Profit Leaks: The Hidden Ways Small Businesses Bleed Money

[Pull quote forward]

[INTRO MUSIC]

Welcome to another edition of the Things Entrepreneurs Should Know. The business podcast for entrepreneurs, founders, and business owners who wanna build lasting financial value and supercharge the growth of their business. 

I’m Chip Schweiger, a strategic growth CPA who helps bring big company strategies to small businesses. 

Today on the show, I’m gonna do you a favor: I’m going to tell you where your business is bleeding money right now. 

Not in some abstract, “maybe someday” way. I mean right now, while you’re listening. Here’s the hard truth: Most business owners are losing profit in places they never even look. 

These aren’t the big, obvious expenses. They’re the slow leaks—the silent killers. 

But the good news? Every leak can be plugged, and most fixes are easier than you think. By the end of this episode, you’ll know exactly where to look, what to do, and how to stop leaving money on the table.

And, because you’re busy, we’ll do it all in about 10 minutes.

After the episode, check out the show notes at TESKPod.com/profit-leaks

[Segment 1: What Are Profit Leaks?]

Let’s start with a definition. 

A profit leak is any place in your business where money is slipping away unnoticed—little by little, month after month. 

It’s not the big, one-time mistakes that keep you up at night. It’s the death by a thousand cuts.

Why are profit leaks so dangerous? Because they’re sneaky. They don’t show up in your inbox with a red flag. And they don’t announce themselves at your team meetings. 

They just quietly drain your bottom line, until one day you realize your margins are razor-thin and you’re working twice as hard for half the reward.

I’ve seen businesses—good, growing businesses—lose tens of thousands a year to profit leaks. And the worst part? They usually have no idea it’s happening.

So let’s shine a light on these hidden killers.

[Segment 2: The 5 Most Common Profit Leaks ]

Let’s break down the five most common profit leaks I see in small businesses, day in and day out.

1. Unmonitored Subscriptions & Software Fees

First up? Unmonitored Subscriptions & Software Fees. How many software tools are you paying for right now? Go ahead, take a guess. 

Now, check your bank statement. I guarantee you’ll find at least one you forgot about. 

Maybe it’s a project management tool you tried for a month and never used again. Maybe it’s duplicate licenses because you never cleaned up after a contractor left.

These little charges add up fast. I’ve seen companies paying hundreds—sometimes thousands—a year for tools nobody uses. 

Here’s your fix: once a quarter, run through your bank statements and cancel anything you’re not actively using. No mercy.

2. Scope Creep in Client Work

OK, next up is scope creep. And this is a big one, especially for service businesses or where you build something to order. You start out with a clear agreement, but then the customer asks for “one more thing,” and you say yes—because you want to be helpful, or you’re afraid to push back.

Before you know it, you’re doing 20% more work for the same fee. That’s money out the door. 

The fix? Draw a hard line. Get your engagement letters or contracts in writing, spell out exactly what’s included, and charge for anything extra. 

If you’re not sure how, just remember this phrase: “Happy to do that—let me send over a quick change order.”

3. Inefficient Processes & Manual Tasks

The number three profit leak is inefficient processes. If you’re still doing things manually that could be automated, you’re leaking profit every single day. Think manual invoicing, double data entry, or chasing down receipts.

Here’s a real example: I worked with a client who spent five hours a week just reconciling expenses by hand. We set up an automated workflow in their accounting software—suddenly, it was done in 30 minutes. That’s 18 hours a month back in their pocket, just like that.

Look at your workflows. Where are you repeating yourself? Where are you doing things the hard way? 

Automate or delegate because your time is too valuable.

4. Underpricing or Discounting Services

Fourth let’s talk about underpricing. This one stings, because it’s self-inflicted. Maybe you’re offering “friends and family” rates, or you haven’t raised your prices since you started. Maybe you’re discounting just to close the sale.

Here’s the truth: If your prices haven’t gone up in the last 12 months, you’re losing money to inflation—guaranteed. 

And if you’re not charging for the value you deliver, you’re training your clients to expect more for less.

The fix? Review your pricing at least once a year. Benchmark against your competitors. If you’re delivering more, charge more. Don’t apologize for it.

5. Wasteful Spending & Overhead

And the last one is wasteful spending. This is the classic “death by a thousand cuts.” 

Think, office supplies you don’t need. Unnecessary travel. Bloated vendor contracts that nobody’s reviewed in years.

I once found a client paying for two internet services at the same location. Nobody noticed for 18 months. That’s thousands down the drain.

The fix is simple: Review your recurring expenses. Ask yourself, “Would I buy this today if I wasn’t already paying for it?” If the answer is no, cut it.

[Segment 3: How to Find Your Profit Leaks ]

OK, So how do you actually find these leaks in your business? Here’s a simple, no-BS process you can use every single month called the The Profit Leak Audit, and it has five steps. 

Step one: Pull your last three months of bank and credit card statements.

Step two: Go line by line. Circle anything you don’t recognize, anything that feels high, or anything you haven’t used in the last 30 days.

Step three: Review your service agreements—both what you’re delivering and what your paying for. Are you over-delivering where you’re the vendor? And re you paying for things you don’t use when you’re ths customer?

Step four: Look at your pricing. When was the last time you raised rates? Are you charging for all the value you deliver, or are you giving away work?

And Step five: Ask your team—or your bookkeeper, or your outsourced CFO—to look too. Sometimes, outside eyes catch things you miss.

Now this whole process takes an hour, tops. You can do it once a month by simply putting it on your calendar. 

It’s the highest-ROI hour you’ll spend all month.

[Segment 4: Plugging the Leaks—Action Steps ]

Now that you’ve got the leaks identified, let’s get practical. Here’s how you start plugging those leaks today.

1. Cancel or Renegotiate Subscriptions & Vendor Contracts

If you’re not using it, cancel it. If you are, see if you can get a better rate. Vendors are more flexible than you think—especially if you threaten to leave.

2. Tighten Up Your Service Agreements

No more “just this once” freebies. Spell out exactly what’s included, and what’s extra. Use engagement letters or contracts, and stick to them. If a client asks for more, quote them for it.

3. Automate Repetitive Tasks

Look for tools that save you time—Xero, QuickBooks, Zapier, whatever fits your workflow. If you’re doing something more than twice a week, there’s probably a way to automate it.

4. Review and Raise Your Prices

This one’s simple: If you haven’t raised prices in a year, you’re overdue. Inflation is real. Your costs have gone up. Your expertise is worth more. Pick a date, send out the notice, and stand firm. The clients who value you will stay.

5. Set a Recurring Profit Leak Review

Make this a habit. Block one hour a month to review your expenses, pricing, and processes. Bring in your bookkeeper or someone you trust. The goal: spot leaks before they become floods.

[Segment 5: Real-World Stories ]

Let me give you a quick story. I worked with a retail client last year who was struggling to hit their profit targets. They swore up and down that they were running lean—no fat to trim.

We did a profit leak audit together. Turns out, they were paying for three separate marketing platforms—two of which hadn’t been used in months. They were also undercharging on a core service, because “that’s what we’ve always done.” We cut the unused subscriptions, renegotiated a couple of vendor contracts, and raised their prices by 10%.

The Result? Within 60 days, they added nearly $2,500 a month to their bottom line. That’s real money, just from plugging leaks.

[Wrap-Up & Action Steps ]

So let’s recap. Profit leaks are everywhere, but so are the fixes. 

The key is to look—really look—at where your money’s going, and then take action.

Cancel what you don’t need. Charge what you’re worth. Automate what you can. And make reviewing your leaks a monthly habit.

Here’s my challenge to you: Pick one area from today’s episode—just one—and tackle it this week. Maybe it’s subscriptions. 

Maybe it’s your pricing. Maybe it’s tightening up your client agreements. Whatever it is, do it now. Your bottom line will thank you.

Until next time—keep more of what you earn, and don’t let your hard work go down the drain.

This is Chip Schweiger reminding you that if you always do what you’ve always done, you’ll always get what you’ve always gotten.

I look forward to seeing ya next time.