Recently I had an experience with a client that blew me away!
It all happened over a zoom call, as we chatted back and forth about the nature of his business. What he’s excited about, etc.
As we discussed a bit more, I became interested to know the answer to a question. A question that I’ve learned is massively powerful in the numbers of a business.
Here was the question…
“What expenses do you have, that are unneeded”?
He paused for a moment and replied… “a few”.
I said, “would you be willing to invest a few minutes and go over them”?
Willing he said “yes”.
During the next 30 minutes, we discovered $1988 of non-essential expenses per month.
But the amount was better reflected when converted into a 12-month figure, using an annualized “run-rate” calculation.
$1988 per month is $23,986 in expenses per year!
For most entrepreneurs, $24,000 is a number that catches our attention.
Add to this the insight that comes what Tim Francis refers to as “bloat factor”. Whereby a 10% net profit margin business, would need to sell $239,860 to generate this same $23,986 in net profit! Cutting expenses is hugely leveraged!
For my client, there has been $23,986 of cash going down the proverbial drain each year.
My heart hurt, as I considered how hard this entrepreneur works in his business.
Together though we faced the painful reality of lack of financial stewardship. Something I’m familiar with as shared in this epic failure story!
The Good News
Our brief conversation, plus about another 2-3 hours of follow-through, and this client is well on the way to a nice reward!
This includes an extra $24,000 accumulating in his business bank account over the next 12 months.
What shall he do with this cash?
Dividends? Charity donation? Invest back into the business?
This is a TOTAL win for this hard-working and now even smarter client.
My Lesson
We can sometimes be so focused on one area of the business, that we overlook the high-impact opportunities so close to our nose.
I’m literally awestruck by the opportunity so many entrepreneurs have to uncover this kind of real cash in their business!
The issue and opportunity are three-fold:
- Knowledge & education about what Warren Buffet refers to as the “language of business” (Warren calls this accounting. I like the translation of the language of business being “numbers”).
- Being focused solely on marketing and sales.
- Fighting the fire of the week.
The solution is simple:
Find that Goldmine in your business!
Would you like to chat about finding cash in your business?
If so, I would be happy to hear more.
Email me: Kyle@GetThoughtfuLeadership.com
PS – As an entrepreneur myself, and someone who cares about healthy businesses, and healthy entrepreneurs, finding this hard-earned cash is something I love!
To your success,
Kyle McNeil
Fractional COO
Kyle McNeil is a Fractional COO for service-based businesses in the $1M – $10M range.
Kyle is based in Calgary, Alberta, Canada.
Photo Credit: by N. on Unsplash