Episode Transcript
[00:00:00] Speaker A: Foreign.
Hi there, friends. Welcome back to the Total Profit podcast. This is where we're keeping things lean, very smart, and profitable. I'm your hostess with the most margin questions. I'm T2, and I'm here with the human calculator himself, my partner in profitability, Tommy B.
Wow.
[00:00:30] Speaker B: Human calculator. That's. That's a great one. I was just hoping to bring coffee and formulas.
[00:00:37] Speaker A: Well, Tommy, you are the reason that this framework exists, so you're the one who gets the fancy nickname. So before we dive in, a huge thank you to everyone who joined us for our first episode. We loved hearing from you, and we are just getting started.
[00:00:53] Speaker B: And if you're new, welcome. You've picked a great one to start with, because today we're going to talk about something that hits home to so many business owners that we've encountered with customers to see what's really bothering them in their business. And the number one thing is profit leaks. Hidden costs that quietly drain your margins while you're too busy grinding to notice.
[00:01:18] Speaker A: Right. This is one of those why am I making money but still broke Kind of episodes. Here's your hook. You might be crushing it in sales, working really long hours. You're hiring good people. You're doing what feels like a lot of the right things, and you're still wondering why your bank account just looks like it's been on a juice cleanse.
[00:01:41] Speaker B: Yeah, it's revenue fire hose and a profit bucket full of holes. So full of holes.
[00:01:47] Speaker A: So those holes are what we're talking about today. There are things that drain your profit without really.
They just go under the radar. So why don't you tell us some of the basics? What is a profit leak?
[00:02:00] Speaker B: So profit leaks are hidden or unobvious areas in your business where your money is leaving your business, whether it's ignored expenses, inefficiencies in your production or productivity, or decisions that slowly drain your.
Your profits. It. It can sneak up on you, and it's hard being a business owner and keeping track of all these opportunities to keep your money. And it only takes one little hole in the bucket to create these profit leaks.
[00:02:34] Speaker A: I remember working with a client one time that had 19 recurring software subscriptions. 19.
And they were using maybe five of them.
[00:02:46] Speaker B: Wow.
Yeah. That is. It's so common because you're in the moment and you need this widget and you use it that one time, and sometimes it may get shelved and there's a better widget that comes along and you forget about the one that you just purchased. And it just sits there and it tracks. Or you the infamous free subscription and then it turns into a paid subscription. And then a year later it's like, where is this cash going? So you know every little bit. It's not about what you make, it's about what you keep.
[00:03:19] Speaker A: Right, let's break it down a little. Here are some of the most common places that we have seen profit business owners that overstaff because they feel like that's the way they need to grow or they underutilize team members. So you've hired people, but you haven't really optimized or use them to their full skill set. Another one is inefficient processes. This is just time wasted. This is just time wasted on things that should be automated or delegated to some of those people that you're underutilizing. There's that subscription creep that we just talked about. Tools, software services that you're paying for but you're not using and you've probably forgotten about.
And then there's also pricing problems. And this is one that we'll get into quite a, a bit recur in a recurring way on this podcast and that is undercharging for your services over discounting things or maybe just not raising prices when you should.
[00:04:18] Speaker B: Yeah, no, those are great ones. And I'll add to that is not monitoring your margins regularly. A lot can happen in a day, in a week, in a month to your financials. And if a, if you don't have them in order, they can happen right under your eyes and you don't realize it. Or if they're in order and you don't check them, they can slip away from you very quickly. A lot of the folks look at financials at year end when it's too late and can't do anything and the damage is already done.
We're going to be talking through the processes here to keep you. This is going to be a regular tool in your business that's going to help you direct where your finances are going instead of just accepting where they've gone. So these are going to be some really good episodes that I encourage you to tune into and help us get into the details of these. And if you, if they dip your margins, you can correct them in a day or so as long as you have up to date information.
[00:05:19] Speaker A: Right. So real time is really critical and we need to monitor this stuff like vitals on a hospital monitor. Right. This is your business, this is your livelihood. It is so important and okay, now that we've Depressed everyone with. We've got the wheels turning about where they might be losing money in their business. And oh, my gosh, there's another thing that we. That I gotta think about. Why don't we offer our listeners some hopes? Let's. Let's offer a few simple steps that you can take this week to start plugging those leaks. All right, Number one, all audit your expenses. And this does take a little bit of time. Sorry to pile one more thing on your list, but it's just that important. You wouldn't be working if you weren't making money. So go through your bank and credit card statements line by line. If it's not saving you time or if it's not making you money, cancel it, get rid of it. It just doesn't have value. You've got to keep your eyes on the prize.
And second of all, review your pricing. All right? Are you charging enough? Have you raised your prices at all in the last 12 months? Goodness knows, everybody else has. Are you offering any discounts that aren't really strategic and bringing on business that's going to make you more money in the long run?
Okay, so number one, audit your expenses. Number two, review your pricing. Number three, streamline some of your processes. Think about some of the things that you're doing that are repetitive. What are some of the things you're doing that are taking too long?
Can you simplify or automate any of these things? AI Assistants are fantastic. If you're not utilizing them, you are already behind the eight ball, my friend. Okay? And then number four, watch your margins. Watch them on a very regular basis. Don't just rely on your P and L. Create some sort of a simple dashboard or a weekly report that is that it's going to track for you what is actually happening.
[00:07:08] Speaker B: This isn't about perfection. It's about progress. And at no time should you ever feel bad about your past because you're here wanting to fit your future. We can help you and show you opportunities. These are great points that you make, T2. The other thing is you make sure you're executing your work as you bid it. There's various team members that have various levels of skill and just knowing when you bid the work to make sure those people are in their proper swim lanes and doing their work that they're. They're masters at so they can maximize your bids that you're putting out there. And like T2 said, the cost of things are ever changing. So knowing your cost and tracking those and the biggest thing is setting your margin Goal knowing what that is so you can cover all your cost and keep what you're earning instead of letting it just fall off to the side. It happens oh, so commonly and faster than a person realizes.
[00:08:12] Speaker A: Yeah, I think for margin goal. A lot of people just say, I just want to make as much money as I possibly can. But that's. It's really shooting in the dark. We need to know what all of the costs of your business are, and we need to plug those leaks that are draining money out the back end. So one leak plugged is money saved, and it adds up fast. Right? Just like those subscriptions we talked about. They add up fast and they start running in the background. You don't even realize it. Okay, so here's an action step for you. Take 30 minutes this week. Just sit down with your expenses and sit with them for a little bit. Look at your pricing or your processes. Just find one. Just start with one. Find one leak to fix, and that's where it starts. And I'll bet you that once you start getting into it, it catches fire and you'll start to find others and you'll realize, gosh, I could make 3% more if I just do. If I just plug this one leak and it will start to add up.
[00:09:13] Speaker B: And the other tool that we didn't mention, but it's probably obvious, but we'll just say it anyway, is your calendar. Take time and block time out to do this every week.
Look at your profit and loss statements, go back through your jobs, review the work that you did, and see how you can do better the next week and going forward because it is. And as a. Also with this goal is set down the money that you've you found and track it against your time it took to find it. Because that's what you're in business to do. You have an hourly rate no different than your employees, and maximize that to get to that optimum value.
[00:09:52] Speaker A: Anybody who's worked with me, lives with me, lives near me, worked for me in the past, knows that I'm absolutely militant about my calendar. Militant. At my age, if it's not on my calendar, it. It doesn't exist in my world. I don't have time for it. And I'll just share a funny story with you all. Just yesterday, Tom and I were working on a project together, and I was sharing my screen and my computer was very slow. And he was ticking off not seconds, but the amount of money and dollars that it was costing me to have a slow computer.
Yeah, we've got a New computer on the way.
[00:10:31] Speaker B: Oh, what a great addition that's going to be to this podcast.
[00:10:37] Speaker A: Anyway, so go check. Just 30 minutes. That's all we're asking for you this week. Spend 30 minutes sitting with your expenses, your process, et cetera, and figure out ways that you can be more efficient. You might need to invest in a new tool like a new computer, but while you're at it, subscribe to the show so you don't miss what we've got coming next. We've got it. We're keeping things pretty short, pretty sharp and packed with real strategies. And leave us a review if you've got something out of today's episode. It helps more business owners find us. And hey, sharing is profitable. Before we go, I want to give a shoe a huge shout out to our sponsor, Performance margin. This is the software that ties your numbers to your bidding and your bidding to your strategy and your strategy to your actual bank balance. If you want to see where you're winning and where you're bleeding, Performance Margin is the tool that we trust here at total profit.
[00:11:30] Speaker B: Yeah. And share this with your coworkers, your friends, families. It's. We really want to grow this family and help people and show them opportunities that they may not be just in tudent to find. And it truly is. And titu said leave a comment in the blow or ask a question. And we're happy to get back to you and follow up with that. So we truly are here to share the information that we've been blessed with and are going to provide people the opportunities to really have some tools that will help their businesses succeed and keep that hard earned money that you're out there making.
[00:12:10] Speaker A: Absolutely. Good point. Yeah. Ask a few questions and we'll base future episodes based on the feedback that we get. All right, folks, until next week, take her cool. Take her cool. Don't get too excited. It's all under control.
[00:12:24] Speaker B: It's going to be fine. Have a great week.
