Taking The Lead

Prepared for print by Ilana Keilson

RECAP: After taking on a new partner and hiring a new manager, Michael’s online kitchenware business, Foodies, isn’t turning a profit, and Michael is falling deeper into debt.

“Michael, I see the money coming in from sales. Where is it going?”

I can tell from his expression that he doesn’t know the answer to that one.

We look at his monthly P&L — profit and loss — statements, and they’re all over the place. Michael’s expenses, including payroll, marketing, purchasing inventory, and other costs aren’t carefully recorded, making it nearly impossible to track overhead, predict costs, or plan future product orders. One thing is clear, though: Costs are higher than they should be.