MBA2643 3 Hidden Costs Killing Your Business Profits

Summary

The $100 MBA Show: Episode MBA2643 - 3 Hidden Costs Killing Your Business Profits

Release Date: June 27, 2025

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Introduction

In Episode MBA2643 of The $100 MBA Show, host Omar Zenhom delves into the often-overlooked expenses that silently erode the profitability of businesses. Drawing from his extensive entrepreneurial experience, Omar identifies and dissects three hidden costs that can undermine even the most promising ventures. This detailed analysis offers actionable strategies to recognize and eliminate these profit killers, ensuring sustainable growth and healthy margins.

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1. Time Waste Masquerading as Productivity

Timestamp: [01:10]

Omar begins by addressing the deceptively common pitfall of mistaking busyness for business success. He emphasizes that not all tasks contribute meaningfully to a company's growth and profitability.

• Key Points:

  • Low Leverage Tasks: Activities that consume time without significantly advancing business objectives are major profit killers. Examples include excessive website design tweaks that don’t impact conversions, or founders handling customer support instead of delegating.
  • Valuing Time: Omar underscores that time is the most valuable and limited resource. "Your time is your biggest asset... It’s limited and it’s actually the ultimate leveler of everybody in the world" ([01:30]).
  • Actionable Strategy: Conduct a weekly audit of all tasks, assigning a monetary value to each. Tasks generating less than $100 in value per hour should be delegated or eliminated. Omar suggests, "Give yourself an hourly rate... If something is going to cost me less than $800 an hour to get done, I should delegate that" ([03:45]).

• Notable Quote:

  "Time is your most expensive resource and it's the one resource that most people waste." – Omar Zenhom ([01:30])

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2. Recurring Charges That Bloat (Subscription Creep)

Timestamp: [03:05]

The second hidden cost Omar explores is the gradual accumulation of recurring expenses, often referred to as subscription creep. These are ongoing costs that may start small but accumulate over time, significantly impacting the bottom line.

• Key Points:

  • Identifying Unused Subscriptions: Many businesses pay for tools and software that go unused or are rarely utilized. Omar advises scrutinizing all monthly and yearly subscriptions to identify and eliminate those that no longer serve a purpose.
  • Example from Experience: Drawing from his time running a software company, Omar recounts how regularly reviewing expenses allowed him to cut unnecessary tools, saving thousands each month.
  • Actionable Strategy: Regularly review financial statements, particularly the Profit and Loss (P&L) sheets, to monitor and manage recurring expenses. Omar offers a practical solution by providing a free P&L template on his website, enabling entrepreneurs to maintain financial discipline. "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?" ([05:50]).

• Notable Quote:

  "If you 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." – Omar Zenhom ([04:30])

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3. Poor Processes Leading to Expensive Mistakes

Timestamp: [06:00]

The final hidden cost discussed is the impact of inefficient or poorly designed processes within a business. Omar highlights how miscommunications, missed deadlines, and operational errors can lead to significant financial losses.

• Key Points:

  • Systemization is Crucial: Without standardized procedures, businesses are prone to errors that can be costly. Omar shares a poignant example from his company, Webinar Ninja, where a single broken link in an email campaign resulted in $12,000 in lost sales. "One process could have saved us $12,000." ([06:15])
  • Creating SOPs: To prevent such mistakes, Omar advocates for the development and documentation of Standard Operating Procedures (SOPs). Automating repetitive tasks ensures consistency and reduces the likelihood of errors.
  • Team Ownership: Empowering team members to own their tasks and follow established procedures safeguards against profit leakage. Omar emphasizes, "Every system you build protects your profits." ([06:50]).

• Notable Quote:

  "Perfect practice makes perfect. You have to practice properly in order for that to work." – Omar Zenhom ([07:00])

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Conclusion and Actionable Insights

Timestamp: [07:00]

Omar wraps up the episode by reinforcing the importance of working smarter, not just harder. He encourages entrepreneurs to continuously monitor and refine their operations to eliminate hidden costs.

• Key Takeaways:

  • Awareness is the First Step: Recognizing the existence of hidden costs is crucial for taking corrective action.
  • Continuous Improvement: Regularly auditing time usage, managing subscriptions, and refining processes are ongoing tasks that sustain profitability.
  • Proactive Management: Implementing the strategies discussed can transform how resources are utilized, leading to significant financial benefits.

• Final Encouragement:

  "Plug those leaks, and you're going to find your business starts to breathe again and have healthy margins. You deserve to be profitable." – Omar Zenhom ([07:25])

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Closing Remarks

While this episode primarily focused on identifying and mitigating hidden costs, Omar also offers additional resources for entrepreneurs seeking to deepen their business acumen. By subscribing to his "Three Things" newsletter, listeners can receive weekly insights designed to build a strong mindset, encourage actionable steps, and foster continuous learning.

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Resources Mentioned:

• P&L Template: Available for download at 100mba.net/templates
• Newsletter Signup: Visit 100mba.net to subscribe to the "Three Things" newsletter.

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Notable Quotes Summary:

1. "Time is your most expensive resource and it's the one resource that most people waste." – Omar Zenhom ([01:30])
2. "If you 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." – Omar Zenhom ([04:30])
3. "Perfect practice makes perfect. You have to practice properly in order for that to work." – Omar Zenhom ([07:00])
4. "Plug those leaks, and you're going to find your business starts to breathe again and have healthy margins. You deserve to be profitable." – Omar Zenhom ([07:25])

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By meticulously addressing these hidden costs, Omar Zenhom equips entrepreneurs with the knowledge to safeguard their profits and steer their businesses toward enduring success.

Transcript

[Stripe Representative]

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[Omar Zenhom]

Your product is solid, your sales are growing, your customers are happy. And yet you're still not making the kind of money you should be. Why? Because there are hidden costs. Silent profit killers, I call them, lurking inside your business. You don't see them, but they are eating at your profit margins. And the longer that they go unchecked, the harder it is to scale your business. So today I'm going to break down the three hidden costs that quietly 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. Welcome back to the Hundred Dollar NBA Show. I'm your host, Omar Zenholm, where I deliver practical business lessons three times a week, Monday, Wednesday and Friday to 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 look like things you should be doing. Now you might be thinking, wasting my time. That's wasting my money. Yes, 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 is not been proven to cause problems with your conversions. It's actually making you money or losing you any money, but you're just obsessing about it. Another 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 ten thousand, a hundred thousand dollars 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? I 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 hundred dollar task or is it a $10,000 task? You gotta 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 gotta start somewhere. Okay? Eventually what I want you to do is give yourself an hourly rate and don't or even in your life that is less than that hourly rate. So think, for example, like I like to give myself an hour 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. What 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, is that some of us, if you 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 first hand. I ran a software company that required a lot of different tools and software that we tried over and over. And we would go through this kind of itemized list in our kind of P and L and say, okay, we can cut this out, cut this out, cut this out. And every about six months we would save about five to six thousand dollars 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, a thousand, $2,000 a month. And that's a lot of money. This is why I highly recommend that you maintain a P and 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 and 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 templates and you can download all our templates.

[Stripe Representative]

Stripe is the go to choice for AI companies from early stage startups to scaled enterprises. 78% of the leading AI companies use Stripe to go to market quickly and scale globally. That includes pioneers like Nvidia, OpenAI and Perplexity. Stripe has developed cutting edge tools to improve everything from fraud detection to checkout optimization. Whether you're aiming for incremental gains or planning for enterprise transformation, see how Stripe.

[SoFi Representative]

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[Omar Zenhom]

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. That'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. It'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 users with a broken link. Okay, a link that did not work 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 in into the email in the inbox, that test email and click on all the links, make sure they work. That 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. If 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 that 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. you know, hard work was like our middle name. We had to work hard. It was just part of our upbring. And I just thought, the harder I work, 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 harder, work smarter. So 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. You 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. It'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 100- MBA-NET sign up for any of our freebies and you'll get added to our newsletter automatically. All right. Until next time, keep moving forward. I'll check you in the next episode. Take.

[SoFi Representative]

Today we'll attempt a feat once thought impossible, overcoming high Interest Credit Card debt. It requires merely one thing, a SoFi Personal Loan. With it, you could save big on interest charges by consolidating into one low fixed rate monthly payment. Defy high interest debt with a SOFI personal loan. Visit sofi.com stunt to learn more. Loans originated by Sofi Bank NA member FDIC terms and conditions apply. NMLS 696891.