Ben McAdam is a profit coach. In this interview he shares how you can find more profit in your business without selling more or getting more clients. While this is usually the default way people try to fix their profit problems, there are much easier ways.
Resources mentioned in the episode
- Quick Profit Hunt exercise on Ben’s site
- Ben’s Facebook group
- How to write a price increase letter to clients
Check out these previous episodes on raising your prices with Christine Thatcher and Corey Dodd
Connect with Ben
About Ben
Ben is a Profits Coach, Virtual CFO and entrepreneur. He helps business owners earn more profits, without judgement or confusing jargon. He's been advising business owners for more than a decade.
Transcription
James Rose
Good day and welcome back to another episode of Agency Highway today it's Episode 66. with Ben McAdam, specifically without an S on the end. I'm very much instructed not to put the s on there because everyone does it. Ben, thanks for coming on, mate.
Ben McAdam
Great to be here.
James Rose
We I don't remember where we met originally, but I feel like we've been in the same online communities for a long time. We've been to various dynamite circle events, which happens to be one of my favorite online communities and they have live events all around the world. If you're interested in that, I'll link it up in the show notes below. But yeah, Ben, give us a bit of a background about what you do, because I'll butcher if I try to do it.
Ben McAdam
Fair enough. Yes, I think we've met at the dynamite cycle events and like the ones that I've been running on the Gold Coast as well.
James Rose
Which are amazing, by the way, it was basically just drinking for like five days with a bunch of entrepreneurs. A couple of mansions, which I mean, if you're listening to this and you are from Australia, I would recommend getting involved in that hit me up and I'll let you know how because it's awesome.
Ben McAdam
It's good fun. Anyway, to answer your question, what I do, I'm a profits coach. So it's kind of my duty to help business owners my job to help business owners grow their profits, free up some time actually achieve their goals. And I have a bit of a clue about what the numbers actually mean. How to use them to make the business better.
James Rose
Yeah, nice. Because I guess that's a pretty I mean, most of us are lacking in that I, you know, I try to be pretty good with, you know, checking reports and stuff every so often. But when we get busy, it's very hard to remember to stay on top of that kind of thing. And that's why we need people like you, I guess.
Ben McAdam
Yeah, absolutely. At least those reports are somehow happening without that actually puts you ahead of people.
James Rose
Well, I mean, I use that term loosely. It's pretty much just jumping into zero and digging through some numbers to make sure our like, costs aren't blowing out or like I haven't, you know, I'm not spending money in places I shouldn't be. But so I know a lot of what you talk about is finding profit without selling more because the default is to start, you know, if you want more money to sell more, get more clients, right. So what how do you recommend getting more profit without just the default, selling more?
Ben McAdam
Yeah, so a lot of clients that I start working with and just a lot of business owners like in the dynamite circle events. I tend to find like they're working really hard and they don't feel like they're earning enough.
James Rose
I've never heard that before and never heard of it.
Ben McAdam
I've run a couple of agencies I know the feeling and the kind of solution that people always go to for how to get more money, how to get more profit is just like oh, I've Just got to sell more. That's the solution, empty bank account, out we go, let's go sell. And it's very reactive thing, where there's a number of other reasons why it could be in that situation and a number of other reasons, a number of methods to get out of that situation. And in the worst case scenario, it's like you're super busy, you don't have any time to fix the situation. And you don't have any money to put towards fixing the situation either.
James Rose
It's kind of dangerous too, by the way, like I just was thinking it just jogged up the thought of mine because I've seen people do this, where if they've got no clients or something, not my clients, but they need clients quickly. They'll almost say yes to anything. And often that can put you in a position that costs you more money, then it saves because then you get in because you end up with a bad client, you know, for example, yeah,
Ben McAdam
Absolutely, or you discount because you're desperate for the money to come in. And then suddenly, you've got an unprofitable job and you're too busy doing that to find a better one. Yeah. So I found like the lead Domino, the thing that gets people out of this situation and starts more of a virtuous cycle to get them out is an exercise I call the quick profit hunt. Okay, it's there's a PDF available on my website, but I can just walk people through it live.
James Rose
Yes, of course, we will link up to the PDF, and I'll get that off you later. Actually, what is the URL? Can you set off? Is it easy?
Ben McAdam
Yes, its profitscollective.com. Okay. And it's just there on the homepage.
James Rose
Oh, boom! Easy and we'll also link that up at agencyhighway.com/66. And everything else we talked about during this episode will be there along with the transcript if you do feel like you need to jump into that later on. So let's let's walk through it then.
Ben McAdam
Alright, so the idea of this is where we're not looking at selling walls. We're not looking at the revenue side of the profit equation. We're looking at the expense side. We're thinking okay, what are you spending money on that you shouldn't be or that you don't need to You could pause for a little while. So the way the exercise works is you grab your bank statements or your credit card statements or you crack open your bookkeeping software, if that's up to date, somewhere where you've got a list of all the things you've spent money on for the past 1-2-3-6 months, if you want to go back that far. And as you go through each of those, and you ask a question of each of those, in simple terms, it's you know, do I need this? Do I need exactly this? Yeah, but there's like five things you can do. So what I usually recommend people do is actually get printed statements or something, and they just put a little mark next to each of them. And you could put like a tick sign to say, Yes, I need this and I need exactly this. I'm quite happy with what I'm spending here. I don't need to make any changes. You could put a cross next to it and say, I don't need this at all be cut completely. You could put a minus sign to say I don't quite need this amount or you know, maybe I can downgrade the number of users I've got on this particular software program. So you can lower that thing. Or we can put a plus sign that yes, actually this thing is helpful. I shouldn't be spending more on this, like, for example, marketing that's working. You might want to spend more on that.
Ben McAdam
So for each of the things you find on your bank statement, you go through and you do one of these options on it, just quickly go through it, make snap decisions. Mostly your gut decision will be will be right, the point is to just clear through this as quick as you can. And then afterwards, you go back and you start taking action on each of those things.
James Rose
That makes sense. I've kind of 80-20'd this in the past if by 80-20, of course, I mean like trying to get 80% of the results with 20% of the work. And if you are coding expenses properly in your accounting software, it makes this unbelievably easy. So these days I can Jump into Xero, pull open my profit and loss and wind up back 12 months, you know, you said sometimes, you know, six months might be if you want to go back that far, I mean, it's very easy for me to go back 12 months using this method because it's all there on one grid. And I can just have a look and see if any cells so actually just to sort of build the picture better down the left hand side we have a bunch of rows which are like software expenses, or supplier expenses or marketing or motor vehicle. So it's all the different expenses and then the months are the columns. So then I can see how you know in May how much we spent on motor vehicle stuff. And then it's very easy to spot anomalies. And see, well we spent like a couple of grand on something this week, this month. You know what and going and dig in and see if there's anything crazy. So this is how I've kind of 80-20'd all of this. And there's one one part of this that I'm curious to get your thoughts because I almost swing the opposite way. Like with software, especially in tools and whatever, actually, you know what any expense. I see it as a time saving more than a cost. Like I think sometimes it can be really detrimental to think of the cost of something in terms of like this is costing me $50. Whereas I try to look at it as this is saving me two hours and for $50 that's totally worth it. So, yeah, I mean, is that I'm guessing that's how you actually come up with your plus sign minus i like if it's saving you time to get some plus, right?
Ben McAdam
Yeah, yep. So you're pretty sophisticated with this stuff and fairly advanced. You'd be surprised like most people don't even have a bookkeeping for the first however many years of their business and haven't done This exercise like if you do this exercise, it kind of subconsciously trains you to never take on the expenses that are unnecessary in the first place. And so you can find the first time I might deal with a client, I might find them thousands of dollars in extra profit a year, you know, right. And then the next time you do it might only be hundreds and then the third time you don't for the client barely find anything, because it's like a thing that kind of highlights to them. You know, if you save someone to thousands of dollars the first time then they remember Oh, wow. I need to pay more attention to the expenses I'm signing up with because obviously I sign up to thousands of dollars too many. Yeah. So it does. It does help.
James Rose
To find the truly just stuff that you really shouldn't have signed up to. That's Yes, yeah.
Ben McAdam
Yes. I'm not like most accountants who have like a default position of let's reduce them as much as possible. Lean, let's go Super-super lean. I definitely more with you Like, that's why there's the plus sign in there for some of the expenses, because you know they're good. And they're helpful. I tend to find that there's software subscriptions people forget to remove users when a team member leaves is like a big one. Or they've replaced the software with something else. They've migrated to something else. And then they forgotten to cancel the old one. That's like, just little things that slip through the cracks tend to add up when they recurring expenses. But overall, I'm very much in favor of your spending that money to get the value out of it. Yeah. And so I'm usually one of the big arguments I have with people is I say, all right, how much you spending on marketing. And they say are, you know, hundred dollars? Like, okay, how hard is it for you to get leads? And how hard is it for you to convince them to sign up? And they say, Well, actually, yeah, it's really really hard. like yeah, go spend some more money on marketing.
James Rose
Yeah, mean, also, you said many people don't have bookkeeping set up. And I guess like, this is almost a really good opportunity to say like, that's something almost every business should automatically believe that like, because I just find like it these days, it's so easy to have a good system set up like zero and it's not even that expensive. Like, this is all the exact same thing. People might not sign up zero because it's $60 a month or whatever the hell it is, you know, but that's going to save you more than $60 and it's going to save you mucking around with like spreadsheets for your bookkeeping, for example. It's like a perfect, perfect example, I feel.
Ben McAdam
Yeah, absolutely. I'm a big fan of zero in particular $60 a month is I can mean that I'll save you hours every day. It's a no brainer amount of money unless you're just starting and you like bootstrapping and you barely have any money at all. Zero something that will save some money. Even if you do it yourself initially, you don't have to pay a bookkeeper and a lot of automated systems for agencies that makes a lot of sense. Yeah. And and yeah, it's just worth spending the money. It also saves like your accountant when you're doing your tax returns or your quarterly BAS for the the Australians in the audience. It saves you having to pay your accountant or bookkeeper to do that stuff and also saves a bunch of mistakes related to all those things. So it's, it's worth a lot more than it seems.
James Rose
Yeah, I feel like our accountant bills are way lower than I expected at this point in our business for that exact reason. Because now I mean, they hit a couple of buttons and zero and it can dump all the information that they need. So yeah. Although like, we're probably going to put everyone to sleep if we just keep talking about accounting software. So what, what are some other ways we can like obviously, we're talking like about cost here quite a bit. I know, offline before you mentioned like hidden costs, what? Like, you want to dig into that?
Ben McAdam
Yes, yep. So the the quick profit exercise that I walked people through said, you know, have a look at your bank statements have a look at your bookkeeping, but there's another cost that doesn't actually show up on there.
Ben McAdam
And to kill the suspense, it's productivity,
James Rose
okay?
Ben McAdam
And it kind of shows up there. Like if your staff are really, really slow, then you have to pay them for many hours to get the same result as if your staff are a bit faster. But it's mainly personal productivity of the business owner, because you can many of us don't pay ourselves an hourly rate. Many of us will just pull out the money whenever we need it. You know, we don't have a set, you know, here's your salary, and we're going to pay retirement Bella benefits and all sorts of other payroll stuff. So it's really easy to know Miss how your own efficiency and productivity can be a big cost for the business. Even if you do realize that I mean, you've got some amazing stuff that you do with Zapier to help save time Thank you. So even the people that do kind of realize, Oh, yeah, I, I better be really efficient at what I'm doing. They might be working on the wrong things either because they don't know what the right things are because like their self sabotaging got some mental mindset blocks or something like that. Or they just distracted and they haven't hired a team to take them away from the day to day fires so they can do the stuff that only the business owner can do. And if you think about it, is that if you're say, for example, web agency is listening to this and they're doing the design work or they're writing the code themselves, the time they're spending doing that is time that nobody is signing up the next client for a lot of agencies that don't have sales people is just there more than some people that help with the design and development. Absolutely. Yep. And so if you think about, I could pay a designer hundred dollars an hour, let's say keep it simple. And they spend three hours doing this thing. $300 or $300? That sounds like a lot of money. I could go to a fancy restaurant for a few times on that kind of money. Maybe I'll just do it myself. I'll just work a little later. Yeah. But in those three hours, you could have potentially signed up a $10,000 plus client, right? With all the little bits of outreach and the sales meetings and proposals if you like doing that sort of thing.
Ben McAdam
You could have been signing up a $10,000 client, which is worth
Ben McAdam
paying $300 to someone for a chance to do that.
James Rose
Yeah, absolutely. I think that DIY mindset is one of the biggest things that you know, like the causes problems in business and I still do this a lot. You know, like sometimes I'll dig in and muck around with something in WordPress. Some I know I shouldn't be, you know, because I can, which I think is is like a more of a curse and a blessing to be able to do this stuff like I know people that have no idea how to do anything in WordPress, and they just pay someone to do it and I'm kind of envious of that because just like then I like I wouldn't be spending this time myself. So I mean this this comes down to systems and processes and automation right and, which is why I bang on about it so much because it is such a big cost to businesses is when you are not being as effective as you should be. You know, doing stuff that you shouldn't be exactly like that taking time away from actually like value valuable processes that grow your business, like global tasks or whatever, like sales and marketing, which is the stuff that actually grows your business. And you also mentioned something there on like, briefly just on staff productivity. I like I dont think it enough people put aside I think people put enough emphasis on that too. Because like, especially in like a developer world, the difference between like an average developer and a good developer is insane. Like someone that you're paying 50 bucks an hour for versus 100 bucks. It seems like a lot of money. But a lot of time, the output of a good developer can be like 10 x an average developer, you know, like, so it's, you end up spending just way more hours, like you said, yeah, definitely something to think about.
Ben McAdam
Absolutely. That what's the old expression you pay peanuts, you get monkeys.
Ben McAdam
It's definitely worth I mean, requires a certain amount of bravery to test that theory in one's own business. And I forget who said it like businesses, the greatest self development program out there alongside you know, long term relationships and being a parent,
Ben McAdam
Is that you know, there's all these things you've got to get out of your own way with and one of them is, you know, raising the prices is an obvious one and you know charging what
James Rose
you're worth and that's massive. Yeah, I see so many people trying to do websites for 1000 bucks or whatever Yeah, that's a massive one.
Ben McAdam
yeah, I actually did a few websites I mean my background is in accounting I got a degree ran a tax practice bookkeeping practice and sold them that kind of stuff but I like playing around with programming stuff every so often to scratch the itch and and so I did a couple of websites for people like oh, I'm quite sure I'll do it for five
Ben McAdam
Yeah.
James Rose
no deal.
Ben McAdam
recipe for disaster like how what was my was my hourly rate with all that time I spent, was it? Did I make
James Rose
it to $20 an hour? Yes, probably probably not. I feel like everyone has to go through this process though. Like you. There's so many People that they hear this, you know, they hear people saying, Oh, you can't do websites for 500 bucks. And this is why, and then they go not bullshit, I can make it work because of x and y. And I was this person, I was 100%. This person. In fact, the first like three websites we did with 500 bucks. And I thought they were all going to be awesome. We had a couple of good clients, and I was like, I'm totally going to scale this and make it work. And then we had one client that just destroyed the profit of all three jobs, which is very easy. Where are they charging 500 bucks. And obviously, this just scales like even 1000 bucks it's very easy for that same problem to happen, which is why there's such a thing around raising prices. So I mean, what let's talk about rising prices. Okay, so long, that's where you want to go with this.
Ben McAdam
Well, it's, there's a little bit of mass I walk people through very, very simple, I promise.
Ben McAdam
And that helps kind of deal with the main fear they have around racing prices. So the main fear is that if you raise prices, your clients have run away and you won't be able to sign up another one that will go to someone cheaper around the corner. Some of them will go to the cheaper best around the corner on up work or whatever. And that's fine. You just kind of gotta get used to that probably better off, you don't want them anyway. Yeah.
Ben McAdam
People who are out for all they can get a pain to work with.
Ben McAdam
So the the main fear is that no one no one will accept the new prices and their customers or leave, you can always test your prices on new customers. And so that feels pretty easy to put under the microscope and examine. You just say to the next client say add an extra five or 10% to what you normally charge and if they give you the same level of resistance to the old price, well then you know, you can probably keep charging this one and the next client you try it again and again and again and eventually people go law that's pretty Expensive when you're finding a lot of people are doing that, probably time to bring them back down a little you found the
James Rose
spot for you. That's such an easy way to raise prices because that's exactly what we did you know, I had the exact same fear. And when you're adding 10% to the price, it doesn't feel like much you don't okay. It's not like a $500 $2,000 Yeah, 500 to $1,000 job is double Ryan, that seems like crazy. But if you adding just like 100 bucks and whatever, you know, it's a much it feels easier to stomach. And then before you know it, you'll be at, you know, a pretty good price.
Ben McAdam
Yeah, yep. And then, so that kind of takes care of that aspect. But then what about your clients that you have already like raising their prices is is a bit of a challenge. I know you've got a price rise letter?
James Rose
Yes. Which I'll be linking up to in the show notes. It's actually one of our more recent blog posts that we've had written about how to tell your clients that you're gonna raise your prices, but yeah, what advice do you have
Ben McAdam
Many want to get rid of the fear. Because, I mean, it's fairly easy to come up with a price. You just look at what other people are charged charging, you pretend to be a shaker chopper and then they go, you've got a ballpark you can start with. I'm not I'm not suggesting that's what you do, but it's not a mystery. Yeah. There there are other ways to build a price we can go into later. But then raising the prices. The thing that people worried about is that clients will leave. And my suggestion is that that's okay. To an extent. And if they all leave, that's probably bad unless they're awful. But to use the example you mentioned before, going from $500 to $1,000, for for a website, or let's say it's a service you doing content marketing or social media marketing or something like that. If you say say $1,000 Is what you charge and you double your prices to 2000. half your clients leave. So you come back down again, then you're back to 1000. And you've been on this stressful emotional roller coaster. Thanks a lot, Ben. The thing I would point out is that yes, you're back where you started, but you've got half the number of clients, which is way easier to serve way easier. Half the number of costs, you've got half the time requirement, you can go out, you've got plenty of time to go find great clients. So it can be okay, if half of your clients would run away from you. So long as your price rises a certain amount. So I just want to leave that concept floating in people's brains. Normally they go Wow. I yeah.
James Rose
I would totally take a business with less clients that makes the same amount of money any day but I know that's probably strange coming from a guy that a software product is 30 bucks a month. slightly different, slightly different thing though, because it's like, I guess less service required per client. So it's it's a bit you can have, you can have lots of clients in that business model. But yeah, like if I was building five websites at a time where 10 websites at a time and making the same amount of money, I'm going to take five every time.
Ben McAdam
Yeah, absolutely. And I'm, that was a simple example just to get people to open to the idea that it can be okay. It's like, the exact amount of a price rise and the exact amount of clients you can be happy that flew you have actually put up it as a simple table in one of my other blog posts. Okay. It's called still more profitable when clients flee your price rise or something like that,
James Rose
which we will link up below.
Ben McAdam
Yeah.
Ben McAdam
And it's got the table in there where you can say, all right, what's on one side is, is the percentage price increase you're thinking of doing and on down on the left hand side is a thing called gross profit margin, which the post explains. But it's basically how much it costs you to deliver that particular website or, or whatever that services. And then the, it's like a lookup table, you can say, right? Here's the price rise, there's my margin, that's the percentage of customers I can happily lose. And the good news is, is that if you just started and your prices are quite low, like, way too close to your cost of doing the thing for them, you can do crazy stuff like you can double your prices and 99% of your customers can flee and your ok. Yeah. So the good news is, is that if you really have super low prices, you can do crazy things with them and be okay with losing quite a lot of customers. It doesn't actually work in reverse, like the same mass that makes raising prices work out where you discount all you lower your prices in order to get more customers really, really hot. Like you have to lower, you have to lower them a tiny bit and get a stack of clients. That actually be a good strategy.
James Rose
Yeah. Yeah, well, I mean, and I guess an easy way to describe that, too is like, if you look, if you lower your prices, you're only eating the profit, not the cost as well. So like if it's $500 of cost to make 1000 sorry, $1,000 website and it costs $500. And you drop your prices to $900. So you decrease your prices by 10%. You actually decrease your profit from 500 to 400, which is 20%. So by reducing prices, it's way worse than just the 10% that you think you're discounting.
Ben McAdam
Exactly. Yeah. And and that marginal profit that you're eating into is the part of the job that pays you while you're getting The next one, are it's part of the job that's paying all of your overheads and your equipment leases and your rent if you have it and software subscriptions and things like that. And yet people can be too eager to dig into that thinking that Oh, if I just lower my prices, I'll be able to sign people up easier. Yeah, it has to work really, really well.
James Rose
Yeah. Alright, so we will send Yeah, that late. This is like a lookup table that I think will be much more obvious when people have a look at it themselves. So we will link up to this blog post about being happy when customers flee your price rise on Ben's website. Ben, is there anything else you think we need to cover?
Ben McAdam
I suppose the main thing, something I was going to mention a little earlier when we're noting out on zero is that you don't actually have to have your bookkeeping up to date, to make decisions based on the numbers or to make decisions that again to increase your profit. Right. There are a lot of people Don't have bookkeeping because they're allergic to that kind of thing. Oh, they just don't believe they should pay someone for it or they've got they've got some skills themselves or a spouse that would be able to do it for them. But for some reason, no one gets around to actually doing it. Like there's a lot of resistance to do bookeeping. And, and I've noticed that a lot of my clients and potential clients and had to come up with ways like this, that blog posts with the lookup table so that people could make decisions without the bookeeping in place. And I think it's, it's worth just noting that you don't have to wait for the bookeeping to be in place to actually try and improve your business. Like you can even do like back of the napkin calculations of where Okay, so this website for $1,000 and add up all the hours all the team all the other things I've got to buy like stock photos, like okay, it's going to cost me $500. That's about 50% of the price. It'd be nice if it was less than a third of the price. Let me try and tweak a few numbers. And nowhere in any of that. If we open up bookkeeping software, yeah.
Ben McAdam
I still think it's super useful to look at bookeeping like the profit and loss at least once a month.
Ben McAdam
But don't let that hold you back. I think it's what awesome people with.
James Rose
Very good, very good closing statement. Man, Ben, thanks for joining me. Where can people find out more about you?
Ben McAdam
Yeah, so my website profitscollective.com. I'm also on Facebook, facebook.com/profitscollective. Remember? Yep. I've just created a free Facebook group. I'm putting a bunch of helpful stuff in there. Like the quick profit on exercises for other ones of different types in there. And just added that recently, see how it goes. I like helping people and so it should be fun.
James Rose
Yeah. A Facebook group is a great place for that. Like it's very easy to, you know, jump in there and answer questions. So awesome. I hope that works out well. And of course, we'll link that up below. Ben. Again, thank you for joining me.
Ben McAdam
Thanks for having me.
James Rose
If you're listening to this and you would like some free advice on growing your agency, please reach out to me via the contact form on agencyhighway.com. And I will try to find an expert to answer your question. So yeah, go to agencyhighway.com, use that contact form, ask the question and we'll see who we can get on. Thanks again, and I'll talk to you in the next episode.