Margin Drivers Academy Module 1 · Read the scorecardLesson 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.

Next lesson: Balance Sheet At a Glance →