MBA2643 3 Hidden Costs Killing Your Business Profits

0:28You could be doing all the right things. destroy your profit, and exactly what to do about each. These might surprise you because they're not the obvious things and that's why they're silent killers. So let's get into it.

0:44Welcome back to the$100 MBA show. I'm your host Omar Zinhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday to help you start, grow, and scale your business. Number one with a bullet, this one's a killer, time waste masquerading as productivity. Let's be honest, busyness is not business, okay? One of the biggest profit killers in your business is time spent on low leverage tasks. These are things that don't move the needle in your business, but look like work, look like things you should be doing. Now, Now, you might be thinking, wasting my time, that's wasting my money.

1:24Yes, your time is your biggest asset. Your time is limited. We only have 24 hours a day. Everybody has 24 hours a day. Jeff Bezos has 24 hours a day. Oprah Winfrey's got 24 hours a day. You have 24 hours a day, right? It's limited. And it's actually the ultimate leveler of everybody in the world. So how you use your hours in your business is going to make or break your business. And it's going to either make you money or make you lose money. Let me give you some examples. You're tweaking the design in your website, which has not been proven to cause problems with your conversions. It's not actually making you money or losing you any money, but you're just obsessing about it.

2:03Another example, doing customer support, you could be delegating to somebody else on your team, hiring somebody for far less money than it costs you because you are the founder, you are bringing in business. you are the person that should be doing high value tasks, tasks that bring in$10 ,000, $100 ,000 in your business. Another example, rewriting the same email four times. This should never be happening now with AI. You should not be wasting time on things like this. I can't emphasize this enough. Time is your most expensive resource and it's the one resource that most people waste. So what do you do about it?

2:39I need you to audit your week, write down everything you did in the last seven days. Assign a dollar of value to each task. Is this a$10 task? When I say$10, I mean, does it bring in the value of$10 into your business? Or is it a$100 task? Or is it a$10 ,000 task? You got to see it in black and white in your face, be honest, then eliminate or delegate anything under$100 an hour of value. That means you should be giving this to somebody else or just cutting it out for your business completely. Now$100 an hour is not high value even, but we got to start somewhere, okay? Eventually, what I want you to do is give yourself an hourly rate and don't do anything in your business or even in your life that is less than that hourly rate.

3:25So think, for example, like I like to give myself an hourly rate that makes me a little bit uncomfortable, like$800 an hour. If something is going to cost me less than$800 an hour to get done, I should delegate that. If you're doing$10 an hour work, you're building a$10 an hour business. That's just the bottom line. Number two, this one's very easy to miss, and that's reoccurring charges that start to bloat. This is also known as subscription creep. You're paying for tools that you forgot you had or you haven't used in a while. So what do you do is you go into your PayPal, you go into your credit card statements, and take a look at at least the last six months.

4:06What are the things that you were paying for every single month or maybe even every single year that you don't use, that you rarely use, or you only think you need, right? If you haven't used it, you don't need it. Guess what? If you need it, you can always re-sign up. And most softwares will allow your account to be reactivated so you're not losing any data. But the point here is that some of us, if we add up some of the things that we're not using that we're paying for month over month or year after year, it could be hundreds of thousands of dollars a year. I know this firsthand. I ran a software company that required a lot of different tools and software that we tried over and over.

4:43And we would go through this kind of itemized list in our kind of P &L and say, okay, we can cut this out, cut this out, cut this out. And every about six months, we'd save about five to$6 ,000 a month on our bottom line. Some examples of maybe like a design tool that you signed up and used once because maybe now you're outsourcing design. Maybe some extra SaaS tools that you might use later. Maybe something that you only use seasonally. Maybe a plugin that you signed up for and it's just auto-renewing. These tools may only be$20 here,$50 here,$100 there, but they stack up. It could be$500,$600,$1 ,000,$2 ,000 a month, and that's a lot of money.

5:23This is why I highly recommend that you maintain a P &L sheet and you're seeing your expenses every single month and you plug in the numbers so that you are aware of what you're spending every single month. Now, if you don't have a P &L sheet, don't worry, I got you covered. We've got a free template that you can download with all the formulas. Just go to 100mba.net slash templates, and you can download all our templates. When you start plugging in those numbers every single month, you know, $50 here,$29 here,$39.99 here, you start to really feel it, okay? You feel the pain, and you start feeling compelled to cut anything that doesn't contribute directly to sales or customer satisfaction.

5:59That's all that really matters is bringing in customers and making sure the customers are happy. If something might be useful, right? Set a reminder to revisit in next quarter, but cut it, like cancel it. And then next quarter, ask yourself, do I need this anymore? No, I don't need it anymore. Then I don't need to resign. But if I do need it, you can resign. You want to keep your tool stack as lean as possible to keep your business as profitable as possible. Number three, huge, silent killer, poor processes, because poor processes equal expensive mistakes. This one's really sneaky. Every time there's a miscommunication with a client, a deadline that's missed, an appointment that's missed, a customer complaint due to a mistake, whether it was from somebody on the team or you, it's usually not a bad employee or, you know, just a one-time mistake.

6:50It's a broken or non-existent system. A bad system in your business causes rework, refunds, stress, and profit leakage, leakage in your business, like a leaky bucket. Here's a story. Back when I was running Webinar Ninja, my software company, we once sent out an email to 10 ,000 plus units with a broken link, okay? A link that did not work. It was a little typo. Why? Because we didn't have a double check process in place. We didn't have a system or a SOP, a standing operating procedure where we said in this process, we're sending out emails, we need to do a test email, go into the email in the inbox, that test email, and click on all the links, make sure they work.

7:32That one email cost us$12 ,000 in lost sales that week. So one process could have saved us$12 ,000. $12 ,000 is no joke. Now that happened in the early stages of our business. That happened later on when we had a larger database and more potential customers. It would have been a lot more than$12 ,000 and that would really, really hurt. So anytime you're doing any kind of task in your business, you want to systemize it. You want to document it. Use checklists. Use setting operating procedures. This literally just means like a Google doc where you write down the steps of any procedure that you do regularly.

8:09If you can automate it, automate it, because that way you just make sure it's perfect once and it just runs that play over and over. You want to train your team to own the outcomes of whatever tasks are doing and to create the system and that SOP so that they take full ownership of that task. Every system you build protects your profits. Listen, I know. You're showing up, you're building, you're working hard. I get it. But sometimes the money you're missing isn't from too little effort. It's from the effort spent in the wrong places. You know, I grew up in an immigrant household. My parents immigrated from Egypt to the U.S.

8:49You know, hard work was like our middle name. We had to work hard. It was just part of our upbringing. And I just thought the harder I worked, the more I'll achieve. But at some point in your career as an entrepreneur, you're going to realize that it's not just about working hard. It's about working smart, right? Don't work hard or work smarter, as they say. Sometimes you just don't need more hustle. You need more clarity. You need better systems. You need to get better at what you do. When I used to play organized basketball, my coach used to say, practice doesn't make perfect. Perfect practice makes perfect.

9:20You have to practice properly in order for that to work. So take this episode as a moment to stop and say, where is the money leaking in my business? Where am I working hard but not working smart? Plug those leaks and you're going to find your business starts to breathe again and have healthy margins. You deserve to be profitable. You deserve a business that rewards all this effort that you're putting into it. But it starts right now with awareness. You got this. Thanks so much for tuning into the$100 MBA show. If you want to go deeper with me, you should sign up for my three things newsletter.

9:56It's absolutely free. It's my way to coach you from afar. I don't do any private coaching. This is a way for me to kind of have a deeper relationship with you because I want to send you what I believe you should be working on or helping you grow every single week. Every week, I send you three things, something to think about. So you're building a strong mindset. Number two, something to do. So you're taking action every week. And number three, something to learn. So you're skilling up and becoming better and better. Again, it's free. just go to 100mba.net, sign up for any of our freebies, and you'll get added to our newsletter automatically.

10:31All right, until next time, keep moving forward. I'll check you in the next episode. Take care.