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Does your income statement (P&L) have to bore people to death?

Or can you excite, align, and lead people with it?

I remember one of our monthly leadership meetings like it was just yesterday. We went through our monthly performance in the form of our P&L (also known as Income statement or Profit & Loss statement), highlighting a few things and the biggest changes from the previous month and our plans. Talking about it for a bit and moving on to plans for specific teams for the upcoming month. And I just caught myself nodding my head and not really trying to go deeper and understand all the different drivers. I stopped and thought to myself, isn’t there a better way to do this?

This is what you usually see when you talk about Income statement (P&L), right?

Does this tell you a story and does this inspire you? To be honest, it bores me to death even though it contains a lot of interesting facts. If it does inspire you, you are a lucky person but for the rest of us, I’ve tried to outline a few ideas that might help you transform your P&L, tell better stories, align all teams, and lead your business.

Please, bear in mind that all examples are coming from our FinTech business (which has a specific view of the P&L) but you can translate all the ideas for your business (for example, our revenue drivers could be your e-commerce or business segments).

Disclaimer: all visuals contain only sample data and are not real performance indicators. They are also simplified for the purposes of this article.

Long story short, this is what our P&L looks like

You can basically see how our revenue builds-up (getting to the total revenue) and how the costs then cut it down to get to the profit margin (also looking at the subtotals as different views of our margin). It also tells you how different revenue and cost drivers are affecting the whole business and how are we doing vs. plan or previous month/year. And then there are few highlights for different drivers, products, and campaigns. That’s essentially about it.

It might seem simple but I think there’s a lot of power in this way of presenting the P&L. It can help you highlight your business objectives and how you are doing in reality or it can help you to give context to your new product launch. There’s great power in storytelling with data vs. just presenting the financial statements in their pure form.

I believe that P&L is useful for everyone – from performance marketers to product managers or customer care agents, everyone can benefit from it and everyone can understand their impact on the business – and not just the top management and financial folk. I just love it and I think people are not using it enough. I think openness is immensely important when talking about Finance, it can help everyone understand the bigger picture.

From company to a single feature

We can start with a few simple examples that will gradually build the story of our company. If we go to the top, you’ll get a consolidated view of our whole group aka all countries we operate in and all entities under which we do business.

Or would you like to go down to a specific country (or company in your group) and have the same view side by side?

If you would go into greater depths, you can get a view of how a specific product launch, new initiative or campaign performed and contributed to the overall P&L (or what are the plans for the next month).

It can be incredibly powerful to align everyone around common objectives and help everyone to understand things in the financial context. We have to focus on the best customer experience and engagement as well (having a sticky product that customers love pays off), but it’s always helpful to understand things in the financial context. As an example, is one customer segment contributing more, and why? Part of our product discovery process is also a discussion about business impact and this is how we try to set it into the context to align teammates.

Shaping your narrative

When you are putting together a presentation and a few charts, it’s easy to forget about the story you are trying to convey. You’ve been with the same charts and figures for the last couple of hours (or maybe even days) and you know them by heart. Here are a few ideas on how to shape your narrative.

Add context and highlights directly to the charts. It can be just a simple post-it note, arrows, or just about anything. When someone will be going through your presentation, they will catch up instantly with what was presented there. Did you run a successful campaign or a product launch was a blast? Get it in there. It will also help see the product (and other) teams’ impact directly.

It can also help to add figures which are indirectly connected to the P&L – like the number of inactive customers vs. active customers or what is the current level of ARPU (Average Revenue Per User).

For example, for our account fees, we add the number of customers in different plans and the number of inactive customers so even a product manager or performance marketer can benefit from it (thanks to understanding the size and segments in the whole portfolio).

If you are not a financial institution, this could be your product categories or just anything that you segment your revenue or customers by.

For other narratives, you can simply compare your P&L to previous periods (year over year or month over month) or how you are doing in terms of your plans/budgets.

Looking at the P&L in this way every month also leads us to new discoveries and opportunities. As an example, one of the items for us is the Cost of Notifications (the price we pay for sending different SMS messages). It’s easy to forget about it but we found out that we were sending a lot of kinds of SMS messages (around 30) and some of them were there since 2013 when we founded Twisto. Our business changed and right now, the majority of our customers use our mobile apps and there’s no need for SMS messages or sometimes the SMS doesn’t even make sense.

One thing I’ve learned through a lot of failures is that I should always focus on the Outcome and not Output. "We’ve delivered 4 features" vs. "We’ve allowed our customers to do X and it got us +5 points in the NPS and engagement rate grew by 6%". It’s easier to go through the list of outputs, but outcomes are the ones telling stories.

Also, the data itself does not make an insight. Insights are stories. If you say "there’s been a 10% month-over-month growth in our interest revenue", that’s an observation, but if you say "we’ve been able to gain +10% in our month-over-month interest revenue because we did a personalized campaign our customers loved and rated 4.5 / 5", that’s an insight.

When shaping the narrative, I always keep in mind that I should be going from the big picture to detail and not dive directly into the tiniest detail as everyone will get lost. Detail and insights are important but it’s always better to add the high-level context. I believe that when you get all the information into the context of the P&L, everyone will bear the top-line in mind and it can help you lead your whole business and align everyone. It will be easier for everyone to understand their impact on the business because they will be able to see it in the "whole business" context. And it will also be easier to understand the impact of others and how our joined objectives play together.

This is not the end

This view and different connections with P&L helped me immensely to understand our business performance and help everyone drive the objectives in front of them. I hope it triggered your creativity too and you can already see new ways how you can use P&L statements and other reports to lead your business forward. Big thanks to Kamil Franek (kamilfranek.com) for inspiration in how to tell a better story visually!

Have you found this story helpful? Is there someone who might benefit from this article? Please share this article and leave your feedback in the comments or write to me directly also about what you would want to hear next. I would also love to see how you look at your P&L and other high-level objectives / OKRs! I’ll be more than glad to share our view as well.


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