Improving Profits With Operational Efficiency – with Ben Hansen, Profit Doctor

In a recent episode of the HR business marketing podcast, A Better HR Business, Ben and his guest, Ben Hansen, talk about how HR companies, and the entrepreneurs who run them – can double their profitability, reclaim the dream of business ownership, and finally get control over the financial health of their organizations.

Ben Hansen, CEO & Founder of Profit Doctor, is an accomplished entrepreneur and business advisor with a long history of driving rapid, sustainable growth. Over eight years, he scaled a consulting firm to an eight-figure enterprise with a 100-person team, earning five consecutive placements on Inc. Magazine’s list of fastest-growing private companies.

Today, Ben works with companies in the $5–50M range, helping them strengthen financial performance, and build healthier, more resilient operations.

You’ll hear practical strategies for running a workplace consulting business, pricing consulting services, and business growth strategies for consultants. Whether you identify as HR, workplace, L&D, OD, recruitment, or people & culture, you’ll discover real stories and actionable advice to attract clients, win contracts, and grow sustainably.

What You’ll Learn in This Episode:

• How to pinpoint and eliminate profit leaks that drain your consulting business.
• Why focusing on operational efficiency often creates more profit than chasing relentless growth.
• The Profit Doctor’s actionable process for rapidly improving margins—and his best lessons from leading an eight-figure staffing firm.

• Profit Doctor: www.profitdoctor.com
• Ben’s LinkedIn: www.linkedin.com/in/benhansen

Scroll down for the audio version and the transcript.

Ok, onto the show!

Audio Version – Improving Business Performance In HR Consultancies & Tech Firms – with Ben Hansen, CEO&Founder of Profit Doctor

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About The ‘A Better HR Business’ Podcast

In my HR marketing podcast, I talk with different HR consultants and HR tech companies from around the world to learn about what they do and how they keep their businesses healthy and moving in the right direction.

If you have questions you want to ask me about growing an HR consultancy or marketing for HR tech companies, just let me know or visit the HR marketing services page.

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Enjoy the show!

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Episode Transcript

Episode 298: Improving Business Performance In HR Consultancies & Tech Firms – with Ben Hansen, CEO&Founder of Profit Doctor

Ben [00:00:27]:
Hello. Welcome back to the show. Great to have you along. And I’m really looking forward to today’s conversation with a fellow Ben, Ben Hansen. Ben is CEO and founder of Profit Doctor which is a fascinating business which we’re going to get into in a moment. But firstly, Ben, thank you very much for joining me today.

Ben Hansen [00:00:43]:
My pleasure, Ben. Always great to work with another Ben. Maybe the best name on the planet. No offense to every one of your listeners. Looking forward to getting to know you a little bit better and perhaps helping some of your audience improve their profitability.

Ben [00:00:59]:
Absolutely. And, yeah, unanimous agreement there on the Ben thing. So we’re in it together. So, Ben, firstly, for people listening, I was taken back in my mind to a time when I was an HR leader inside a business, and I was sort of sent around a few countries on a turnaround project because a large division of a company was underperforming, losing money and so on. And so I kind of teamed up with the finance director and we were going around to different operations. And I remember meeting one operations leader and his business was going so well, and he’d been around doing something within his own section, and he said basically his view was that we did not need to take on any new customers, no new clients.

We just needed to tighten things up, get our operations better, watch our costs, get our procedures and things flowing much better, and that money would actually flow through to the bottom line, and we had a far greater profitability. So, long story short, no new customers, no new business. Just get the thing operating well, and we would be more profitable.

So I think maybe that’s an area of your expertise. So let me throw it to you. Can you tell us, what is Profit Doctor? What do you do? How do you help businesses?

Ben Hansen [00:02:03]:
Yeah. So much to unpack in that little vignette that you just shared. But in terms of what we do, we help our clients double their profitability, and that helps them to reclaim what we call the dream of entrepreneurship. We find very frequently that the clients that come to us in need of improved profitability are really struggling. And having been a CEO for a number of years and started my own company and worked with so many others, you know, a lot of times one business that’s struggling compared to another business that’s performing really well, there might be like 95% doing the exact same thing, but that 5% is killing their profitability.

And it makes all the difference because I work with so many CEOs that are below average profitability. And the day to day life of a CEO when the company is performing poorly on profitability is insert blank, blank and blank. And all of those are negative words you can fill in your own.

But usually it’s exhausting, it’s sucking the life out of you. It’s not a lot of fun, it can be hopeless, dragging down your confidence, making it hard to sleep, getting in the way of your family life, et cetera. So that’s why we say we like to restore the dream of entrepreneurship.

Ben [00:03:26]:
And the other thing is that HR hat on: let’s say that no founder or CEO wants a team that’s dragging their heels, feeling downtrodden, and it’s just nothing’s working. And they know their customers, clients not happy, or that the business is under pressure. They want a happy place. They want to leave perhaps a legacy one day. If they sell, retire, whatever. They want a place that is successful. And then in conjunction with that, as you say, they want a life that produces the kind of lifestyle that they want, but also the lack of stress and so on. So getting that balance is huge, right?

Ben Hansen [00:03:59]:
You know, one thing that’s very underrated is what I call the owner’s gas tank. Does your cup runneth over emotionally, and is your joy meter—if you will—running high? Man, going to work when your gas tank is empty is hard. And as the CEO, to a large extent, you’re the one emotionally leading the whole company. So we’ve got to make sure that tank is on ‘F’ for full.”

Ben [00:04:27]:
Absolutely. I’ve heard you talk about some profit myths and profit killers. Do you want to give us an overview of some of those?

Ben Hansen [00:04:33]:
I would say that one of the biggest profit myths is what I call the myth of growth. And what I see so often starts with being in the popular press. If you read business magazines or books on business or interviews of business leaders, people are so focused on growth and scaling that it makes it seem like that is what everybody should be doing all the time. And so what I find so commonly is that most of my clients who are really struggling with profitability are really 150% focused on growth. And the problem is, if you’re 150% of your energy focused on growth, where is the energy or the share of energy to be focused on profitability? And what I find is partly it’s a share of attention and then sometimes it’s just a different phase of your business maturation. So maybe it’s: we focused on growth for three years. Wouldn’t it be smart to really tighten up profitability for, let’s say, three to six months? And you could almost imagine that growth sort of organic and then very strategic around being very focused around profitability and, and then maybe shifting back the pendulum towards growth.

What I find somewhat counterintuitively is that a very strong focus, at least in waves, on profitability can jumpstart growth. And so you may have seen this with your clients when they’re chasing everything – grow, grow, grow in all directions -, often that lack of focus, which is one of the hallmarks of great profitability, is getting in the way of, of successful growth.

Ben [00:06:20]:
I know we have some alignment about how to improve profitability, but I think you talk a bit about the marketing messaging and getting the alignment with the business. But from my perspective, one of the activities we do from a marketing side of things with new clients is take their list of clients or customers a bit more detail. But take a spreadsheet, dump them all into the spreadsheet and sort in descending order of revenue or lifetime value, something like that. You start to see some themes arise and whether it’s different types of client types or industries or sectors, and I know you talk about this a lot, is certain types of those will maybe drain, take away profit and time and stress, they’ll create problems in those areas where other clusters or groups or cohorts will actually be better for the business. So yeah, I’d love to hear your thoughts on understanding that. First, that messaging part of things and how that can tie into profitability.

Ben Hansen [00:07:09]:
Well, maybe to focus on, you shared an idea where you take all your customers, so to speak, or your market segments and you put them into a spreadsheet and you start looking at that maybe from descending order of profitability. Sorry, you said revenue. I might include in there another dimension or two to start taking a finer look at profitability. It’s very common that some of those customers, whether they are big or small, are actually not accruing effectively in terms of profitability. So I was just working with an insurance company where one of their larger clients, somewhat ironically, was incredibly difficult for them to service.

So while from a revenue point of view, it was a very healthy account, you know, from a cost point of view, and then ultimately revenue very negative. They came to find out that one of their best agents was spending almost a quarter of their time servicing this one client who was much, much less than a quarter of that agent’s book of business. And so one of the most powerful exercises is to in fact look through your clients, whether they be clients by name, John, Sally, Martha, or ABC Company, XYZ company, et cetera, or perhaps by clusters or market segments, which could include size, geography, type, psychographics, demographics, all sorts of things, to identify which of those individual clients or clusters of clients are your best in terms of profitability and which are your worst.

And almost every company in the world would be better off exiting some of those worst customers, whether it’s by name or by market segment. It does kind of run against the grain of most business owners. Like we fought and struggled or invested to get these customers and we don’t want to let them go. But I find very frequently that is one of the most important levers to improving profitability.

Ben [00:09:14]:
On that specific thing you’ve raised, it’s an excellent point. You should be looking at the different client types and by names and so on. But when you actually analyze that, how do you avoid that Taylorism, that time and motion study stuff, or the seven minute time tracking that the law firms might have? Do you do that as an ongoing basis or is it as a project where you say, all right, let’s do a deep dive, really analyze how much time and effort costs are we allocating or expending on each client, and then tie it back.

Ben Hansen [00:09:45]:
I used to be really keen on operations management and business school. So you’re speaking one of my old languages there a little bit. When you said time and motion studies, I think maybe what you’re alluding to, and let me just ask if this was it sort of the overly focused need to measure things or the precision, Is that what you’re asking?

Ben [00:10:05]:
There must be a balance between we’re going to measure every moment of every day for every person, and the other extreme where you’re not doing that at all.

Ben Hansen [00:10:12]:
You know, we offer a series of programs of consulting programs to help people kind of reclaim that dream of entrepreneurship. The first one is where we help them double their profitability. We call it a profit accelerator. It’s a group consulting program. The goal, ironically, is not to teach people stuff, but to help them get the result. It just tends to be a happy accident that they learn a lot during the program. But where I’m going with that is that the follow on one is profit CFO where we focus more on measurement and financials and reporting and things like that. The reason I share that with you is that that first program really doesn’t rely on a lot of precise calculations or precise reporting.

Because in general we’re not looking in that program to separate the B pluses from the B minuses or the Bs from the Cs. We’re trying to identify the Ds and Fs in the A, B, C, D, E, F grading function, if you will. And so it often is very simple from a kind of qualitative or gut feel or just asking people who are the Fs and whether that’s customers by name or customer segments. It often doesn’t take a calculator, a slide rule, a very precise measuring device. Because if you accidentally get rid of some Ds while you’re trying to get rid of some Fs, it’s almost still always a positive. So it’s just not as big of a return on investment there, if you will. And so my point of all that is when you’re trying to exit things from the very bottom of whatever distribution stack we’re talking about, you don’t actually have to be so incredibly precise. There’s a wide margin of error for that.

Ben [00:12:03]:
As you were saying that, I was thinking that’s actually a really good employee engagement thing. Whereas employees teams individual contributors, they would love to be asked: „who’s really takes up all your time really annoys you because having to do all this extra work and follow up and chasing and stuff, who are these D’s and F’s?”

Ben Hansen [00:12:20]:
And I mean, you could imagine how that could cascade through an entire organization. So let’s take the slice of the organization that interacts with customers, right? So which of your customers or markets or customers by name, for example, are the big time sucks or the problem children or your worst 10 customers or your worst customer segments. But you could also imagine in production, delivery, the factory, the service team, you know, which products and services are the problem children.

That same uneven distribution of benefits and costs is alive and well in your service and product offerings. Asking quote man on the floor of the factory: which of these products are the real problems. They would probably know: rework, scrap, quality, inefficiency, all those kind of things. And it’s very likely that 20% of the products and services that you’re selling. It’s like you’re taping, you know, money to each product or service when you ship it out the door. And whether that’s driven by that product or that customer almost in all cases there is that sort of 80, 20 in effect.

Ben [00:13:37]:
You really like that visual of taping money to the product as you ship it out.

Ben Hansen [00:13:40]:
One of my rules is the best way to make more money is to stop selling things that you’re losing money every time you sell them. And again, that is a function of who you’re selling it to and what is it that you’re selling even before we get to things like pricing.

Ben [00:13:56]:
So words you use there were rework, scrap and so on which they may be from the manufacturing world. People might think, but let me just read something to the audience. So Ben Hansen is a five time Inc. 5000 entrepreneur and founder of an 8 figure staffing firm where he built a +100 person team in just eight years. And today he helps staffing and recruiting leaders fix what he calls profit itis when revenue keeps growing, but profit doesn’t. So what are your thoughts or what’s your advice for people in the HR related world? Whether that’s the consultancies or the technology firms in the HR space, what should they be thinking about in terms of things that are killing their profitability? And secondly, what should they look at to increase their profitability?

Ben Hansen [00:14:37]:
For sure. So first of all, like any good doctor, and again, my lawyer wants me to tell you that I’m not a medical doctor. It’s sort of a theme of profit doctor, a business consultant. So I don’t know that I can always give blanket advice for everybody, but I can certainly share what I would consider some of the tools or most powerful medications, if you will, in the medical bag that we have here. The first one I mentioned was sort of that myth of growth where people are so focused around growth, sales and revenue optimization. Maybe often not optimization, just more, more, more.

I’m a big fan of the optimization of that. Whether it’s optimizing growth around profitability and return on investment or optimizing profitability. Very, very powerful. Another one I would say is one of these myths or profit killers or which is the myth of later. And this is a tricky myth because while people are often very proud to say that they’re focusing on growth, they’re often not proud or they don’t voice this, that they have this idea in their mind that they’re going to fix profitability later. And right now I’m going to focus on something else. But often if you look at the owner of a company’s calendar and you say, how much of the time over the last two weeks have you spent specifically focusing on profitability, which is different from just sell more stuff. Often that number is incredibly, incredibly small.

And so in the spirit of one size does not fit all, imagine that we could slice up the world of all companies in every size category in every industry by quartile or even, let’s just even simplify in half. There’s above average profitability and below average profitability. What I often see as my goal as a profitability consultant is to identify the best practices associated with those companies that are above average profitability in your industry, in your size range, and help those companies that are below average profitability to apply those best practices.

If you are above average profitability, I would be very hesitant to recommend any blanket strategies because in large part you’re often already doing most of the best practices. And certainly that becomes even more accurate if we were to call it quartiles. Top quartile companies are usually very good at doing the right things around profitability, which is why they’re there. And then bottom and second from the bottom, quartiles are often doing a lot of things wrong when it comes to profitability.

The good news is even fixing one or two or three of those things can make a huge difference. And that’s why frequently we can guarantee for our clients to go from bottom quartile or bottom half to average or just a little bit above average in only 90 days. And I’ll just tell you that if you’re below average, getting to average or slightly above average profitability in 90 days is a sea change. It is night and day difference in terms of financial performance, the joy of being the owner and CEO of that company. And it is just like a lifting of the dark cloud from everybody who works there.

Ben [00:18:12]:
Nice. If I take it in a slightly different direction for a moment, a section of the audience would be consultancies. They may be listening to this, thinking: „profitability may be my service offerings. I should be looking at how I deliver them”. So to increase margins, et cetera, perhaps leveraged, ie, training courses, memberships, things that are delivered electronically at scale, et cetera, should be the way to go. But they could go down rabbit holes or produce things that no one wants, et cetera. What are your thoughts on that and the whole rise of e deliverability of services and should they look down those paths?

Ben Hansen [00:18:48]:
Sure. So let me answer that twofold. So whether or not a specific business should offer their products more electronically or digitally, I don’t have a lot to say other than sort of just reading the trends of the world, which is that, you know, E everything and AI, et cetera is on a rapid growth curve and almost everybody needs to be harnessing these tools one way or another. Nothing I just said there I think is particularly unique or astute. So that’s not really my area of expertise. But you know, just a little while ago, rewind in our conversation we talked about maybe putting all your customer information in quote, a spreadsheet, ranking people from top to bottom in terms of revenue. And then I wanted to suggest, let’s definitely also include how effective they are to work with how much they love your product, you know, what is the cost and ultimately the profitability.

But that exact same concept or framework should absolutely be undertaken with respect to your products and services. So you might have some very high touch, high labor, products and services at the top of the stack. I would imagine that one on one education with a very astute HR professional and the CEO of a company could pay incredible dividends for both parties. And that is the opposite of AI, right? Or I anything. But then as you start creating your whole product or service portfolio and kind of ranking and evaluating them, I’m sure you will find some things that have tremendous leverage and should be grown. And it wouldn’t be surprising if some of those areas are in that kind of electronic eLearning AI. I would imagine that almost every consultancy today, if they’re not experimenting with creating an AI consulting bot to cover certain chunks of what they do in certain formats, I think they’re missing the boat. Now again, I’m speculating in an area that few would call me a subject matter expert in.

But we are also experimenting with a Profit Doctor AI to help our clients perform better, faster, easier, 247 access. Now it’s tricky because those AI engines do say some incredibly stupid stuff in an incredibly authoritative manner. I’m not sure that those AI bots are a true substitute at this time for a seasoned professional who rarely says incredibly stupid things with high authority. But I think I digress. But being very thoughtful with your product and service portfolio to dump the ones that are your losers and put more emphasis on the ones that are your winners are 100% the formula for improving profitability and having a better, tighter, more effective connection with your customers.

Ben [00:21:57]:
Yeah, I’d love to get your experience advice, specifically in the staffing recruiting realm, what are examples of practical things that business leaders might do there to their service line, the way they deliver their services to increase profitability?

Ben Hansen [00:22:13]:
It’s tricky because when you say in the HR world, you know, to me that’s a whole variety of segments. What could that mean? Very, very different. Speaking with a staffing or recruiting company, CEO versus a HR tech kind of company, or a Senior leader of HR and Fortune 1000 kind of company and I think there’s a number of different slices. There are the CEOs of staffing and recruiting companies, there are the leadership of technology oriented companies focusing on HR, and then there are probably HR executives in large multinationals or Fortune 1000 or just mid sized companies. I think for that first group, I would say that a core focus in terms of profitability advice is to make sure that you are focusing on the area that you are most effective on.

And by that I mean kind of a niche orientation around which markets you serve. I would find it rare that a $30 million recruiting company could be equally good at filling roles across every geography, every functional area, every altitude of the compensation stack, et cetera. So by being more narrow, you could probably be much more effective at delivering value in that space, which probably allows you to acquire clients, acquire candidates, charge a premium, have a higher fill rate, give a better customer value and service, et cetera. And I would highly recommend that.

And if we think about the Profit Doctor framework of how people improve profitability, and I do want to point out that we offer a free leakage detector or profit leaks detector, probably one of the most powerful tools for people. In that first and second category that we’re going to talk about, you can access it: www.profitdoctor.com/leaks. I think leak, leaks and leakage all head to the same place, but I really recommend that as a very, very powerful tool because what it will tell you is if you’re trying to focus on too many vertical areas that are not effective for you, that’s likely a big leakage area. Whether it’s the wrong kinds of customers or the wrong kinds of service offerings, either way of that distribution, highest effectiveness to lowest, the bottom, least effective areas, whether it’s customer type or service type, is really crushing your profitability.

And then those same lessons, I think can be applied to those HR tech companies. There are going to be things that you have in your business, whether it’s the target market, the product or service offering, the people who work inside your company, the customer acquisition vehicles or initiatives, whether they’re marketing or sales. In all of those cases, there’s going to be a distribution of performance. High performance, mid performance, low performance.

And that leakage detector can really help you identify where you have pockets of low performance and where cutting that low performance area will have a big lift in terms of profitability. Then what I guess I would say for that HR function is, I mean, I’m sure you’re probably familiar with this Gallup research work called the Workplace Study. Really impressive body of work. They’ve been doing it for maybe 20 or 30 years. They’re surveying maybe 150,000 organizations around the world. And what they find across almost all geography and customer types is that about 18% of the workforce globally is actively disengaged. My label for that is toxic.

And I think that those HR executives who are equally focused on recruiting and bringing in and managing and upskilling to high performance, that top quartile of the workforce, I think trying to minimize that bottom quartile of the workforce is probably one of the highest leverage activities that can be done in any company, in any HR function, whether it’s tightening the screws on who comes in or being much more deliberate on exiting those folks from the bottom

I think that is one of the most powerful levers that can be accessed from the HR function. How do you make sure that the team in the company is top performers and mid performers and very, very, very, very few D’s and F’s if you will. Very, very powerful lever.

Ben [00:27:05]:
You’re speaking the same language of a previous guest, Nia, who is an HR or cultural change expert for workplaces, and she was saying something very, very similar. It has such a huge impact because it does so much that flows on. It motivates the higher performers, it frees up management time, it produces better outcomes for customers, clients, better products.

Ben Hansen [00:27:26]:
I mean, I think I would be telling things that are singing to the choir, so to speak, of your audience with such a strong HR background. What draws high performers is usually a high performance team. What repels and tends to exit high performers is the more that they have to interact and work with low performers, God forbid they have a low performing manager is usually the worst poison for any team. One of the things that we do here is we do help managers of owners of companies, let’s say 5 to 50 million, often they don’t have the muscle of quickly exiting low performers and, you know, just one of the most powerful levers.

Ben [00:28:09]:
Absolutely. Now, before I let you go, I was talking earlier about a turnaround situation I was in and I was trying to educate the staff with the CFO about how P&Ls work and cash flow analysis and stuff like that. And I always feel that if you can get people to teach something back to you, it sinks in more for them. And so it was very embarrassing. I shudder to think back on it now. But I had groups of employees. It had to be entertaining and informative at the same time. So you had groups of employers doing wraps on what a P&L L is, and then someone was doing a game show on cash flow analysis.

Oh, dear. But we all learned something. So I love the way you have taken something that many business owners might think is dry or whatever. They know it’s important, but I love the way you’ve structured out your programs and stuff. Just to close off. Could you quickly summarize what your offering is and then how can people learn more about you and how you can help?

Ben Hansen [00:28:56]:
Absolutely. So again, our brand promise, if you will, at Profit Doctor is to help the owners of companies double their profitability and reclaim the dream of entrepreneurship. And what we mean by that, kind of to break it down a little bit, typically we’re working with owners of companies, 2 to 50 million and helping them double the profitability of their company. And that means that these are typically companies that are below average profitability, typically 10% net profitability or below.

Sometimes it’s tricky because these companies think they have a higher profitability because their owners are taking very low salaries. And so it artificially enhances their profitability. But generally speaking, we consider ourselves profit experts to help businesses in that 2 to 50 million double their profitability and just make everything work so much better. And being able to fund your own growth out of profitability and pay yourself and be high profit will put a smile on your face every day and turn that frown upside down.

Ben [00:30:01]:
Well, you put a smile on my face, Ben. So thank you very much and thanks very much for sharing your insights and expertise. I really appreciate it. For people on the go, it’s www.profitdoctor.com. Ben, thanks again for joining me today. I really appreciate it.

Ben Hansen [00:30:17]:
Thanks, Ben. I appreciate it.

Topics covered: pricing consulting services, running a workplace consulting business, business growth strategies for consultants, HR consultants, profit leaks, how to increase profitability

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