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The Silent Profit Leaks Costing Your Business Thousands Every Year · Profit Points Podcast

• 0:00
  SPEAKER_00: Hey, glad you're here.
• 0:01
  SPEAKER_00: This is Profit Points, and I'm Megan Schwant, your accounting sidekick and certified Profit First Professional and Fix the Snext Advisor.
• 0:09
  SPEAKER_00: If you're a small business owner who wants to actually understand what is happening in your business financially, not just survive it, but genuinely get it, you're in the right place.
• 0:20
  SPEAKER_00: Every episode covers one concept, uses real numbers, and ends with something you can actually do.
• 0:26
  SPEAKER_00: That's the deal.
• 0:27
  SPEAKER_00: Let's talk about today's topic.
• 0:31
  SPEAKER_00: Many business owners know their profit matters more than revenue and might also know what a healthy margin looks like, but they often don't know where the money is going.
• 0:44
  SPEAKER_00: Today we're going on a profit leak hunt because money doesn't just disappear, it often leaks.
• 0:52
  SPEAKER_00: Slowly, quietly, consistently.
• 0:55
  SPEAKER_00: And once you know where the holes are, you can close them.
• 1:00
  SPEAKER_00: Hi, I'm Megan Schwann, and this is the Profit Points podcast.
• 1:04
  SPEAKER_00: Let's get into it.
• 1:08
  SPEAKER_00: So, the first things first, let's make sure we have this conversation from the position of CEO.
• 1:15
  SPEAKER_00: Having leaks in business doesn't mean you're failing.
• 1:19
  SPEAKER_00: It doesn't mean you're bad at business.
• 1:22
  SPEAKER_00: It's just an observation, an opportunity to look at the systems and make adjustments.
• 1:30
  SPEAKER_00: Okay, so isn't that freeing?
• 1:35
  SPEAKER_00: Let's get into that mindset.
• 1:37
  SPEAKER_00: Okay, so now that we've cleared that mental space to address this, let's get into it.
• 1:42
  SPEAKER_00: A profit leak is any expense or practice that reduces your profitability without adding equivalent value to your business.
• 1:53
  SPEAKER_00: And what makes profit leaks so dangerous is that none of them feel catastrophic in the moment.
• 2:00
  SPEAKER_00: A$79 a month subscription here, a service that's been underpriced by$200 there, a project that ran four hours over scope that you absorbed because you didn't want the conflict individually.
• 2:17
  SPEAKER_00: None of these things feel like a big deal, but when you add them up across a year, that number is almost always shocking.
• 2:27
  SPEAKER_00: So today's profit point is profit protection.
• 2:32
  SPEAKER_00: The idea is that profit isn't just built on the front end through pricing and revenue, it's also protected on the back end by actively identifying and closing the gaps where money is escaping.
• 2:46
  SPEAKER_00: So let me walk you through the most common profit leaks that I find when I work with small business owners.
• 2:54
  SPEAKER_00: Leak number one is forgotten subscriptions.
• 2:58
  SPEAKER_00: This is truly the easiest and most immediate win in most businesses.
• 3:03
  SPEAKER_00: When we help people put profit first in place into their business, this is where we start.
• 3:08
  SPEAKER_00: SaaS tools, apps, platforms, automated service, they all stack up quietly.
• 3:15
  SPEAKER_00: For example, I had a client last year who had 23 active software subscriptions, but she was only actively using about 14 of them.
• 3:29
  SPEAKER_00: The other nine added up to$612-ish dollars per month, which is about$7,344 per year in tools that she wasn't using.
• 3:44
  SPEAKER_00: So we canceled them.
• 3:46
  SPEAKER_00: She canceled them on the call in one afternoon.
• 3:49
  SPEAKER_00: That's$7,344 that she got to keep with absolutely zero impact on her business operations.
• 3:58
  SPEAKER_00: Neatly.
• 3:59
  SPEAKER_00: Number two is scope creep.
• 4:02
  SPEAKER_00: This one can be harder to see because it often feels like you're trying to be a good service provider.
• 4:09
  SPEAKER_00: A client asks you for one more thing, or is like, hey, by the way, can you take care of this?
• 4:15
  SPEAKER_00: You accommodate because you want to deliver, right?
• 4:18
  SPEAKER_00: That extra hour is in build, and then the next month they ask that again, and there's an extra two hours build, unbuild, then it becomes the norm.
• 4:28
  SPEAKER_00: If you're absorbing even five hours per month of unbuilt scope across your client base, and your effective hourly rate is around$100, that's$500 per month, which is$6,000 per year that you worked for and didn't get paid for.
• 4:47
  SPEAKER_00: The fix in this is clear contracts, clear scope, and communication, and sometimes a gentle but consistent practice of billing for work outside of that scope.
• 5:00
  SPEAKER_00: And it's fine if you want to include that, but maybe it needs to be a VIP or uh um an added on an upgrade to your current service package.
• 5:12
  SPEAKER_00: You can work those things in, and those are often conversations that I have with my clients who still want to be able to serve, but also need to make sure that they're not over-bill, getting over underbilled, underpaid for the work that they are providing.
• 5:29
  SPEAKER_00: Okay, so link number three is pricing that hasn't been updated.
• 5:33
  SPEAKER_00: So I'm gonna ask you, when did you last raise your prices?
• 5:38
  SPEAKER_00: And if you're sitting there thinking, uh, I'm not really sure, I don't remember, it's been more than two years ago, then your pricing is definitely behind, especially after this past year.
• 5:52
  SPEAKER_00: Inflation is real.
• 5:54
  SPEAKER_00: Your costs have gone up and your experience has increased, and yet your prices are still where they are, or where they were when you were newer and less expensive to run.
• 6:06
  SPEAKER_00: Even a five to 10% price increase across your client base can dramatically improve your margins without requiring you to get a single new client.
• 6:18
  SPEAKER_00: And I know it can feel scary, but in my 12 years of business, one year, I can even say that I doubled my pricing and only had one client leave.
• 6:28
  SPEAKER_00: If you're underpriced, most likely your clients know they've been getting away with it for a while now, and they'll be happy to keep you, or if they do leave, it will make room for better fit clients.
• 6:42
  SPEAKER_00: Either way, you can fix this leak.
• 6:45
  SPEAKER_00: Okay, leak number four is the wrong clients.
• 6:49
  SPEAKER_00: This is one that sometimes people don't really talk about, but truly, not every client is equally profitable.
• 6:56
  SPEAKER_00: Some clients are smooth, efficient, they pay you on time, they require minimal hand holding.
• 7:04
  SPEAKER_00: Others take twice as much time, require constant revisions, and drain you and your team's energy.
• 7:12
  SPEAKER_00: If you're not trafficking tracking profitability by client or by project, you may be systematically underserving your best clients while pouring resources into your least profitable ones.
• 7:26
  SPEAKER_00: Let that sit for a minute.
• 7:29
  SPEAKER_00: I'm gonna say it again.
• 7:30
  SPEAKER_00: Okay, if you're not tracking profitability by client or by project, you may be systematically underserving your best clients while pouring resources into your least profitable ones.
• 7:46
  SPEAKER_00: This is another lesson that I've been learning.
• 7:50
  SPEAKER_00: I decided recently that we were gonna stop discounting our services.
• 7:55
  SPEAKER_00: You know, you get people on the phone and they're like, well, I'm not sure I can afford that, or that was more than I thought it was gonna be, you know, all kinds of reasons.
• 8:04
  SPEAKER_00: But what often happened, or what I was finding happened, is that those clients actually were more demanding, less appreciative, kind of sucked the energy and didn't really provide what you needed, right?
• 8:19
  SPEAKER_00: Didn't provide us what we needed.
• 8:21
  SPEAKER_00: Um, and then it became like this blame game kind of a thing.
• 8:24
  SPEAKER_00: And so I decided um recently that we were gonna stop doing that, or I was gonna stop doing that because I'm the one that does the sales calls, right?
• 8:33
  SPEAKER_00: And uh as a result, we've been bringing in better clients, clients that see our value, things that I don't have to prove our value to, people that are ready to work with us so that we can help each other and collaborate to make them successful in their businesses.
• 8:51
  SPEAKER_00: And it's been really freeing.
• 8:52
  SPEAKER_00: So I can attest that this one is sometimes scary on the high level, but really it's it makes a huge difference.
• 9:02
  SPEAKER_00: And maybe it's a mindset thing, maybe it's an abundance thing.
• 9:06
  SPEAKER_00: I don't really know exactly what it is.
• 9:09
  SPEAKER_00: I can just tell you what my experience has been is that by doing that, it's made room and it's made my mindset better when I have conversations with people.
• 9:20
  SPEAKER_00: So if that's been a problem point for you, definitely check out that leak.
• 9:25
  SPEAKER_00: Okay, so your action step.
• 9:28
  SPEAKER_00: I want you to do this before your next money date.
• 9:31
  SPEAKER_00: Um, and if you haven't done a money date with yourself, you need to have that on the calendar.
• 9:35
  SPEAKER_00: You need to spend time with your numbers on your money at least once a month.
• 9:40
  SPEAKER_00: Um, but I want you to do a subscription audit.
• 9:43
  SPEAKER_00: Okay, so pull up your bank or credit card statements from the last 30 days, highlight every recurring charge that's on there.
• 9:51
  SPEAKER_00: And then I want you to sort sort them into two columns.
• 9:55
  SPEAKER_00: Um, one, column one is using actively, and column two is that you're not sure.
• 10:00
  SPEAKER_00: Maybe everything in that not sure column gets canceled or reviewed before next month, and everything in the actively, you know it has a purpose or an explanation.
• 10:12
  SPEAKER_00: So set a 30-minute timer and just dig into that and go.
• 10:17
  SPEAKER_00: Okay, action step for this week.
• 10:19
  SPEAKER_00: All right, so profit protection isn't complicated, but it is consistent, it needs to be consistent.
• 10:25
  SPEAKER_00: Every dollar you stop leaking is a dollar you get to keep without making a single additional sale, without working a single additional hour.
• 10:37
  SPEAKER_00: That is one of the most powerful levers in your business, and it's entirely within your control.
• 10:44
  SPEAKER_00: Okay, so if you've learned nothing else, you can protect your profit in a different way.
• 10:52
  SPEAKER_00: And if you want an extra pair of eyes on your business looking for exactly these kind of leaks, like I said, book a strategy call with me, chatwithmeg.com with a sidekick accounting.
• 11:04
  SPEAKER_00: We do this work every single day, and we'd love to help you keep more of what you're earning.
• 11:10
  SPEAKER_00: So, link, chatwithmeg.com, could take you to my website.
• 11:14
  SPEAKER_00: You can book a free consult.
• 11:16
  SPEAKER_00: In the meantime, I will see you next week.
• 11:19
  SPEAKER_00: Have a good one.
• 11:20
  SPEAKER_00: All right, that's your episode this time.
• 11:22
  SPEAKER_00: Don't forget your action step.
• 11:24
  SPEAKER_00: I want you to actually do it, not just add it to the list.
• 11:27
  SPEAKER_00: If this episode was helpful, share it with a fellow business owner who needs to hear it.
• 11:32
  SPEAKER_00: And if you're ready to go deeper on your specific numbers, book a strategy call with Sidekick Accounting.
• 11:37
  SPEAKER_00: Go to chatwithmeg.com, and I'll see you next time on Profit Points.