Profit Leakage Calculator: Diagnose How Much Profit a Business is Losing
Imagine being able to quickly and accurately calculate how much money a business is sacrificing through imperfect operation, and which areas of the business are draining the most profit. Keep reading this blog to find out more about ConsultX’s Profit Leakage Calculator.
What is Profit Leakage?
Profit that is available to you now, from money that is already circulating in your Business.
This is Profit that is being missed out on from areas of the business that aren’t operating as they should.
“Our Consultants are meeting with Business Owners around the world every day. They are seeing first hand how many opportunities are being missed to improve profitability and cash flow just from existing operations alone.
The results and conclusions of this study are based on over 15,000 Profit Leakage diagnostic sessions with Small & Medium Size Business owners in The USA, UK, Europe, Australia and New Zealand.
For many privately owned Businesses that are performing poorly, we find it’s not the economy that is causing this, it’s actually Profit Leakage.”
David Thexton, Founder of ConsultX
Common areas we see Leaking Profit
Sales and marketing that aren’t working to deliver the ROI (Return on Investment) that a business requires
Staffing levels and issues
Prices and margins that are exposed to the market or aren’t set correctly
Productivity is one of the most significant issues we see across most business types and industries
Debtors not paying causing cash flow issues
Business growth where profits are reinvested without a growth or return plan
Conclusion - every single Business leaks profits!
Regardless of the Industry, size of the Business or state of the Business, we found Profit Leakage in every single Business we surveyed!
History of the Profit Leakage Calculator
ConsultX has developed its own Profit Leakage Calculator as a diagnostic tool to discover the areas of a business that are draining the most profit.
The early versions of our proprietary calculator were built using an excel spreadsheet and used by more than 150 Consultants in Europe, The UK, and Australasia. This gave us the ability to quickly review, update and test the algorithms that predict the results.
In 2016, ConsultX launched a Business Consulting Software, with a specific portion of the application dedicated to calculating Profit Leakage.
Today, in 2022 - the profit leakage calculator has been used over 15,000 times and has undergone many fine-tuning adjustments to the algorithm to improve accuracy.
How does the Profit Leakage Calculator work?
The Profit Leakage Calculator will help identify in your Business how much profit is leaking, which areas the profits are leaking from, and what can be done to fix it.
1. Financial Input
The Profit Leakage Calculator requires basic financial information from the business being analyzed. This easy to get find information can be found in a profit and loss statement (income statement) such as revenue, expenses, cost of goods sold, staff costs, and profit.
2. Business Analysis
The Business Owner then analyses their own business based on how well their business is performing in 14 key strategic and operational areas. These business areas come from the ConsultX Business Triangle.
ConsultX Business Triangle with 14 Elements
The Consultant guides the Business Owner through this process, ensuring that they’re giving an accurate and honest snapshot of their business.
Business Diagnostic Analysis
3. Calculation
The Profit Leakage Calculator processes the financial and Business Analysis information based on a highly developed algorithm. This algorithm has been developed since 2008 and has been constantly improved with the input of over 500 consultants working with 15,000+ businesses.
4. Output
11 key strategic operational areas, indicating how much profit each area of the business is leaking, and the total amount of profit leakage over 12 months.
Printable report
The calculator produces a printable report that can be offered as a deliverable, included in a proposal or used as a part of an improvement plan.
Why is it so effective at communicating to Business Owners
Here are seven strategies that we’ve tested and proven to get and keep ideal clients – ones that stay on for the long term.
Business Owners can Understand
For many years, Business Owners and managers have never been able to comprehend the financial implications on issues within a business. The Profit Leakage Calculator clearly explains the foregone profit from an imperfect business.
Explaining ROI
As a Business Consultant, it can be really difficult to explain what kind of return on investment a client will get. By understanding the amount of profit a company is leaking, you can develop a clear value proposition and a likely return on investment when the issues are fixed and profit is returned to the bottom line.
We want to show you more!
Check out a demo of the ConsultX System, including the Profit Leakage Calculator