career – MintROI

Creating your own Profit & Loss (P&L) tracker

For those who don’t think they have a budget, nonsense! That’s pure laziness. You always have a budget. You may not yet be aware of it. So, let’s spitball it.

Profit & Loss (P&L)

Budgets are starting points that can change over time with the right justification. Let’s get started!

A P&L works like any budget in that it has all the Income (revenue) minus all the expenses = how well you are doing. In business terms.

Revenue – Expenses = Profit and (Loss), hence the name P&L.

The P&L takes this a step further in breaking up the expenses into two categories: Cost of Goods Sold (COGS), or costs associated with the core revenue production. This gives you your gross profit. But that’s not enough for the street. You must also remove your Operating expenses or Selling, General, and administrative expenses (SG&A). This gives you your Operating Income. This knowledge is powerful, because if you can show clear line of sight to increasing your profitability, you are creating leverage in potential money. Even if you don’t have the money in hand, this leverage is a key to opening the door to get the investments your boss (or investors) needs to make in you to scale your business.

If you don’t have P&L ownership, create your own budget to track. Currently, you generate something – what’s that value? If you are a revenue-generating team, that’s easy to define – what is your revenue? Are you a “cost of goods sold” that doesn’t have direct revenue? Well, those goods couldn’t be sold without you, could they? What is that value to your internal clients? Think about what they would pay if they had to use an external vendor for your services. Now think about the proportion of your services to the overall product of service they are receiving revenue for. If an external vendor charges $100 for similar services, but your company generates the same service cheaper through your team, and the product your service goes into is only going for $80, then your value is something smaller than $80. How much it is will depend on the other costs of the other parts of the product. If you are producing the entire product being sold, but you don’t have the responsibility of paying the team that is selling or marketing the product, well those are costs the company is paying that you need to subtract from the total cost of the product. What remains is your value to the overall product. This is your revenue. Another way to figure out your revenue is to figure out your company’s markup, and then take all your costs and expenses and apply that markup on it. It’s not exactly representative of your revenue, but it’s close enough to get you started.

Now, let’s calculate your costs. For simplicity, let’s bucket it into Cost of Goods Sold (other support costs that you need, such as IT services, 3rd party services, etc.) and Expenses such as labor costs, advertising, office space and supplies, technology costs, utilities, insurance, taxes, and anything else you need to provide. You may not be responsible for all these costs, in which case, you’d bucket them in “cost of goods sold” for the purpose of your mini P&L because they cost your business even if they don’t cost you but go ahead and keep your resource cost and direct cost of resources (facilities, etc.) in your expense bucket because you can use this as leverage later on.

Here’s how it works:

Are you making a profit, or making a loss? A loss is certainly not good, but being aware of it is very powerful. What can you do to trim down your costs or increase your revenue to turn that loss into a profit?

Once you have a budget, the name of the game in capitalism is “Better, faster, cheaper.” If you can take your P&L and identify ways where you can do better, faster, or cheaper without risking profit, you are doing well.

Doing things better increases your street credibility and brand image. That’s sales credit and reduces your costs. That’s profit for the taking.

Doing things faster means you can do more of it in the same amount of time – that’s profit for the taking.

Doing the same thing cheaper, is profit for the taking.

The logic is simple. If you can create more profit, you are creating value for your organization. Spitball it now, what value does your team bring to your organization?

I found some good (free) P&L templates here: https://www.smartsheet.com/content/small-business-profit-loss-templates

Crafting Effective Interview Questions

Part 2 of 4 in the Hiring Right Series

Identifying the required competencies and experience is one thing, validating them is another. When deciding on your questions, you need to identify questions that will go beyond surface-level answers. These questions will reveal depth and, more importantly, authenticity.

Once you identify the skills needed, what questions can you ask to ferret out whether the person truly possesses those skills or is merely appeasing you? What are the key competencies that lead to success? What behavioral questions can you ask that will uncover the competency or reveal if the candidate needs development in a specific area?

Experience is a indicator that a person has built the necessary skills or competencies. Past behavior is the best predictor of future performance. That’s why experiences matter. The easiest way to check for experiences is to look at a resume. Understanding a person’s resume will tell you what they have done and answers several of your questions. However, don’t assume that the resume tells the whole story. It often presents the version the candidate wants you to see. In fact, in today’s world, recruiters are seeing candidates who not only embellished their resumes using AI, but also some candidates who created the whole resume using AI. Some candidates don’t even know what’s on their resume because of this. Because of this, the recruiter or hiring manager has to do some validation. The resume is a launching pad to probe into those experiences in search for the skills you need.

Currently, there is a shift from experience-based hiring to skills-based hiring. Many companies are prioritizing skills over specific experiences (such as working for a particular company in a specific role with a specific education background). The essence of experience is to demonstrate that the candidate has acquired the necessary skills. I’m not suggesting you skip the experiences – not at all! Experience is the fast track to the likely skill. However, if a candidate lacks direct experience, probe for the underlying skill.

If you find that your person has gaps, decide for yourself, are these gaps that I can train or grow within them, or are these gaps that I need filled from the onset?

As you embark on the interviewing process, document your questions. Understand the core reasons behind each question. Was your question a key competency or fit-related question, was it to explore the experience a person had? Was it a probing question? Probing questions to understand a prospect’s answer will vary by prospect, but the key competency, skills, behaviors, traits and drivers that you trying to uncover should be consistent with all of your prospects.

You can’t ask one person about their ability to create data analysis in visuals and another person about their ability to consult with others, and then compare the two responses. These are not like-for-like comparisons, and your decision-making process should be designed to reduce as much bias as possible.

Interview questions are key. Some takeaways for managers:

They should be focused the same skills, competencies, traits or drivers for the same role.

You can ask different people different probing questions, but the basic questions should be the same across all candidates.

Keep interviews down to 5-10 questions max. Sometimes a good behavioral interview may take 5-10 minutes of discussion. If you have more than 3 behavioral interviews, consider breaking up the interview. But also, if you need too many interviews, consider whether you can consolidate down to the core competencies that drive performance outcomes.

Now let’s find out how to take this magic and multiply it. Hiring Right: Don’t be a Victim to Your Blind Spots .

After that: Hiring Right: Interview Tips & Tricks for Managers

Incase you missed it: Hiring Right the First Time

Hiring Right the First Time

Part 1 of 4 in the Hiring Right series

Hiring is one of the most important and difficult tasks for any manager. When you’re hiring your team you need to find someone with the right knowledge, skills, abilities, behaviors, and fit for your organization.

While many hiring managers primarily focus on competencies or experiences, we shouldn’t overlook the other dimensions that may not be easily assessed in an interview. For this reason, assessments that can look at all dimensions are of value. Different types of assessments work best for different types of needs. For instance, the KFLAP works great in leadership roles or roles of a very critical nature. But for more entry-level roles, a skills assessment could be appropriate. Where you place an assessment is also important. If you’re looking at a hard skill, such as typing speed, you can place the assessment before an initial interview. If you’re looking for a competency or behavior, you should place the assessment before the interview so you can develop probing questions to get a deeper look during an interview.

But what if you’re short on computer-based assessments? Let’s explore a few tools you can put in place today to help make sure your next hire is the right one.

Defining Success: A prerequisite

Before embarking on the hiring journey, clarity on success criteria is essential. Begin with the end in mind. What does success in this role truly look like? Do you have a job description? If not, pause and build it, thinking about it carefully because it is the basis of the contract you will have with your future employee. Do you have clear expectations for the role? Expectations and goals are different but very closely related. Expectations represent an expanded job description. If your employee does everything on the expectation list, they will be doing the job well, not just getting by. In fact, this would be a person you would want on your team so long as the role is needed. Goals, on the other hand, elevate that person to their next level. If they are not meeting expectations, perhaps leveling up to meeting expectations is the goal. But if they are already meeting expectations, then what can they do to raise the bar? It is important to understand your own expectations of the role before embarking on the hiring journey.

If you already have employees in the role, think about what they are doing well and what you tend to coach them on. Consider elevating the job description based on your learnings of the role. Expectations for the role can and should change over time because the role should evolve over time.

When you are ready to go public with your job description, don’t just rely on the traditional posting venues. Lean into your network. Everyone knows someone, and the highest source for hires is traditionally referrals. Who do you know who might know someone good for this role? Where are you already networked where you can get the word out? Do you have a LinkedIn account where you can advertise your role in your network? Even though referrals are a great source, if you get a referral, do your due diligence. Vet the referral. Ask the referrer how they know the candidate and what they know about the candidate’s work output and work ethic. Seek a deeper understanding of potential skills and behaviors that would make this candidate a good fit for the role. Make sure the referral meets all your qualifications before progressing them through the process. If they don’t meet the qualifications and you still want to progress them, then you need to pause. Were all those qualifications really necessary? If you’re willing to budge on a requirement for one person, you need to budge on that same requirement for everyone. Not doing so can be the limiter to allowing your RIGHT hire in the door.

Also, don’t forget your internal network. Sometimes internals with less experience are still better candidates because they bring the company knowledge to the table. Company knowledge should be treated like a skill that can only be trained on the inside. It’s up to you and your specific situation to determine how much you prioritize previous company knowledge. Sometimes having an existing network can leverage a person into productivity faster. Sometimes, if you’re trying to change the culture, for instance, it can be best to go externally.

Now that you have a good idea of what the desired skills & competencies are for this role and a good idea of where to look for talent, let’s move on to Hiring Right: Crafting Effective Interview Questions.

Or if you already have great interview questions, you can skip straight to

Hiring Right: Don’t be a Victim to Your Blind Spots

Hiring Right: Interview Tips & Tricks for Managers