I was looking for a file this morning and stumbled across a P&L sensitivity model I built in 1998. I built the model while working for the continuity marketer International Masters Publishers, where I learned (and eventually taught) proper direct response marketing.
The most interesting thing about the model? It didn’t bother to model revenue, only profit. The model allowed the user to adjust assumptions to locate the best compromise between maximizing profit and maximizing marketing efficiency (ROI).
Takeaway: When you understand your business so well you can build P&L from the bottom up, you’re on to something!