Record quarter, empty bank account

• Larkline: $2,000,000 revenue — a record.
• Kept: $90,000. Where did it go?
• *Presenter note:* Take three guesses from the room before showing any numbers.

What a P&L is

• One page: revenue at the top, costs subtracted in layers, profit at the bottom.
• Reading it in order is the whole skill today.
• *Presenter note:* Say "P&L = profit-and-loss statement = income statement" — same thing.

Larkline's P&L, line by line

• Revenue $2.0M → minus delivery cost $0.5M → minus running-the-company $1.35M → minus interest &
• tax $60k → net $90k.
• Each layer takes something out.

Two margins that tell the story

• Gross margin = $1.5M ÷ $2.0M = 75% — the product makes money each sale.
• Operating margin = $150k ÷ $2.0M = 7.5% — the whole business barely does.
• *Presenter note:* The 75% → 7.5% collapse is the lesson. The money went to operating expenses.

The board's ask

• Lift operating profit from $150k to ~$300k (~$150k of savings).
• Name one line to cut. Every option costs something.

Your task

• Pick one line, an amount, recompute the operating margin.
• One sentence: which line, how much, why that one — and what you protect.
• *Presenter note:* Groups of 3–5. Hand out the worksheet now.

The defensible call

• Trim Sales & marketing ~$150k (largest line, most reversible, protects product + future).
• New operating margin ≈ 15%.
• Cost: growth may slow — pair it with cutting the weakest channels first.

What each other cut costs, and the takeaway

• R&D: cheap now, expensive later. G&A: can't reach $150k. COGS: attacks a healthy layer.
• Takeaway: cut where it hurts least and matters most — and say what your cut costs.