The Instant $10K Profit Audit

Most businesses are bleeding cash without even realizing it.

I've seen companies with millions in revenue struggle to make payroll because they're leaking cash from dozens of tiny holes.

That’s why I developed something called "The $10K Profit Leak Audit" to rapidly root out the margin killers flying under everyone’s radar.

It's simple, but I've personally witnessed it recover hundreds of thousands of dollars in lost profit for our portfolio companies, so don’t underestimate it.

Here's the playbook:

Step 1: Pull Your Top 10 Expenses

Review your expenses from the last three months and identify your 10 largest recurring costs (excluding one-time purchases).

Send this email to your leadership team to “encourage” them to help with the process…

Step 2: Ask the “3-Why” Questions

For each expense, ask the following three “Whys”

• Why do we pay for THIS? (You’re likely paying for legacy tools no one even uses.)

• Why do we pay THIS SPECIFIC VENDOR? (You’re likely paying people who added value in the past but no longer add value today.)

• Why do we pay THIS MUCH? (You’re likely paying more than you need to pay, because most vendors will lower their rates if you ask.)

Step 3: Apply the 30% Test

Ask, “Could we cut this expense by 30% without seriously impacting operations?”

If yes, it's a leak.

Cut it.

Step 4: Identify 3-5 Key Metrics

For each identified leak, establish a specific dollar amount reduction target with a deadline.

The average business I work with finds at least $10,000 in immediately recoverable monthly expenses through this process (hence the name).

A few examples:

• One of our portfolio companies was still paying a consultant $4,000 a month, but no one knew what he actually did. The employee who hired him had left the company two years ago, and the contract just auto-renewed year after year. Oops.

• Another one of our companies discovered they were paying for 17 different software subscriptions across 4 different vendors that essentially did the same thing. Oops.

• Another found they were paying a vendor 2X the market rate simply because they had never renegotiated in 5 years. Oops.

Each of these companies recaptured over $150,000 annually from this one-hour exercise, so if you don’t find at least a 3% profit margin improvement, go back and dig deeper.

Virtually every business has extra profit hiding in plain sight…

…you just have to be willing to look (and ruthless with what you find it).

This audit will not only help you find hidden profit, but it will also help establish a culture of responsibility and frugality, which is essential as your company scales.

⚡ Action Step: Run a “Profit Leak Audit” this week, and then set a reminder to repeat the process in 90 days. Goal: Find 3 - 5% of extra profit margin. (Virtually every business can if you look hard enough and you’re ruthless with your cuts.)

Quick Hits

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