[00:00:00] Speaker A: Foreign.
You're listening to the Total profit podcast. I'm T2, and I'm here with a guy who's seen the inside of more P. Ls than most CPAs. Tommy P. How are you?
[00:00:17] Speaker B: I'm great. How are you doing today?
[00:00:18] Speaker A: I'm good. And you probably still get surprised sometimes, don't you?
[00:00:22] Speaker B: Oh, absolutely.
[00:00:24] Speaker A: But not this quarter. No, not this quarter. That's what today's episode is all about. We're wrapping up quarter one with some stories, some real numbers, and some big takeaways from inside the total profit management client community.
And if you've been following along, this quarter was all about phase one of the performance margin zone, which is the realization, the reframing, and that first big wake up call. That hustle isn't the same thing as profit. Exactly. So client snapshot number one went from. From absolute chaos to some really great clarity. So one of our newest clients ran a commercial maintenance company, had about 25 employees. He came to us in January saying, I am exhausted. I'm busy, but my bank account doesn't look like I'm winning. All right. Sound familiar?
With all of our clients? Right? Too familiar.
He thought his problem was pricing, but after going through our onboarding diagnostic, it turned out that he was undercharging by almost 40%.
[00:01:28] Speaker B: Ouch.
[00:01:29] Speaker A: On most of his contracts. So his chart of accounts was spaghetti.
His actual profit margin was around 4%.
I know. I see your face. But after going through our onboarding, our margin mapping, a pricing restructure, he's on Track to hit 4%, 14% by June.
[00:01:49] Speaker B: Oh, my gosh.
[00:01:49] Speaker A: That's fantastic. Yeah, he didn't need to work more. He just needed to see the truth.
[00:01:54] Speaker B: Yeah, and sometimes these, your accounting systems can just acquire numbers and they don't have the proper charts of accounts, and you don't know where it's hiding, so you really don't have a way to troubleshoot it. So putting us in with the profit margin zone, we can flush these things out and get you back on track.
[00:02:14] Speaker A: A lot of bookkeepers have a standard way that they like to set up charts of accounts. And we will go in and we'll mess with that a little bit because we want to tie as many costs as we can to your jobs as possible.
So just know that going into it, working with us might create a little bit of a tension with your bookkeeper.
[00:02:35] Speaker B: Tell her it's all outside of the. All outside your accounting system.
[00:02:39] Speaker A: So it's all outside of your accounting system. So we will do all of that kind of show you what it looks like, and then you can decide whether you want to take that back to your accountant or not.
[00:02:48] Speaker B: Yep.
[00:02:48] Speaker A: Right. At the end of the day, you're always making all the decisions, not us.
But here are some new patterns that. Some common patterns that we've seen across some of our new clients this quarter.
A lot of owners running blind on job level profitability. They're looking kind of at overarching, you know, macro profitability and not really digging it down to job level profitability.
I think I heard you say one time, blended margin is lying to you.
[00:03:17] Speaker B: Oh, exactly.
[00:03:18] Speaker A: Blended margin will lie to you. Gotta dig into there just a little bit.
We found that 70% were underpaying themselves or they're not paying themselves at all. All right.
That's why that profit margin zone. I'm sorry, performance margin zone, phase five that we just talked about, that's why it hits so hard later on.
[00:03:38] Speaker B: Oh, yeah. And when that's aligned, it's a powerful tool, and it just gives such amazing results. It gets attention really quick.
[00:03:45] Speaker A: It really does. It really does.
And only one in five that came to us this quarter had a working cash flow model before they worked with us. And so not a single one was forecasting quarterly. And almost every single one of them had money that was stuck in accounts receivable.
They were overspending on software, or they were bleeding out through misquoted labor.
[00:04:07] Speaker B: Yeah, it's. It's happened so quick. And some of these labor costs, if you don't catch them in time, they can get away from you.
[00:04:15] Speaker A: Yeah, let's tie it back to that performance margin zone. All right. In quarter one, we walked our clients through the first three phases of transformation. Number one, that curiosity and the realization that something is not working.
Why don't I have more money at the end of the month? At the end of the quarter?
Number two, profit is planned. And it's not accidental. It is discipline over the chaos, and it's a lot of discipline.
Number three is snapping that attention. So clarity through simplification, streamlining, processes, very critical that we get them through those first three phases of transformation.
And our onboarding is built to walk them through that arc of the first 30 days, that margin mapping and down by job type that we talked about, auditing their pricing and simplifying their order stack, identifying which jobs are not profitable and making decisions about whether we scrap that kind of work or whether we do something to change it so that it is profitable and hit the.
The target that we want as an.
[00:05:24] Speaker B: Owner and if you're listening out there, this probably sounds like an intense interrogation, but it's really not. We've got the systems in place to know where to start looking and start teaching.
[00:05:36] Speaker A: It's a partnership. We're walking through it with you hand in hand and helping you kind of identify where those common pitfalls and trips are.
All right, we want to get rid of those hazards.
[00:05:50] Speaker B: And you said it common. And that's. That's where we know where to look. So it speeds up the process, and we can help you get back on track quicker and make profit faster.
[00:06:02] Speaker A: So let's talk about some of the common early wins that we saw. All right? Clients identifying one or two services that were bleeding margin, cutting, some unnecessary software tools. We saved one client over $2,000 a month.
The first clean P and L by department or by offer.
The owner finally seeing how they can afford to pay themselves.
That's a huge one. Absolutely huge. And then turning the quoting into a system instead of a guess, right? Yeah.
And the emotional shift. All right, so I don't want to skip over this one, because this one is really the most fun. Most of these founders come, and most of these founders are exhausted. These business owners are really tired, and they're stuck in reactive mode. In just a few weeks, they weren't just working differently, they were feeling differently.
And that is that phase five that we just talked through, that emotional payoff. They stop saying, I hope this works, and they start saying, I know what I'm doing and it's going to be okay.
[00:07:04] Speaker B: It's fun to watch that body of language when that transition happens. They just sit up straighter and they're listening harder, and they just keep want. They want more and more and more. So it's fun to see.
[00:07:16] Speaker A: We touched on phase four and phase five in quarter one, but next quarter, we're going to go deeper. So we're going to move into phase four and beyond, which is that leadership shift, systems scaling, strategic growth.
And that's where the business stops being heavy and it starts getting to be really fun.
All right. It's margin on purpose.
[00:07:37] Speaker B: Yes, Right, Exactly.
[00:07:39] Speaker A: All right.
If you've been following along and you're wondering what onboarding into Total Profit Management really delivers, this episode was your answer. It is a lot of clarity, margin, and control in your business. And we want to invite you to come along with us. Next quarter, it's time to lead. And we want to also invite you to check us
[email protected] and reach out to us and see how we can help your business as well.
[00:08:08] Speaker B: Absolutely.
[00:08:09] Speaker A: So that's a wrap on quarter one, my friend. So we'll see you next week when we kick off quarter two, and we'll start doing a deeper dive into systems that scale.
[00:08:19] Speaker B: Exactly. And when you're looking for those clarifying moments, just pause for a moment, take a deep breath, and realize, I just need to take it. Cool. Everything's gonna be fin.
