A lot of business advice falls into a category I’d call “simple, but not easy.” For example, it probably seems obvious that there are essentially two ways to increase profits — cut your expenses or bring in more revenue.

Many business owners tried both last year in the face of tariff uncertainty and other financial challenges, according to new research from business banking platform Bluevine. Of the 1,200 respondents to their recent survey, 34% of business owners cut costs in 2025. Another 28% raised prices.

How do you know which approach will help your business most? Your profit and loss statement, or P&L, might have some clues. This accounting statement lists your revenue and expenses to help you understand how profitable you are.

I recommend reviewing your P&L monthly to keep a finger on the pulse of your business. Here’s how to do it.

If you’ve heard of any financial statements, it’s probably a P&L. This document shows whether your business put money in your pocket or cost you money over a certain period of time. I’ve been learning how to read these in my MBA coursework over the last few years, and they include a ton of helpful information about how your business is performing.

Your accounting software should produce a P&L for you. (I know some business owners swear by a spreadsheet. But if you’re generating revenue, I strongly recommend using accounting software. Here are the best options, according to my colleague Hillary.)

Download your P&L now, looking at January 2026. Don’t have one yet? Here’s a hypothetical P&L I asked Google Gemini to create for a food truck business.

Let’s walk through what this chart means.

This is the total amount of money that came into your business in January. Your P&L may also label it just “sales.”

You’ll subtract everything else on your P&L from your gross revenue. The larger this number, the more costs you can absorb.

There are two ways to increase revenue:

Gross Profit = Revenue - COGS.

Your P&L will use the term “cost of goods sold,” or COGS. These are the expenses directly tied to creating your product or delivering your service. If you sell handmade goods, this is the cost of your materials. If you run a coffee cart, it’s your beans, cups and lids. If you write a digital newsletter like this one, you might not have any direct costs.

Want to really drill down? Divide your COGS by the total number of items, cups of coffee or newsletter subscriptions you sold. That’s how much it costs you to make each widget you sell.

To increase gross profit: Reduce your COGS. Say your coffee cart charges $8 per latte and your COGS is $6 per latte. If you can reduce your costs to $5 — by finding cheaper beans, milk or cups — you increase your gross profit to $3 per item. This also increases your margin.

Operating income = Gross Profit - Operating Expenses.

This is how much your business made after you account for your “overhead” expenses, like rent, insurance, digital ads and utilities. Those are called “operating expenses.” You pay them consistently regardless of how much you sell.

If you read finance news, you might have heard operating income called EBITDA. That stands for “earnings before interest, taxes, depreciation and amortization.”

This isn’t really a metric small businesses use, but understanding it can help you see trends. For instance, investors often look at EBITDA because it offers a glimpse at whether a company is earning more than it spends, or whether it’s spending tons of money on staff or marketing in pursuit of faster growth.

To increase operating income, cut your overhead. There are lots of ways to do that, including:

Net income = Operating Income - Interest, Taxes, Depreciation and Amortization.

This is what you, the business owner, get to take home as profit after all of your expenses are paid. This part of your P&L lists other expenses, like interest, tax payments and depreciation. If you don’t have anything in this section right now, that’s OK — these costs are more relevant to mature businesses than new ones.

If this number is negative, you’re operating at a loss. That means you or your investors will need to put more money into the business to keep it afloat.

If it’s positive, congratulations! Your business is profitable. That’s a milestone every entrepreneur dreams about.

How long it takes to become profitable depends on your industry, startup expenses and experience. If you’re striking out as an independent consultant in a space you already know well, you could be in the black right away. If you need to build up a client base, it could take years.

But how you get there is the same for every business: Increase your revenue while keeping your costs under control.

To make sure you’re on the right track, look at your P&L every month. (It’s not too late to make this a New Year’s resolution!) Note when your costs grow and when your sales decline. Every business has a tough month here and there — but if you see your margins shrinking consistently, look for ways to reduce your expenses or increase your prices.

NerdWallet’s Karrin Sehmbi finds and shares these grant opportunities.

You have until Feb. 22 to enter the UPS Store® Small Biz Challenge, a partner effort between The UPS Store and Inc. Business Media.

A short online form asks you a handful of questions about your business, including how often you visit The UPS Store. You’ll also need to submit a short statement on “what makes you unstoppable as a business owner.” Earn bonus points by including a one-minute video.

Organizers choose nine semi-finalists from the online submissions to progress to the next round, where they complete a series of challenges with the help of business mentors. Three business owners are then chosen to go on to a pitch competition in Nashville. The winner earns a $25,000 grant plus a feature in Inc. magazine. The two remaining finalists are each awarded $5,000.

Click here to see the application.

To be eligible, businesses must have no more than nine full-time employees and must operate within the U.S. You must be at least 18 years old and a legal resident of the U.S. to enter.

Interested in more grant opportunities? Visit our small-business grants page.

As of March 1, a business will have to be 100% owned by U.S. citizens or nationals to be eligible for SBA 7(a) or 504 loans.

If your business is less than two years old, you probably haven’t applied for an SBA 7(a) or 504 loan yet. But if you’re in the process of applying and any of your owners are noncitizens — including lawful permanent residents or green card holders — reach out to your lender right away and ask if there’s anything you can do to speed up the process.

What will this mean for the future? Karrin broke it down in a video:

For more details, here’s what my colleague Randa Kriss reported last week.

We don’t know if the government will make additional changes. (They’ve already made many that make these loans harder to get.) But take a moment to get familiar with the different ways to get a business loan. Some might be better fits for your business than SBA loans, regardless of your residency status.