The 3 Numbers That Run a $20M P&L (And Your Business)

There were 40 tabs in this workbook that I got, this Excel workbook, and only three cells in the entire fucking thing mattered.

This was the first P&L that I ever got. It was a $20 million P&L at the US Chamber of Commerce. And I was early in my management career and I had no idea where to start. I'm looking at this, I'm like, 40 tabs. There's a ton of data, and it's a fairly complicated budget, because you've got membership, you've got fundraising, you've got different types of membership, you've got different types of fundraising, you've got political fundraising, you've got general fundraising, you've got specialized. I mean, it's all over the board, right? And all of it's rolling up into this one workbook. And I'm supposed to build next year's budget on it. I'm like, all right. And I've got some historicals and some other stuff in there.

And I go to the VP of finance and I'm like, hey, how do I do this? And she says something that really changed how I look at KPIs and forecasts and basically anything complicated financial, forever. And it was: there's 40 tabs in here. There's only three numbers that drive this entire $20 million P&L. You've got number of leads, close rate, revenue per sale. Every one of these tabs rolls up to one of those three. And if you know what those numbers are — those are your dials. And if you know what we did last year, and you know the year before that, and the year before that, you can get better at predicting what we're going to have this year. And that's going to be your budget. That's going to be your forecast. The entire thing comes down to three numbers. Three cells.

So we built a simplified version, one that even I could understand, with just the inputs that drove everything else. And sure as shit, that's exactly what it was. A $20 million P&L came down to three numbers.

And that has held in almost every complicated financial scenario — budget, forecasting, whatever it is — that I've touched since. And I've done PE, I've been an operator, I've helped in turnarounds and exits and all sorts of shit. Had to report to banks, loans, blah blah blah. Sales stuff too.

And simplifying like that matters for two reasons, and I want to separate them, because most people only think about the first one.

The first is: you simplify it, you can drive it. When you know which numbers are real signal and which are noise, you can focus on the right things. You can predict the right things. You can understand what you're looking at. Pull the levers that you want to pull, turn the knobs that you want to turn, and get the result that you want. You're not guessing anymore.

The second thing — and this is what'll save you — is it kills all the red herrings. Because what could have very easily happened is I spent the entire next year rifling through 40 tabs, trying to move this number, trying to move that number, watching this trend and then that trend, busy as hell. And none of it changing the actual number that I had to hit at the end of the year.

And I see this beyond finance, right? I see it in content, I see it in sales, I see it in marketing, I see it in ops. Anywhere you've got a pile of numbers or data that's rolling up and it looks like you're measuring performance, what you'll usually find is there are just a few meta numbers underneath all of it, at the foundation, that are doing all the heavy lifting. And the better you get at spotting which ones those are — the signal from the noise — the better you're going to comprehend your own business, the better you can move it, and the less time you're going to spend chasing shit and doing shit that doesn't actually matter.

Now, it's harder than it sounds, because she just knew those numbers. She built a budget around it. She'd been there a long time. This was not her first rodeo, and so she earned that. It's super easy to get bogged down in the pile of numbers, and finding the three that matter when you're relatively new is work. If I didn't have her as an advantage, it would have been hard.

It's like Mark Twain said — I think it was Mark Twain — he said, I didn't have time to write a short letter, so I wrote this long one instead. The same shit happens with numbers. It's hard to simplify it, and it's expensive. It's the source of a ton of wasted time, energy, money.

It's like the agency that you're paying that keeps reporting good numbers to you, and you're like, man, these all look good, but it's not actually moving the needle where we want it to move. Or it's the employee that's reporting all these activity numbers, and you're like, but the job's still not done. Or you spent a ton of money on shit that you'd assumed would have an impact, and it doesn't. Nothing's really worse than that — you spend money, you spend time, really focusing on a bunch of stuff, and it's not what you really need.

So: signal from the noise. Simplifying it. Finding the meta numbers. Huge advantage in the game.

Next time you're staring at a really complicated dashboard or a set of KPIs, some monster workbook that's sitting in front of you and you're getting inundated with numbers — zoom out. The further you go, the easier it is to find the two, three, four numbers that actually move all of it. And when you know those, and you invest the time into finding them — and it's hard — you get really effective and you stop burning hours. You start knowing exactly what to focus on. You stop pivoting. You stop being confused.

And what's funny is what triggered all this was a sales coaching call the other day with a friend of mine, another coach. She's the owner of a $100 million IT company. Hers got acquired, they're now partners, very successful. She knows her shit. And we're coaching this group of MSP sellers, and somebody's struggling, and we're looking at the activity tab and all the stuff that they're doing. And she's like, listen, this is going to come down to three things. And I was like, oh my God, that's deja vu. Volume, conversion, average deal size. Basically the same numbers my VP of finance gave to me. And I was like, yes, this is it.

So that's why I'm recording this, because the pattern still holds. Different industry, different business entirely, basically the same three numbers. Full circle.

And I thought I would pass this along. Maybe it's the same three for you, maybe it's not. But if you can find what the three are, man, it makes your life a hell of a lot easier. You get crystal clear. You get really committed to it, because you've got conviction on what the numbers are. Nothing else matters. But getting there is harder than it sounds.

So, hope it helps. Adios.