Margin Drivers Stage 1 · FoundationsGuide 1 of 22

P&L 101

Profit & Loss At a Glance

The scorecard every other guide uses.

Stage 1 · Foundations4 min readStart here Completed

The Profit & Loss statement is the scorecard every other guide in this roadmap uses. Read it top to bottom: start with what you billed, take away what the jobs cost, then what it costs to run the company. What's left is profit.

Where each $1 of revenue goes

Example company · $110,000 revenue

Gross Profit · 60.3¢ left to run the business

39.7¢10.8¢34.9¢10.1¢

Direct 39.7¢
Indirect 4.5¢
Fleet 10.8¢
Admin 34.9¢
Net Profit 10.1¢

Every line, in plain words

Term · what it meansWhat goes in itExample

Revenue

Everything you invoiced customers for work performed. The “top line.”

In-house work $100,000 + subcontracted work $10,000

$110,000100% of revenue

−

Direct Expenses

Costs tied to doing the job itself. No job, no cost.

Field labor, materials, subcontractors, equipment rental, dump fees

$43,70039.7% of revenue

Gross Profit

What the jobs earn before paying to run the company.

Revenue − Direct Expenses

$66,300$110,000 − $43,700

Gross Margin

Cents kept from every $1 after job costs.

Gross Profit ÷ Revenue

60.3%

−

Indirect Expenses

The hidden “burden” that rides along with every crew hour.

Field payroll taxes, workers' comp, vacation/sick pay, travel & lot time

$5,0004.5% of revenue

−

Fleet Expenses

The cost to own, fuel and keep trucks and equipment running.

Depreciation, vehicle & equipment fuel, repairs, fleet insurance, small tools

$11,85010.8% of revenue

−

Admin Expenses

The cost of running the office and the business: overhead.

Office salaries & taxes, rent, utilities, advertising, insurance, phones, payroll processing

$38,38034.9% of revenue

Net Profit

The bottom line: what the business actually earned.

Revenue − Direct − Indirect − Fleet − Admin

$11,071$110,000 − $98,930

Net Margin

Cents of true profit kept from every $1.

Net Profit ÷ Revenue

10.1%

Try it with your own month

Starts with the example company's numbers

Your P&L, one dollar at a time

Type in one month from your own P&L to see where your dollar goes.

Revenue ($)

Direct expenses ($)

Indirect expenses ($)

Fleet expenses ($)

Admin expenses ($)

Direct
Indirect
Fleet
Admin
Net Profit

Gross Profit

Gross MarginGross Profit ÷ Revenue

Net ProfitRevenue − all four expense lines

Net MarginNet Profit ÷ Revenue

Key idea: Gross Margin shows how well you price and run jobs. Net Margin shows how well you run the whole company.

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Profit & Loss At a Glance

Where each $1 of revenue goes

Every line, in plain words

Revenue

Direct Expenses

Gross Profit

Gross Margin

Indirect Expenses

Fleet Expenses

Admin Expenses

Net Profit

Net Margin

Try it with your own month

Your P&L, one dollar at a time

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