Unveiling Profit Secrets: The Math Behind Your P&L

Alright, let's cut to the chase about your monthly Profit & Loss statement (P&L). No magic tricks, just straight talk. When set up right, your P&L isn’t just a document; it’s a guide, showing you where your Custom Integration (CI) company is shining and where it needs a bit of polish.

The key? Profit Math. It's not complicated, just simple arithmetic:

GM% - COMP% - MOC% = NOP%

Breaking it down, GM is your Gross Profit, COMP is Compensation expense, and MOC is Major Operating Costs. The result – NOP (Net Operating Profit) – is the bottom line of your financial health. If GM is 60%, COMP is 30%, and MOC is 10%, then NOP is a solid 20%.

An NOP of 20% is the sweet spot, and that’s what the blue on our scale means. It's a classic profit model we call 60-30-10.

Can a CI company hit a 60% GM or higher? Absolutely! In our system, where everything except actual goods and related discounts is an expense (COMP or MOC), a GM of 60% or higher is pretty standard. Keeping a handle on Compensation and Operating Costs leads to a killer NOP.?

And here’s the thing: Understanding your numbers is one thing; turning that knowledge into action is another. That’s where the rubber meets the road. It’s not just about knowing; it’s about doing.

Ready to turn insights into strategies? Schedule a free call with us! https://growwithvital.com/freecall/

Stay focused and stay VITAL,

Matt & the team