I read P&Ls the way some people read novels. There’s a plot, tension, foreshadowing, a hero and a villain (and honestly… both are usually you), a breakthrough, and a reveal at the end. Your Profit & Loss statement tells the truth about how your business behaved, where it stretched, where it settled, and where it quietly leaked money. When we compare this year to last, we’re not chasing vanity wins. We’re checking whether your systems create durable, repeatable profit and reliable cash flow. Growth is easy. Sustainable and replicable growth is intentional.

What Year-Over-Year (YoY) Really Shows

Most owners glance at the top line, celebrate, and stop there. But if revenue went up and margins shrank, we need to unpack the truth behind that. With an increase in sales but a drop in profitability, you didn’t grow, you sustained. And sometimes, after a big growth year, that is crucial to the sustainability of your business. But if you did not have exponential growth, a YoY comparison reveals whether your price increases worked, whether cost controls held, and whether the new initiatives you “invested in” produced a return. It also exposes timing quirks that can distort the story, which is why you compare revenue to expenses and review your balance sheet to see what the story is month by month.

Revenue Up Is Not the Same as Profit Up

A 15% sales increase looks impressive on paper. But if fulfillment costs rose 22% to support it, that “growth” was not actually growth, and that is why you are constantly stressed about money. Maybe supplier pricing increased. Maybe discounting crept in. Maybe labor hours ballooned. Your P&L will show the pattern so you can shift: raise prices, adjust your labor structure, or renegotiate with suppliers. I know it feels glamorous to say “sales grew 15%,” but if you had to take out loans just to cover payroll, the celebration ends quickly and feels icky. The answer to your financial stress is almost always found in the expenses portion of your P&L.

The Expense Lines That Whisper the Truth

Every expense tells a story about your leadership. Subscriptions reveal tool overload. Marketing reflects your confidence in demand. Payroll shows where you invested in capacity and where you may have held on to emotional hires a little too long. When I review YoY, I look for jumps that don’t match strategy. If facilities doubled but rent stayed flat, why? If software spend tripled, what did it replace? If contractor fees rose but output didn’t, why are you paying them before you collect on contracts?

Sales & Pricing

You can chase volume, or you can build value, your P&L reveals which path you chose. Did your average order value rise? Amazing. But did your gross margin rise with it? If not, your pricing model needs a reset, or your COGS and overhead need tightening. And friendly remember: you can have the best “sales month” ever, but if the cash didn’t hit your bank account, it isn’t real. You can’t pay yourself and your team with monopoly money.

Owner Pay That Makes Sense

I believe in intentional owner pay. If you’re waiting for leftovers, you’ve trained your business to ignore you. A YoY review makes this painfully obvious. If profit looks fine but you still can’t pay yourself consistently, the business model isn’t sustainable. Not paying yourself isn’t selfless, it’s what you were conditioned to believe. Predictable owner pay isn’t selfish, it’s leadership. The more financially grounded you are, the more you can pour into your team so they can build wealth and stability, too.

Red Flags Your P&L Is Waving

If these show up YoY, here are the mindset and budgeting shifts to consider:

• Revenue rose while gross margin fell → stop relying on discounts to make fast sales, instead adjust your pricing for each new customer for rising COGS
• Operating expenses grew faster than revenue → pause; review expenses to income report
• Marketing spend increased but qualified leads didn’t → check the strategy, reporting, and accountability
• Net profit improved but cash dropped → shorten collection timelines or reduce inventory buildup

Final Thoughts from Your Favorite Bookkeeper 🧡

Your P&L isn’t here to judge you, it’s here to guide you. It shows where you held your boundaries and where you drifted. Year-over-year numbers give you the cleanest mirror you’ll ever have. Use it to confirm what’s working and do more of that. And when you see what isn’t working, gently shift away from offering those services or products.

If you want support translating what your numbers are trying to tell you, I’m here. Bring your P&L, your questions, and your goals to my Path to Profit workshops, where I’ll bring budgeting clarity, strategy, and a little joy to remind you why you built this dream in the first place.

✅ Want help with your Profit & Loss? Hire My CFO as your bookkeeper!
📚 Prefer to DIY? Grab my book + workbook on Amazon to walk through the process step by step.

👉 Because at the end of the day, cash flow isn’t luck, it’s strategy