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

Release Date: June 27, 2025

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.

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])

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])

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])

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])

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.

Resources Mentioned:

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

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])

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