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BOOK EXCERPT
📖 How To Run A Profit Killer Audit For Your Business
Excerpted and adapted from 125+ Hidden Profit Killers book by Bart Smith
Reprinted by Permission
Most businesses don't suddenly wake up one morning and discover that profitability disappeared overnight. It usually happens gradually.
A missed invoice. A subscription nobody notices. An expense that keeps growing. A process that wastes twenty minutes every day. A client relationship that receives too little attention. A price increase that gets postponed. A difficult decision that nobody wants to make.
Individually, these problems may appear insignificant. But, collectively, they can become expensive. That's why one of the best ways to use 125+ Hidden Profit Killers is not merely to read it. Audit your business with it.
The goal isn't to attack all 125+ problems simultaneously. In fact, the book recommends identifying just three to five profit killers currently affecting your business and addressing those first.
STEP 1 — LOOK FOR THE LEAKS
Start by reviewing the major areas of your business: Financial. Operations. Marketing and sales. Leadership. Strategy. Behavior and decision-making. Risk and long-term sustainability. Then ask:
What isn't working as well as it should?
What are we tolerating?
Where are we wasting time?
Where are we wasting money?
Where are profits disappearing?
What problem keeps coming back?
What have we been meaning to fix but haven't?
Those questions alone may reveal several costly issues.
STEP 2 — IDENTIFY YOUR TOP THREE TO FIVE
Don't create a list of fifty problems and overwhelm yourself. Choose the ones that matter most right now. Look for problems with one or more of these characteristics:
They happen frequently.
They directly affect cash flow.
They reduce customer satisfaction.
They consume significant employee time.
They create repeated mistakes.
They weaken margins.
They expose the business to unnecessary risk.
They are getting worse.
Those are strong candidates for immediate attention.
STEP 3 — CHOOSE ONE TO FIX FIRST
Awareness without action changes nothing. Choose one profit killer and make it the priority. The financial execution framework in the book recommends identifying the top weaknesses, choosing one to correct within 30 days, assigning ownership, selecting a measurable metric, and scheduling a review. That's a simple but powerful structure:
Problem. Owner. Measurement. Deadline. Review.
STEP 4 — MEASURE THE DAMAGE
Whenever possible, put a number on the problem.
How many hours are being wasted?
How much revenue is going unbilled?
How much are unused subscriptions costing annually?
How many customers are leaving?
How much rework is being performed?
How long does collection take?
How much profit is lost through discounting?
Numbers create urgency. They also give you a baseline so you can measure whether your fix actually worked.
STEP 5 — FIX THE SYSTEM, NOT JUST THE INCIDENT
Suppose an invoice gets forgotten. Sending the invoice fixes the immediate problem. Creating an invoicing procedure prevents the problem from happening again. That's the bigger objective. Whenever you identify a profit killer, ask: What system would prevent this from recurring?
That system might be: A checklist. A written procedure. An automated reminder. A dashboard. A weekly review. A new approval process. A clearer contract. Better training. Better delegation. A recurring audit. The incident shows you the symptom. The system fixes the cause.
STEP 6 — COME BACK AND AUDIT AGAIN
Your business changes. Employees change. Technology changes. Clients change. Markets change. Costs change. That means new profit killers can appear even after old ones are fixed. Treat your Profit Killer Audit as a recurring business discipline.
Quarterly is a great place to start. Ask the same questions again. Find the next three to five. Fix them. Then repeat.
The purpose isn't paranoia.
It's awareness. As the book explains, businesses often experience several profit killers without realizing it, and awareness gives you the chance to act before those small issues become serious damage.
You don't have to eliminate every possible problem in your business today.
Find the leaks doing damage now. Fix them one by one. Then keep watching. Awareness creates prevention. Prevention protects profit.
FINAL THOUGHT
The objective isn't to fix everything overnight. Pick the financial leaks hurting your business most, correct them, measure the improvement, and then move to the next one. Small leaks ignored become major losses. Small leaks corrected become stronger margins.
(THIS CONTINUES IN THE BOOK)
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