If you're just jumping in, this show is all about helping founders scale with intention, grow profitably, and build businesses that are worth buying, even if you never plan to sell.That's the key. Because you may be listening to this and you're like, I'm not planning on selling. You should build your business like you're going to sell it one day.Because a sellable business is a scalable business. Now, in the last episode, we talked about what makes a business sellable. And one of the biggest factors in that conversation, profitability.Not just revenue growth, but value creation. And that brings us to today's episode. Because a lot of businesses look successful on the surface, but under the hood, they're leaking value.So today we're talking about the hidden value killers in your business model. These are the silent margin drains, the inefficiencies, the mispriced offers, the bloated expenses that add up and slowly erode what your business is really worth. And that's terrible, right? So we're going to expose them and more importantly, show you how to fix them.So let's dive in. The problem. You're working harder, but profit isn't moving.Let me paint the picture. You're growing. You're adding clients.Your team is busy. Revenue's up. But profit? Yeah, it's still tight.It's still unpredictable. Still not where it should be. You're thinking we're doing more work.So why the heck aren't we making more money? But here's the truth. Most businesses aren't destroyed by one bad move. They're drained slowly by hidden inefficiencies baked into their model.So let's break down the most common culprits. And then we're going to talk about how to fix them. Number one, low margin services or products.This is a big one. You've got offers that sell well, maybe even bring in lots of revenue. But when you dig into the costs, the margins are razor thin or even negative.Let me give you an example. I worked with a B2B service firm doing $6 million in revenue. One of their signature offers brought in nearly $2 million a year.The problem? After delivery costs, labor and revisions, they were making 6% margin on that line of business. 6%. That's crazy, right? Super low.They were basically running a $2 million charity. They didn't like me saying that, but hey, that's the fact. We analyzed the full cost to serve, including scope creep, rework, and client handholding.And we realized that this offer wasn't just underpriced. It was undermining the entire business. So here's the fix.Audit your services and products, calculate gross margin by line, and then ask, what should we double down on and what needs to go? And that's where strategy comes in because strategy allows you to focus on the things that add value. And it allows you to eliminate things that don't add value, like this example. All right, number two, bloated SG&A, which stands for selling general and administrative expenses.SG&A is a part of OPEX. It falls under OPEX, which stands for operating expense. It's your overhead, in other words.This one sneaks up on founders as they grow. You start hiring to get help. You add software, assistance, subscriptions, and layers of management.And before you know it, your overhead has ballooned and margins are getting squeezed. A healthy SG&A expense varies by industry, but here's a good get check for you. If your admin or overhead costs are growing faster than your revenue, then you've got a problem.So here's the fix. First, look at your G&A, your general and administrative expenses, line by line, and ask yourself the following. Are we paying for software no one uses? Are there roles without clear ROI? Are we overstaffing instead of building systems? That's the key.Because efficiency isn't about cutting corners. It's about protecting profitability. And that's what I want you to hear.All right, number three, underpriced labor or poor utilization. Especially in service-based businesses, labor is everything. It's one of the biggest line items on the income statement.And here's where people get it wrong. Either they build too little for the hours their team puts in, they take on work that requires more labor than they scoped, or they have team members stuck in low leverage tasks. Let me touch on the first one, how I said they build too little for the hours their team puts in.I was working with a company years ago when I first got started. They had 50 employees, which meant that each employee is working 2,000 hours a year on average, right? So 50 employees times 2,000 hours equals 100,000 labor hours. Guess what? They were off on their hourly rate.So they're doing bids, they're sending out bids to customers. Customers are signing up with them. They're off by $4 an hour, right? $4 an hour times 100,000 hours.They were mispriced by 400 Gs, crazy. All because they were too busy to take the time to know their numbers and really understand their cost. That's just one example.Here's another example, a $90,000 a year salaried employee spending 30% of their time on admin work. Yeah, that's a value killer. So here's a fix.Track time, even at a high level. Understand what roles produce what output and either raise prices, redefine scope, or delegate lower value work. All these things will be super helpful.Make sure your employees though, they understand what their success measures are. At Coltivar, that's what we do with our clients. We set up success measures in our platform and then they're scored on a quarterly basis, green, yellow, or red.So every single employee knows exactly what success looks like in their role, what the expectations are, and then they get to see the scoring. All right, so that's super helpful. Number four of the value killers, inefficient project mix or client mix.Not all work is created equal. You know that, right? And not all clients are worth keeping, which is easier said than done. If you're saying yes to every project just because it pays and I've been there before where you're like, I need to cover our overhead.I got payroll coming up. I'm just going to take on this work, even though it's out of your scope or beyond your ideal customer profile. You're probably saying no to higher margin, better fit work without even realizing it.One company I worked with had four client tiers. Tier A, high margin, easy to serve. Tier B, moderate margin, some friction.Tier C, low margin, high support. And Tier D, nightmare clients. They always push scope.They delayed payments. They drain the team. They were just a pain to work with.So we helped them to cut out Tier D, raise prices on Tier C, and invest more time in attracting Tier A. And in nine months, they saw a 40% increase in net profit margin with the same revenue. Crazy. So here's the fix.Score your clients by profitability and fit. And two, stop trying to be everything to everyone. All right, number five of the value killers.Complexity that doesn't add value. As businesses grow, they tend to add layers, more offers, more processes, more reporting, more files, more meetings, et cetera. But here's the thing.Complexity is super expensive. When I became CFO of this billion-dollar company, I had over 40 people in my FinOps department. And we had a whiteboard in this little chill area.It's like our little huddle area. And I wrote on the whiteboard, I wrote simplify. That was the word, right? That was the mantra.It's like simplify everything. Simplify our chart of accounts. Simplify our reporting.Simplify everything so we could free up time and focus on the most important things in the business. But so many businesses are plagued with complexity. And this adds confusion.It slows decision-making and it requires more management without necessarily adding more value. So you have to ask yourself, is this process necessary or just habit? Does this feature drive margin or does it just look nice? Do we actually need five packages or are we diluting our focus? So here's the fix. Simplify, focus on your sweet spot, and then eliminate complexity that doesn't create value.And when you eliminate complexity, guess what? You eliminate cost. And you, more importantly, eliminate wasted time so your employees could focus on the things that matter most, that drive the most value. Let me give you a quick story.A founder I worked with was stuck at $3.5 million in revenue and barely $100,000 in operating profit. We did a deep dive and found one service line that was wildly underpriced, a bloated software stack costing $8,000 a month, a sales process that rewarded discounting, big no-no, and a 10-person team doing the work of six. So we streamlined the model, we cut non-essential expenses, repositioned pricing, and we upgraded systems.One year later, same revenue, operating profit over $600,000, that's 6X, and that's what happens when you remove the value killers. So let's do a quick diagnostic and you could ask yourself these five questions. Number one, which of your products or services are driving the highest profit per unit? Number two, where are you overpaying for results that you're not getting? Number three, what roles or expenses are just there, but they're no longer serving you? Number four, which clients or offers consistently drain energy and margin? And number five, where's complexity slowing you down? The goal isn't to cut ruthlessly, okay? You don't want to be the hatchet person.It's instead to build efficiency with purpose. That's what creates margin, that's what creates enterprise value, and that's what gives you freedom. So here's the big takeaway.You don't always need to grow to be more profitable. Sometimes you just need to stop leaking value. Your business might already be capable of greater success.You just need to tighten the model and you can do this. Like, I believe in you. You have the power and you need to do this.And when you do this, guess what? Margins improve, stress goes down, and you build a healthier, more valuable business. All right, that's what I have for you. It'd mean the world to me if you would share this episode with a founder you know who's grinding, but they're not seeing the profit they deserve.The more we spread the word, the more people we can help. All right, also, if you ever need help with this and you want to connect, you could always go to kulturar.com. Also check out the resources on our website that we've prepared for you. We have a lot of tools and other things that will be valuable.As you continue to scale or sell your business. All right, that's it. Talk soon.Take care of yourself. Cheers.