L isn’t just an accounting report—it’s a tool to run your business smarter. If you don’t have one, start today. It doesn’t have to be perfect; it just has to be in place.

Once you have your P&L set up, the next step is making sure your accounting team is structured to support it. Need help? Just contact me. Again, I’m always happy to exchange a few emails with some pointers free of charge.)