What I learned about Profit working with Big Tech with The Profit Doctor

[00:00:00]

**Greg:** So today we’re talking to Ben from The Profit Doctor. Now, profit is one of the big focuses that many have. Ultimately, it’s not about revenue, is it? It’s what do we secure at the end of the year? But the problem is that isn’t always the focus of every business owner. You’re just out there trying to win the work, you’re trying to run the projects, and sometimes profit is the last thing that you get to think about, and it could be too late by the time you look at it.

**Greg:** So today we’re gonna do a deep dive with Ben into what are the big problems that construction businesses face with trying to secure profit? What are the levers that you can pull that are gonna make the difference? So you’re gonna learn a lot from this. So let’s dive in.

**Greg:** Ben, great to have you on the podcast. This is Ben from The Profit Doctor. Welcome.

**Ben:** Thanks, Greg. I’m looking forward to it.

**Greg:** Good stuff. So Ben, tell us where about you are in the world at the moment.

**Ben:** I am here in Austin, Texas. Hook ’em Horns. It is a beautiful day, and I’m eager to jump into it with you, Greg.

 

 

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**Greg:** Great stuff. Yeah, Austin. So Austin’s… This is where all the famous people move to now, isn’t it? Joe Rogan and- … Chris Williamson and all the- I

**Ben:** mean, right … people. Yeah. As soon as I got here is where all the famous people got to. But it is definitely, it feels influencer heaven these days.

**Greg:** Yeah. Do you see them out and about when you walk in the streets?

**Ben:** I don’t know that I’ve seen a ton of Joe Rogan. But he does play at the comedy shows and and I have seen him at a couple shows. I think it’s it was, I think, Gas Works or something like that, and then now it was Comedy Mothership.

**Greg:** Ah, cool. Excellent. Good stuff.

**Ben:** Yeah.

**Greg:** Yeah. Yeah. Really wanted to visit Austin, actually.

**Greg:** I’m meant to be potentially going in November to watch the F1, so we’ll see. Oh, nice. So we’ve got a-

**Ben:** Nice …

**Greg:** we’ve got a little- Nice … little mark on the diary. Let’s just see how the how the world economy goes and if there’s any flights by then.

**Ben:** Yeah. But we’ll see, Apparently jet fuel is is a thing these days.

**Greg:** Yeah, exactly. Yeah. I I just booked my flight back to the UK to host an event there.

 

 

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So we have a big event in the UK every year, so flying back from Sydney to UK. And managed to get a pretty cheap ticket, and then all of a sudden I wanted to just do a small change to one of the days, and they literally tripled the cost of the tickets.

**Greg:** They said, “No, it’s $1,500 per person.” Got two kids that are coming and my wife, so they wanted to charge me six grand for just a change in day, just because of the yeah, what’s going on with the war. So yeah- Yikes … not good times at the moment. Yikes. Yes. So that’s gonna mess up my profit, Ben, and that’s what we need to talk about.

**Ben:** Yes, exactly. So- So that’s pretty much the whole thing. Mic drop moment. Don’t change your flights last minute. Okay, we can go have a beer now.

**Greg:** That’s it. Good stuff. All right. So Ben tell us, first of all, obviously we’re gonna be talking about profit today. I really look forward to diving into that for builders and contractors and how they can maximize their profit.

**Greg:** But I always love to know how people got into this industry and, you know, what got you into becoming The Profit Doctor. So do you wanna just start there? What’s your background?

**Ben:** Yeah, absolutely. You know, my background is mostly sales and marketing. I got my MBA here at the University of Texas, and then I got into some startups, and then Dell, and then Microsoft.

 

 

[00:03:00]

**Ben:** But then I started my own company, and over a period of about 10 years we did pretty well. We grew to 100 employees and $13 million in revenue. During that time, I did, you know, three or four things when it comes to profitability really right. We did really good job on pricing. We did a good job on being very crisp and focused on our client focus, if you will, our avatar, and very good on sticking to the knitting in terms of what kind of products and services we would offer.

**Ben:** But you know, one thing led to another, and I look back at that time and I’m like, “Man, I really messed up on a couple of these different things.” And so then, you know, fast-forward to where we are today, I kind of look at my lessons as the founder and president of Mactus Group as both an example of some of the really powerful, smart things to do it…

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**Ben:** in what we now call The Profit Prescription, and then there are three or four things like, ugh, nails on a chalkboard, that I really studied and now come up with a better, if you will, prescription on how to deal with that. And now we kind of bake in a different approach to The Profit Prescription.

**Ben:** So kind of, again, pulling from, you know, best practices that I did and best practices that I did completely wrong, but then researched and, you know, dug into how to do right, and that’s kind of what we show people now.

**Greg:** Awesome. No, that’s great. Yeah. I think that’s what it’s all about, isn’t it? I think people resonate with ones that have been there and done it, but also are not afraid to talk about what wasn’t, what didn’t go right or what went wrong in their businesses.

**Greg:** And I’ve certainly had the same, you know, had many successes in businesses, but also had failures. And I think you gotta talk about those failures. Obviously, you don’t learn the lessons. That’s the key.

**Ben:** Yeah. You know, I think it’s those failures that etch the lessons in, you know, deeper, often with blood and scar tissue-

**Greg:** 100%, yeah. So, where did this name come from, The Profit Doctor? I love that.

 

 

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**Ben:** Yeah. Well, like every business name these days, it’s some combination of trying to encapsulate what you do, and can you get a URL that matches that isn’t a complete train wreck, you know, 1,000 characters long? But the, you know, the way I look at it is I really try to work with my clients to help them kind of cure poor profit sometimes we call it profititis but to really kind of strengthen their company, improve the health of their business and their profit line, and, you know, their own family’s financial f- financial future.

**Greg:** Yeah. Good. Okay. So, what actually got you into coaching, though? So you’re running your own business. You said doing, you know, big revenue, a lot of employees. What made you flip into coaching? How did that start?

**Ben:** Yeah. Well, I had pretty much exited from that business, and I was looking around to see what made sense for me, and I joined a group called The Entrepreneurs’ Organization in 2011.

 

 

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**Ben:** And, you know, over the next five or 10 years, I just had so many conversations with so many other business owners, and what I realized is, gosh, a lot of them did not think like I did. A lot of them had different backgrounds than I did. And I found that maybe a third to possibly half of those business owners pretty much got into becoming a business owner by being really good at either selling or delivering the thing that their business did.

**Ben:** And I bet that’s very typical for the owners of the businesses that are listening to your podcast. You know, they used to swing a hammer, or they used to be a plumber, and now they’re the CEO of a construction or trades type company. And so what I found is while many of those people very astute at dialing in profitability, looking at their financials, focusing in on the bottom line, you know, quite a number that is really kind of a bit of a foreign language or something that came second to them.

 

 

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**Ben:** And so a number of the, of my fellow colleagues in in the Entrepreneurs’ Organization started asking me for help to look at how they were running their businesses to help them improve profitability. And I guess it was just always a knack I had or sort of a special focus area. I was always very dialed in to profitability, understanding the financials, and ultimately that led me to kinda get into this business to help you know, other business owners improve their profitability.

**Greg:** Awesome. No, that’s great. Okay. Yeah. Well, well, let’s dive into the problem that construction and builders have generally. So, y- I mean, you’ve touched on this a little bit about, you know, some people w- were swinging a hammer initially and, you know, now they’re the CEO. But what do you think some of the big mistakes are that these construction businesses are making?

**Greg:** You know, wh- why is profit maybe an afterthought for so many of these?

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**Ben:** Yeah. I think it’s twofold. You know, the first is sort of this you know, what you think about and what you’re focused on, and I kind of call it the big lie. There are so many business owners that have been taught to believe, come to believe, pre-wired to believe that if they just grow their business, everything’s gonna work out fine.

**Ben:** And we actually have a condition, we call it profititis, which is what we call when somebody’s revenue or sales are going up up, or maybe just maintaining at a pretty high level, but their profitability is either flat or decreasing. So we think of that as healthy top line, healthy sales, healthy revenue, but weak, flagging, dropping, you know, bottom line or profitability percentage.

**Ben:** We call that profititis. And so, you know, where the problem is, the first one is people have this profititis often because they’re just so focused on that big lie of revenue, and not really paying close attention to profitability.

 

 

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**Greg:** Yeah.

**Ben:** And then I think another big one, certainly in construction and trades, is, you know, gosh, you’re often forced to, you know, bid out a project on a specific hard bid, and then if costs get away from you, most of those cost overruns are often coming out of people’s bottom line.

**Ben:** So what we see often is this laser-focused on revenue, but not the equivalent, you know, laser-focused on costs, and you gotta match those revenues a- and costs in order to win o- the profit game.

**Greg:** Yeah, 100%. Yeah. So I think that’s really common, and definitely at the moment in the UK we’re…

**Greg:** they’re feeling that with… There’s a little bit of a recession there. They don’t like to use the- … the R word, but there’s definitely a pinch. And- Yeah … people are… You’re still sort of bidding you… Or tendering at the same price, and- … but costs are changing. Or actually, maybe you’re not bidding at the same price ’cause you wanna win the work.

**Greg:** You’re coming in a little bit lower.

 

 

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Yeah … and sometimes it’s the debate, isn’t it? I need to bring this project in but at the same time you might be tied up on that project for six months. But are you actually gonna be making any profit out of it at the end of it? And that’s that’s a real battle, isn’t it?

**Greg:** So I guess some of the profitability starts right from the beginning, doesn’t it? In the tenders and bids that you’re submitting. We gotta look right at the start.

**Ben:** Yeah, 100%. I mean, I would say maybe putting the cart before the horse, but one of the most powerful tools I think for folks who bid projects is what I call Operation Dog Catcher, which is if you were to go back over, let’s say, the last year’s worth of projects that you bid, can you unearth, you know, what was your bid?

**Ben:** What were the total costs that it finally cost you to kind of land that project? How did you do from a profitability point of view? And then what are the various commonalities among those projects? Are there certain kind of customers that you end up doing real well with, other customers you do poorly?

 

 

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**Ben:** Certain kinds of work you do really well with, others not so good. Certain estimators that have a habit of estimating too low, AKA you always lose money or the reverse. And then certain, you know, foreman or project leads or whatever responsible for delivering that work, some of whom tend to deliver on budget and some of whom don’t.

**Ben:** And hopefully through that process you can identify kind of what are your, quote, dogs, and then how can you not have those going forward, whether that’s just exiting certain customers, project types, project managers or estimators, or figuring out how on the front end you can fix those things, like maybe raise your price or build in some flexibility into that contract so that you don’t kinda go in already knowing you’re gonna lose before you’ve even bid on the work, you know?

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**Greg:** Yeah, I think that’s really valuable. Maybe almost every project you finish you just have a bit of a debrief on that project- For sure … and just think you know, ask a few questions, like how did this go? What went well? What went wrong? Yeah. I don’t think we do that enough really, especially in construction.

**Greg:** You sort of… You- you’re running at 100 mile an hour straight onto the next project and you’ve got a million things to do. Yeah. But I think you’ve raised a really valid point there, so that’s yeah, that’s something I’m certainly gonna take away from that. Yeah, debriefing-

**Ben:** Yeah, I mean, I think the key is both look at them one at a time, that, quote, postmortem if we’re gonna use some medical- di- you know, language. Super, super valuable after action or whatever you wanna call it, debriefing. But again, if you can kind of look at that across a bunch of projects, because when you look at it across a bunch of projects, that’s where you start seeing some of these patterns, right? Yeah. Are there certain customers, certain project types, certain delivery leads?

**Ben:** I don’t know if you’re gonna call them a for- a f- a foreman or a project manager or or certain estimators or, you know, account managers or whatever can make a big difference in terms of how that gets done.

 

 

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**Greg:** Yeah. That’s a really valuable point. So, yeah- We talked about becoming the CEO of your business and, you know, you obviously come off the tools, you become a CEO you’ve got a lot of moving parts.

**Greg:** We’re almost talking now about how you need to become the CFO of your business too, haven’t you? So if you don’t, if anyone’s listening to this, doesn’t know what that is, it’s the chief financial officer, so now in charge of all the finance. You know, how do you get the, you know, the owner of a business to start thinking like that?

**Greg:** How … is that a bit of a mindset shift?

**Ben:** Whew. You know, we actually have a whole course on that. We call it the Profit CFO. You know, I guess I would just say I don’t know if it’s possible for a small to mid-sized construction and trades company for that CEO to just sort of fully delegate the finances, if you will, to someone else.

**Ben:** Now, that doesn’t mean you can’t have someone on your team who really takes the lead on that. But I don’t know that you can just kind of outsource that entirely. So the way we look at it is very important for either your bookkeeping, your accounting resources, finance, CFO, whoever’s sort of running the numbers, if you will, at your business.

 

 

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**Ben:** First of all, they need to be digging into it. They need to be looking at the profitability side of that. But really important if that person is not you, to start presenting that to you in a way that’s a lot easier to consume. We see so often where CEOs who don’t think of themselves as numbers people are getting really complicated reports that are not real valuable and easy to understand.

**Ben:** And so when you’re getting reports, data if you will, it’s not easy to understand, and then you yourself are not, you know, super comfortable or well-trained in that area, it’s kind of a recipe for disaster. So in our Profit CFO program, which we now have part of our Profit Doctor 180, we really go the extra mile to make sure that the information and reports that the leader or CF- CEO is looking at are easy to understand.

 

 

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**Ben:** And then we pair that with a little bit of education so they know what to look for are trained on how to ask questions and go back to their numbers people to get the information that they need. And so it’s kind of a, you know, you gotta get both, easy to understand reports and the kind of confidence and competence to look at those reports and get the right information out of them.

**Greg:** Yeah that’s a really valid point. I mean, I’m … I would say I’m pretty all over my numbers and I’m pretty good at it and have had to learn to be. But I get reports from my accountants every month, and they’re probably doing this just ’cause they’re charging me a fortune. But, they’re thir- 30-page long reports just for, you know, a P&L that comes to me at the end of the month. And you just think I’m not looking at half of it. I might be looking at maybe two pages of that report. You just don’t- Yeah … you know, need all that noise in the background sometimes.

**Greg:** Obviously, you know, there’s gonna be value in some of it, but I think that’s really good. Yeah, just, you know, if you are, if you have got someone reporting to you, make it nice and simple and actionable so you can do something- Yeah … with those numbers. Yeah.

 

 

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**Ben:** I think the way we look at it is we want the CEO to look at something simple and powerful so it’s easy to draw the key insights.

**Ben:** And then once you’re like, “Wow, we’re really spending a lot on our materials cost,” you know, now maybe I wanna drill down and see a two-page report just on materials. But if in your P&L is two pages worth of materials information, you’re just never gonna see kind of the forest for the trees, you know?

**Greg:** Yeah, 100%.

**Greg:** So, there’s obviously some, you know, core levers, profit levers that business owners have to pull in a business to, to get right. I don’t know whether you’ve got a, another doctor analogy for what you describe them as. But maybe could you walk through, like what do you think the high level things you know, builders and contractors should be really looking at in, in a business?

**Ben:** Yeah. You know, I think we’ve already talked about two things. One is maybe I mentioned the big lie, which is if I just grow, everything’s gonna work out.

 

 

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So that’s sort of this fallacy or myth about revenue versus also thinking about profit. And then we talked a little bit about the numbers. You know, if you can’t see what you’re doing, how are you gonna be able to manage it effectively?

**Ben:** And again, that’s this idea of you wanna have numbers that are easy to understand, visibility into both revenue and associated costs with each category of revenue. So for example, if you’re not looking at profitability by customer, by project, by market, by product or service family, you’re really gonna struggle in order to kinda tighten that up, right?

**Ben:** But then the third big thing, here’s like a big one. When I say it, you’re gonna be like, “Come on, Ben, that’s not tricky or interesting.” But then if you think about trying to apply it, you’re like, “Huh, maybe that would help me.” Stop doing things that are not profitable. And you’re like, well, who would wanna do things that are not profitable?

 

 

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**Ben:** And I’ll just tell you, 95% of companies that are below average profitability are doing a lot of stuff that’s not profitable. And by exiting that stuff from their business is the fastest way to kind of raise up, you know, the balloon of your business by cutting the ballast, right? Those are the boat anchors that are holding your business down.

**Ben:** And we have a rule or a principle, we call it the 50/20 rule, and we say, go, you know, element by element through your business to identify, and this a triage metaphor for the doctors among you, you know, which areas of your business have the most leakage. But then when we identify those areas, we wanna cut half of the worst 20% of that stuff within 30 days.

**Ben:** So sorry, I kinda blended two things together. We do offer a free tool, so please stay to the end and we’ll show you how to get it. It’s called our Profit Leaks Detector, and it kinda shows you where your business is leaking and where your business is leaking profit the worst.

 

 

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And so you identify those worst leakage areas, and then you apply the 50/20 rule, which is to stop doing half of the worst 20% within 30 days.

**Ben:** Hopefully that was clear as mud.

**Greg:** Yeah, very, no, very clear. That’s I think very valuable. So, just trying to think of, you know, in a practical way what, you know, what’s gonna stand out for someone listening to this now as, yeah, I’m probably losing profit on that. So, I guess one thing that’s really important for builders and contractors is that actually when they’re, and that we often teach this in our community too, is when they’re actually delivering a project, it’s all often broken down into phases.

**Greg:** So they may have, you know, the foundations- … the brickwork, joinery packages, you know, all the different things. What a lot will do is they’ll analyze the entire profit on that project, the gross profit, and go, “Right, yeah, we ended up with whatever, 30% gross profit.” But what they fail to do is actually look at it a little bit more granularly and think, “Actually, how did we do on each package?

 

 

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**Greg:** Like, how did we-” Yeah … “actually do on the foundations? How did we do on the roof?” So I guess one of the things you’re saying there is if we’re gonna do that triage, if we’re looking at phases deliberately, and then think, you know, “Why am I losing every single time on my joinery package? What subcontractors am I using on my joinery which makes me lose, you know, every single time?”

**Greg:** Is that the sort of things you’re getting at there?

**Ben:** You know, I could see a couple of approaches to that. You know, the way you just described it, if I’m building an entire house, let’s just say we’re gonna break it up into 10 phases, right? I don’t know, site clearing, foundation, framing.

**Ben:** I don’t know. We’re gonna come up with 10 phases. I’m not entirely sure that I would start w- Well, so certainly phase by phase, I think it would be very valuable to know what your revenue chunk is and what your costs are, and therefore what your profit or margin or contribution margin is. I’ll give you a hint.

 

 

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**Ben:** I bet many people listening to this podcast are not fully attaching all the costs with each of those phases, and that is giving them an inappropriate understanding of the contribution margin. Maybe the right gross margin, but not the right contribution margin. And I’ll give you just one of the most simple things that’s easy to understand that n- really isn’t construction.

**Ben:** But let’s say I sell a million dollars worth of T-shirts to consumers, and I get paid by credit card. I’m just maybe attaching the raw costs of that T-shirt. But I might be missing the shipping to me and to the customer and the credit card processing fees. And when I add that all up, my gross margin, which I thought was, like, 70%, when I add in all that shipping and all those credit card fees, maybe I’m only clearing 30%, ’cause that other stuff- Yeah

**Ben:** can add a lot. I don’t think that’s quite analogous in the construction area, but you know, there’s a lot of freight of things coming to you.

 

 

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Maybe adding delays. Let’s say when it comes to joinery, let’s just say you’re frequently delayed, and you’re paying labor dollars for those guys to sit idle, but you didn’t attach that to the job because you didn’t think it was appropriate.

**Ben:** Well, I don’t know if it is appropriate or isn’t, but it’s certainly gonna hit your profitability and cost line in that example, right?

**Greg:** Yeah.

**Ben:** So I kinda got a little off target there. But number one, yes, you should absolutely want to get a sense of all the cost, and therefore a better understanding of your profitability by those phases.

**Ben:** But let’s cut that a little bit differently. Let’s say you’re in the residential construction business, and you have three kinds of customers. Maybe you have 103, but let’s say there’s three. High-end, mid-range, and low-end. And so let’s say you were to look back at the last 100 houses that you built, or the last 30 or the last 10, and you built two or three high-end homes, four to six mid-range homes, and two or three low-end homes.

 

 

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**Ben:** It wouldn’t shock me that your business is better suited for one of those three categories than another. And if you could appropriately attach revenue, cost, and therefore get a profitability calculation by those different kind of homes, you might find, aha, we’re really good at high-end, you know, high-end specialty homes and terrible at low-end homes.

**Ben:** Maybe the other way around. But if you’re not thinking about it by t- I mean, that would almost be a different product type, right? Or you could think of it as a different customer market. I guess your mileage may vary if that’s a different customer or a different product. I might argue maybe both.

**Ben:** But I might really invite you to look at it that way, and then when I’m suggesting to stop doing the things that aren’t profitable, let’s pretend you’re very effective at high-end homes.

 

 

[00:24:00]

If you are, it’s highly likely that you’re getting your butt handed to you on low-end homes, ’cause it would be rare that the same company could deliver both kinds of projects with equal success.

**Ben:** So in this w- in this example, high-end homes good, low-end homes bad. I might invite you to stop doing low-end homes if for the last five years you’ve been trying to be good at it and you’re still not good at it. Why are you gonna be good the next year? Probably not, right? Never say never, but but but I think it’s worth looking at.

**Ben:** So I do have some great- Yeah … customer examples, and I’d love to squeeze a few in there before we end. Did I get to your question?

**Greg:** Yeah, you did. You did 100%. And look, I can relate to that. I think it… when I was running construction years back, we used to do two, two specialist things. We started with loft conversions- and then we used to do roof extensions, what they call here in Australia, and then we used to do ground floor extensions.

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So two completely different products. And and we were known in the area for doing loft conversions and, you know, we grew our business huge on that. But it was only when we analyzed it, and this was years later, and it’s actually embarrassing to say really, that we, we-

**Greg:** were just plowing along with both for so many years. W- we were making almost double the amount of profit on our ground floor extensions than we were with our lofts, and we thought, you know, we were known for loft conversions as a business. That was w- how we grew. So, I get that. Get that 100%, and we had to make a shift.

**Greg:** But y- you know, why, you know, why take two years or more to work it out? That was our problem back then. Yeah. So hopefully someone’s listening to this now and think, “Right, actually, let me actually sit down and analyze this,” and, you know, you can make that shift today. No, that does, that makes that makes complete sense there.

**Greg:** So we’re gonna, we’re gonna show people how to do that assessment later on. So we’ll show them that at the end of the podcast that you mentioned, that that leaks assessment. I think that’d be valuable for everyone. Let’s just talk about cash flow and profitability. Because oftentimes when I’m talking to people about when they say they’ve got a problem in the business, they normally say, “I’ve got a cashflow problem.”

 

 

[00:26:00]

**Greg:** That’s the first thing they lead with, “I’ve got a problem with my cashflow.” And sometimes it’s not cashflow at all, it’s actually profitability. So let’s just talk, let’s just clear up what the difference is between the two and why that’s so important.

**Ben:** Yeah. Well, you know, we could be writing some books on each topic and then how they interact together, but probably what I would start with is, you know, a CEO of a $10 million contractor firm, you know, that builds houses and additions and stuff like that, you know, they’re gonna feel the pinch mostly on cash.

**Ben:** “Hey, I don’t have money to pay materials contrac- or materials providers or subcontractors or payroll,” so they’re thinking cash in the bank. And I’ll tell you that cash separate from profitability is a huge and big problem for construction and trades companies. Separately, profitability is a big issue, and so they kind of interrelate.

 

 

[00:27:00]

**Ben:** So if your profit stinks, it’s only a matter of time before you run out of cash. Because once you get profit, you actually have to collect oftentimes from your customers. And oftentimes they will pay you after you have paid payroll, materials cost, and subcontractors, depending on the kind of work you’re in.

**Ben:** Hint, special secret, the more you can bill upfront, the more you can collect deposits to schedule a job in advance, those are great ways to improve your cashflow. Okay. But let’s assume that your profit is d- is pretty good, so you’re, quote, making money y- year to year, at least according to your finan- according to your P&L.

**Ben:** You could still have a cashflow problem if your customers are paying you a lot or a long time after you are paying your bills. Now, the flip side of that I have a customer who has pretty modest profitability, but they’re so good at collecting half of the job upfront they’re actually doing great on cash, but their profit stinks.

 

 

[00:28:00]

**Ben:** Now, of course, that is also a recipe for disaster. So what you really want to have happen is you wanna have a good, healthy profitability number. Let’s say you’re paying yourself a solid salary and your business is at least 10% net profit, that’s a pretty healthy place to be. If you’re there year in and year out, and you’re collecting some deposits upfront- And so your cash flow is not like you’re not the bank for your customers.

**Ben:** You’ve got a healthy business. But if your profit is trending to low single digits, or you’re not collecting money up front, and you have a lot of invoices outstanding, pretty much you’re getting killed on both sides. I don’t know if I really got through that all in just a couple of minutes, because it is a pretty rich topic.

 

 

[00:29:00]

**Ben:** But those are two independent levers that work closely together that you really have to do a good job on both of them or you’re gonna get killed. Yeah. The only exception is if you’re amazing at either one of them, it can kind of hide being sucky at a diff- at another one.

**Greg:** Yeah. No I completely see that, and I think we, we see this played out again and again with many who are, like you say, great at collecting cash early on, get big deposits, and then by the end of the job they’re thinking, “Actually, I’ve just burned through all that money and I’m struggling- Yeah

**Greg:** to finish this project now, but it doesn’t matter, I’ve just signed up another three projects and now I’m gonna use- Right … the deposits of those.” So robbing Peter to pay Paul is a common thing. That,

**Ben:** yeah. I mean, we see that out there, and that is a recipe for where you just keep snowballing forward.

 

 

[00:30:00]

**Ben:** And so the good news is you’re kind of robbing from the future to, to pay your current bills, but you’re never gonna be able to sell that business. It’s gonna be incredibly challenging for you to build value in your company or a stable, big, strong financial future. Although, maybe the chickens just haven’t come home to roost.

**Greg:** Yeah.

**Ben:** Dangerous.

**Greg:** Yeah. H- very dangerous. Yeah. So, one thing that I’m noticing a lot lately, and I wonder if you’re seeing this too, Ben, is the problem with obviously the cost of living’s rising and so what we’re seeing with a lot of business owners is actually they’re stripping their company bare just to pay themselves and to keep themselves going, and they’re thinking sometimes, “Look, I’ve got to take this high salary.”

**Greg:** In fact, we had a meeting with a client the other day who said “Look, I’m making no money in my business,” and actually they were really profitable. But they’re just take, taking it all out as director drawings. And so are you seeing this as a bit of a trend at the moment where, we’re certainly seeing it in the UK, where business owners are just maybe living beyond their means or the business actually isn’t just generating enough to sustain the business owner’s life.

 

 

[00:31:00]

**Ben:** Yeah. Well, I heard two or three slightly different versions. One was the company was super profitable.

**Ben:** Okay. And then another one is people are stripping the, you know, the assets or the monies out of the company, usually because the company’s not super profitable. But either way what I guess I would say is- we help, what we do is we help our clients build a high cushion of profitability, and that allows them to pay for, you know, pay their bills and sock money away to kind of invest in their own family’s financial future.

**Ben:** What I would generally say is if your business is not very profitable, you are not able to pay your own bills and sock away money, kind of investing for retirement and that sort of thing. Yeah. What we sometimes see is that business owners get confused on how profitable their business is. It’s “Well, I’m taking money out of the business, so it’s profitable.”

 

 

[00:32:00]

**Ben:** Well, maybe not. That might be the stripping assets out of the business inappropriately. Or they think the business is profitable, but it’s because they’re not really taking a salary before they calculate the profit. Let me give you an example. So I had a compan- I, I had a client doing about $2 million a year, and they were very excited because they felt they had a 13% net profit line.

**Ben:** That’s not bad, and that’s pretty good, right? The problem was the salary that they were paying themselves was only $30,000 a year, when in order to get anybody else to do all the work that they were doing would at least take 130 if not $230,000 to get somebody to do that. So what they had essentially done is they had artificially inflated the profitability of their company by not taking a salary.

 

 

[00:33:00]

**Ben:** And let me just kind of make it a little bit more simple. Let’s say there’s two companies both doing two million in revenue and then both getting zero dol- or both getting 200,000 at the bottom line, thinking, “Hey, we are at 10% net profitability.” But one is paying the owner a $200,000 salary before they get to that 200,000 net profitability, and the other one is paying this, the owner zero salary.

**Ben:** If you would have to pay someone else $200,000 to be the CEO of your company and do as good of a job as you, I would say that the company that’s paying zero salary is really at break even. Because if they paid the owner their real salary that they’re due, they would have zero net income.

 

 

[00:34:00]

**Ben:** But then the other one is already doing that. So it’s a big difference whether or not you’re taking out a salary in what the final profit do- calculation of the company is. And so if you’re not taking a salary, I think, or not a real market salary, like what it would cost to replace you, you’re probably getting the wrong idea of how profitable your company is.

**Ben:** And I’m not saying that you should pay yourself with distributions or a salary, like here in the United States we call it W-2 but I am suggesting you should really know the difference and make sure that when you think your profit is X, that’s after you’ve accounted for a real salary. Whether you take it as salary or distribution, you should know what’s really going on.

**Greg:** Yeah. That’s a very good point. So it’s almost as if… Yeah, ’cause I think we’ve got the same thing here in the UK and Australia where it’s more tax efficient to take it as a dividend than an actual salary. Yeah. But, yeah, that is gonna that, that could se- certainly mess up your perception a little bit when you’re looking at your your P&L- Yeah

**Greg:** what, you know, what you’ve actually got. So, yeah, that’s a fair point.

 

 

[00:35:00]

**Ben:** H- here’s the beauty of that. If you’re taking a very skimpy salary and getting your salary as a distribution, meanwhile you’re thinking you’re a high-profit company, well, I’ve got news for you, your company is likely not nearly as high as you thought it was, which is oh, sad.

**Ben:** But the flip side is maybe there’s opportunity there. Because if you thought you were at 15% profitability, but really if you gave yourself a salary it’d be 5, I would tell you that maybe there’s another 5 or 10% that you could find in the company and really get back to that 15%. For example, if you were following our profit prescription, that’s what we teach people how to do.

**Ben:** So you’re taking a solid salary, again, whether it’s really a salary line or a dividend or distribution line, but then after accounting for that, you’d still be in those solid double digits. That’s really- Yeah … where you wanna be.

 

 

[00:36:00]

**Greg:** Yeah. Excellent. Yeah, well summed up. We’ve had, on this podcast before p- experts that have spoken about Profit First.

**Greg:** Yeah … and, you know, Mike Michalowicz great book, been about for a long time. Can I just get your opinions on Profit First? I will, always find ones… When we have people that talk about profit, we get mixed feedback on, you know, whether they love it, they hate it, they like- Yeah … parts of it.

**Greg:** What’s your thoughts on p- the Profit First strategy?

**Ben:** Well, I’ll tell you I’m a huge fanboy of Michael Michalowicz and Profit First. I think it is a great book, and it covers a lot of very powerful tools. And, you know, if we’re gonna use the doctor analogy, it… Th- there’s a lot of good medicine in that book, but just like- Penicillin isn’t the cure for everything.

**Ben:** I would say that the tools and medicines, if you will, in that book are not universally applicable for every situation, and let me kind of break it down a little bit. So the first thing I would say that the biggest point of the book is that business owners need to be deliberate about their focus on profitability and think about, quote, “profit first” and not think…

 

 

[00:37:00]

**Ben:** And not have profit be an afterthought. Honestly, I think that is universally applicable, great medicine for everyone. We call that winning CEO mindset or focusing on profit now, and I think that mindset or that mind shift very relevant for almost everybody if you’re not already doing it.

**Ben:** There’s some other tools that they talk about where using a bunch of different bank accounts to account for your cash. I think that is typically more applicable for smaller companies w- that don’t have robust accounting tools. But I think once you get more mid-size and have real accounting the…

**Ben:** Your mileage may vary on using those tools. I do suggest that for those companies that have a lot of cash sloshing around in their operating account, probably a good idea to have at least one other account and put all that sloshy cash over there, because I think that many times a business owner and their executive team’s psychology can be driven by how much cash is sloshing around.

 

 

[00:38:00]

**Ben:** And when there’s too much of it, it might make you a little soft and lackadaisical and not have as much fire to either cut expenses or chase more work. So by extracting that out and kind of getting that out of sight, out of mind that might actually be a good thing.

**Greg:** Yeah. I think that’s good advice there.

**Greg:** Yeah. Yeah. Awesome. Okay. Would love to know your thoughts on AI at the moment, where- Ooh … where you feel you think it, the industry might be going with AI and accounting and all that sort of stuff. So, you know, I think if I was an accountant at the moment I would probably be a little bit worried about, you know, my role over the next sort of five years or so.

**Greg:** But how do you think AI’s gonna make things easier for business owners as we sort of go through the next sort of three to five years?

 

 

[00:39:00]

**Ben:** Yeah. Well, I’ll certainly say that right now today, I think AI could be a very powerful thought partner for every CEO to bounce some ideas back and forth with.

**Ben:** And I kind of think of that as creating almost your prototype or your straw man. So to upload some financial information into ChatGPT or Claude- And ask it some questions, I think very powerful. What I’ll also say is unless you’re already pretty darn sophisticated about that sometimes those AI tools, they’re like 40% freaking amazingly brilliant, 40% pretty smart, and 20% dumb as a box of rocks.

**Ben:** And I just would avoid making a big, you know, left turn in your business based on you and AI if you’re not already really sophisticated on that. But I do think having some conversations with AI, taking the three or four, you know, arguably best things that you’ve learned, and maybe then bouncing that back and forth with with a sophisticated operator, whether that’s a heavy duty chief financial officer type, your mentor, someone like the profit doctor who could help guide you.

 

 

[00:40:00]

**Ben:** I just would hate to suggest for somebody to take, you know, the first thing that comes out of ChatGPT’s mouth and say, “Huh, we’re gonna bet the farm on that.” I don’t know that I would recommend that. But we even use AI. You know, we do use it a lot to clean up some materials produce, you know, job job aids and handouts, help people reformat their financials.

**Ben:** But we don’t just take the first draft out of that thing and make it customer ready. We find very frequently that there’s still a lot of noise and a lot of errors in those first drafts, even those third drafts or tenth drafts.

 

 

[00:41:00]

Sometimes AI even introduces some big time errors. So I guess I’ll just say from that very powerful.

**Ben:** You know, but it’s like taking the guard off a table saw or a circular saw. You gotta know what you’re doing. You might lose a few fingers.

**Greg:** Yeah. Yeah, great analogy. That’s awesome. So at the beginning you, you started off telling us your background working for big tech companies. I find that fascinating how you’ve made that transition.

**Greg:** And I think a lot of our listeners will probably wonder what it’s like working for, you know, a big tech company. What did you learn from those as regards to profit or financials? Is there anything that they were doing hugely different that you’ve actually taken into The Profit Doctor?

**Ben:** Well, I could give you a little day in the life of, which…

**Ben:** And then let’s see if I can come up with, I don’t know a news you can use. So, you know, I’ve worked with a lot of CEOs of, let’s say, 10, $20 million, $5 million sized, you know, construction, specialty trades types of companies.

 

 

[00:42:00]

In many cases- They’re really the only one other than a bookkeeper kinda looking at the numbers, except every once in a while maybe taking those to the bank for a line of credit or something like that.

**Ben:** If you were to compare that with, let’s say, when I was working at Dell, and once a year we would have a monthly business review, and there would be 40 people in that room, and 15 of those people would be presenting for five minutes a core chunk of some of the financial picture. And they had gone through those numbers for three days in preparation to present their five-minute chunk to their boss’s boss in that meeting.

**Ben:** So you can see there’s a tremendously different level of discipline and horsepower and attention and time spent on a monthly financial or monthly business review.

 

 

[00:43:00]

Again, as compared to a CEO with maybe very limited training, not real comfortable with those financials, and those financials are being spit out by somebody who maybe used to be the receptionist, then became the office manager, then started entering in all the stuff into QuickBooks, and then learned how to spit out a P&L from QuickBooks.

**Ben:** That’s a big difference from 15 people with advanced degrees in economics and business and finance poring over the financials for days in preparation to deliver their three-minute presentation to the big boss. Very different. That might be one thing, but I think the thing I would say is don’t let that scare you from having that monthly financial review.

**Ben:** I think there’s a lot of ways to go about that. We do offer some courses on how to improve profitability and how to conduct your own monthly financial review.

 

 

[00:44:00]

But if I were to think of just one thing right off, it’s if you are looking at those reports and they’re not telling you the important stuff, they’re not telling you the kind of information that makes your decisions easy, your ability to look at things easy, it’s likely not you.

**Ben:** It’s probably that those reports suck. And it’s not against the rules to go back to your bookkeeper, go back to your accountant, go back to your finance person and say, “I want you to produce these reports differently to make it easier for me.” Here would be one of the simplest things you could do. So many business owners when they get a P&L, it’s one column of rows of what happened last month or last quarter or last year.

**Ben:** Me, I wanna see what happened last month and then the month before and the month before, six or 12 months- Right? So we teach people you need to build in the context of what you’re looking at into that report.

 

 

[00:45:00]

That stuff comes right out of QuickBooks by default. You just say, “Here’s a time period, and I wanna print it out, and I wanna sort it by month.”

**Ben:** And then you could get six months, like each one having a different column. And then you could look at, huh, subcontractor costs are going up or down, or revenue is going up or down, or this type of revenue is going up and this type of revenue is going down. And that is an example of how you can build in…

**Ben:** Make it a lot easier, sort of build in the insights into the report rather than making, rather than having that CEO have to be like a freaking genius with all the numbers and remember all the numbers from each of the last six months in their head, which is a tall task.

**Greg:** Yeah. That’s that’s a really good advice.

**Greg:** Yeah, fascinating to hear, you know, you working for those sort of Fortune, you know, 100 companies or 500 companies that you, you worked for. I think one thing I took away from that is that the bigger you get, the more serious you gotta get about your numbers. And so if you are scaling- For sure

 

 

[00:46:00]

**Greg:** you know, take more… You know, the stakes are much- Yeah … higher. So take the time to, to- let me do… Let

**Ben:** me add one more point on that as I’m kinda warming up to the topic. You know, larger companies are almost always going to have budgets and forecasts, and they’re going to start comparing actual results against what they expected to happen.

**Ben:** A lot of smaller companies do not have budgets and forecasts, and what I’ll tell you is there can be incredible power in what we call target setting. So let’s just make up an example. Let’s say you have three salespeople that each are responsible for a different line of business, and we’re marching into 2026.

 

 

[00:47:00]

**Ben:** If you were to set a goal for each one of those three salespeople, that their goal for ’26, we’ll just take, make it up, is to generate 2 million for this person, 4 million for this person, and 3.5 million for that person. And then each month, you might start measuring their progress, like what they’ve taken in, against that goal or target.

**Ben:** You will find that there’s a tremendous amount of human psychology where they’re gonna try to hit that goal.

**Ben:** The same could be said for your delivery people and project managers. We need you to come in 5% under budget based on the estimated cost we have for that project. And then people are gonna start pushing to do that.

**Ben:** And then of course, over time, again, Operation Dogcatcher, you wanna start seeing are people able to hit the cost targets based on the estimated you know, revenue and cost that were gonna be in those bids that you guys put out.

**Greg:** Yeah. Great advice there. Where do you-

**Ben:** Anyways, target

 

 

[00:48:00]

**Greg:** setting.

**Ben:** Very powerful.

**Greg:** Yeah.

**Ben:** Yeah.

**Greg:** Sorry. Where do you aim your efforts if you don’t have a target? No awesome advice. Yeah. Ben, this was a really interesting discussion. I think you’ve given us a lot of value today for our listeners, so really appreciate all your time. And yeah, ev- everything you’ve said there has been really useful, so I’m gonna take some of that stuff away for myself too.

**Greg:** If someone wanted to learn more about you, Ben, and especially you mentioned about this this leaks assessment, profit leaks assessment we are gonna put it in the show notes, but do you just wanna let people know nice… You know, where they can find you at the moment?

**Ben:** Yes, absolutely. You know, one of the most powerful things that your listeners are gonna be able to do within their own companies to raise profitability quickly is to stop doing as many things that aren’t profitable.

**Ben:** And the faster they do it, the faster it works. Duh. And so we have a tool. It’s called the Profit Leaks Detector. You can download it yourself. It’s www.profitdoctor.com/leaks, L-E-A-K-S. And I’ll just spell it. It’s profit, P-R-O-F-I-T, and then doctor the normal way, D-O-C-T-O-R.

 

 

[00:49:00]

So profitdoctor.com/leaks is where you can get it and download it.

**Ben:** What I’d really recommend is once you get the tool, you also get an email emailed to your inbox that shows a few little videos, and those videos give you maybe a couple of five-minute videos on directions on how to implement it in your own company. And the key there is to go through your company to figure out which chunks of the business you might be leaking the most, the worst.

**Ben:** And on the one hand, it’s a little bit of a negative message, like you’re not doing well here. But again, I try to flip that around. The areas you’re doing the worst in terms of leakage are the areas you have the biggest opportunity to gain the most upside, unlock the most money the fastest by sewing those leaks up or patching them over, right?

**Ben:** So I think it’s actually very exciting to find a leak, because often they can be patched relatively quickly, and that can unlock a lot of extra cash and profitability for your business.

 

 

[00:50:00]

That’s awesome. Ben, thank you so much for all your time. We’ll put all those details in the show notes for everyone, so if they missed that they can grab it there.

**Ben:** Thanks again. All the best with everything you’re

**Greg:** doing.

**Ben:** Thanks, Greg. Thanks for having me on here. And I just gotta tell you, man, I love working with construction and trade CEOs because there’s no way you got to the millions in revenue that you already have and the success you had if you weren’t really good at delivering for your customers and standing by your people and having a good team.

**Ben:** But some of you just, there’s just a little bit something missing, a little special sauce around profitability. And sometimes I find you guys can get the biggest lift the fastest because just with a little bit of additional information that maybe we could help you with, really the upside in terms of profitability can be huge.

[00:51:00]

**Ben:** So love to hear from some of you guys. On our website, we give you a chance to book a call, maybe download that Profit Leaks Detector kinda goof around with it for a little bit, see what you can see, and then call me for a second opinion, you know?

**Greg:** Well said. Thanks again, Ben.

**Ben:** Okay. Thanks, Greg. Bye now.