Start Seeing Your Financials as Tools—Not Just Tax Documents
If you’ve looked at your business’s Profit & Loss Statement recently, chances are it’s presented the same way as almost every small business I’ve ever reviewed: A long list of expenses from A to Z.
This layout isn’t wrong, but it’s not particularly useful. It’s simply the result of default alphabetical ordering in most accounting systems like MYOB or Xero. But this default format doesn’t help you see where your money is actually going—or what you can do about it.
What if instead, you looked at your expenses from Highest to Lowest?
Imagine your P&L with your largest cost categories at the top. This simple change makes the financial picture much clearer—instantly showing where the bulk of your money is going and where you might focus your improvement efforts.
Why isn’t this the standard approach? Mostly inertia. Accountants and bookkeepers replicate the default view.
But as an owner, you should be asking for financials that help you make decisions, not just lodge tax returns.
You Can’t Improve What You Can’t See Clearly
Too often, financial conversations focus heavily on tax—what to buy before June 30, or how to reduce your ATO bill. Tax advice matters, sure, but it doesn’t improve the underlying performance of your business.
If you want to be better rewarded for your effort, you need:
- More meaningful financial information, and
- Deeper analysis of that information.
And this leads to a key insight: You probably can’t improve profitability just by cutting costs.
The big costs are hard to move
-
Cost of Sales: Reductions rely on supplier negotiations or exchange rates, often out of your control.
- Wages: In a small team, cutting one person can mean serious disruption and more stress for you.
- Occupancy: Renegotiating rent or re-financing is rarely easy or quick.
The rest are small
All other expenses are usually a long tail of small-dollar items. You can trim some fat, but the real gains come from smarter thinking, not just frugality.
So, What Should You Do Instead?
Start by making your financials more insightful:
1. Ask for a Highest-to-Lowest (H–L) view of your P&L
It’s easy for your accountant or bookkeeper to do, and it immediately changes how you see your business’ financials.
2. Review Year-on-Year comparisons
Looking at FY23, FY24 and now FY25 side by side reveals important trends:
Are profits growing or shrinking?
Has revenue plateaued?
When was your last price rise?
3. Go deeper, line by line
Don’t just look at totals—ask what drives each expense:
Can I streamline or outsource this?
How much control do I really have over this cost?
Is cutting this going to break something else?
Better Questions = Better Business Decisions
Great financial analysis should prompt you to ask:
- Which products or services are actually the most profitable?
- Could I reduce revenue but increase profit by trimming complexity?
- Could I move to a part-time role if I streamlined operations?
These are the kinds of questions that lead to real improvements in value, profits, and work-life balance. And they all start with using your numbers differently.
Want to Take the First Step?
If you’d like help to re-work your financials for clearer insight, I’m happy to chat. Getting a fresh perspective is often the first move toward unlocking more value in your business, whether you plan to keep it or eventually sell.