I have found that many startup founders and even some executives in larger technology companies are not familiar with the structure of the income statement, also known as profit & loss statement, or short P&L.
Why the P&L is Actually Quite Interesting
Every one who works on business model design or who is in a leadership role at a technology company should understand a few basic concepts about the P&L, because
- the P&L provides information on the cost structure of a business
- this helps you understand your own business, that of competitors (in case you have competitors that need to report their financials), and that of industry leaders who use a similar business model as you do (for inspiration)
- the cost structure is very much intertwined with the business model of a company
- and therefore, it helps you understand which freedoms you have (and don’t have) in evolving or changing your business model
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