Ever wonder how some leaders transform losses into profits and guide their organizations from the brink of collapse to sustainable success? The secret often lies in their ability to decode one powerful document—the Profit and Loss statement, better known as the P&L. With the right strategies, even financial challenges can be turned into opportunities for recovery and growth.
What’s a P&L?
The P&L isn’t just a sheet of numbers; it’s the story of how a business earns and spends money. Whether you’re running a business, investing, or exploring a career opportunity, understanding this document is crucial to making informed decisions. And no, I’m not talking about Wall Street giants or household names like McDonald’s or Starbucks—I’m talking about every startup, nonprofit, small business, or even your Etsy shop.
How Lisa Freed Up $7K by Decoding Her P&L
Meet Lisa, a nonprofit leader juggling big dreams on a small budget. One afternoon, while reviewing her P&L statement, she discovered her organization was paying $7,000 annually for various app subscriptions. Not for magazines or journals—but for tools like a task reminder app, a platform costing $640 per quarter to raise $27 (on a good day), and another $420 to send e-blasts to a constituency that mostly expected free goods and services.
It was a wake-up call. Lisa realized these costs weren’t just numbers—they were eating away at her mission. So, what did she do? She took a hard look at her expenses, prioritized tools that delivered measurable impact, and said goodbye to the ones draining her resources. The result? Freed-up funds to reinvest in programs that truly mattered, proving that even small changes can lead to big recoveries.
Pro Tip from Lisa
Before I pay for any app, I always search for alternatives that offer the same service for free or at a lower cost. New apps often compete with big-name brands and provide excellent features without the hefty price tag. It’s how I saved my nonprofit thousands—and stayed on budget! Click here to explore Lisa’s curated list of free or low-cost apps.
Lisa’s Highlighter Method: Making Sense of Your P&L
Just like Lisa, you don’t need to be an accountant or CPA to read your P&L statement. All you need to do is review it monthly. Lisa recommends printing it out and using two highlighters: green for revenue and yellow for expenses. Revenue categories are numbered—for example, Lisa’s revenue starts with 4000, and subcategories are derived from it. Sales is 4005, and Grants is 4015. Curious about 4010? It’s reserved for various sales products, such as mugs and T-shirts. The P&L organizes everything into neat categories to help you stay on top of your finances. Click here to explore FAQs about the P&L and get answers to your burning questions.
Lisa’s Profit and Loss (P&L) statement revealed her total revenue is $213,846.05. But before she could breathe a sigh of relief, she noticed her expenses totaled $250,165.13. By doing a simple calculation—deducting revenue from expenses—Lisa faced the hard reality that her company was running a deficit of $36,319.08. You might think it’s not a huge loss, but the truth about losses is that they accumulate—just like those stubborn pounds Lisa is trying to lose. Compounding the issue is her expensive business model, which makes her operations unsustainable in the long run. 
Lisa’s New Approach: Strategic Fundraising and Model Refinement
Lisa knew she needed to do something, other than firing staff, so she decided to empower them by asking to raise funds without doing a fundraiser event, which is the topic of another post. So, Lisa asked her team to focus on direct donor outreach: staff members integrated fundraising into their daily work, reaching out to individuals, businesses, and community leaders for direct contributions.
Impact: Personalized appeals strengthened donor relationships and brought in $50,000 over three months.
Lisa encouraged staff to create sponsorship packages highlighting the nonprofit’s mission and impact. These were presented to corporate partners and local businesses, offering visibility opportunities in exchange for financial support.
Impact: The sponsorship campaign generated $35,000 in unrestricted funds within one quarter.
Lisa rewarded her staff with raises and small bonuses as a gesture of appreciation for their efforts. Of course, not all staff members stayed with Lisa—some thought her ideas were unconventional. But that’s okay; those who stayed reaped the rewards of a stronger organization and the benefits of their hard work.
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