Module 4 · Treatment
Plug the Structural Leak
“The quiet costs that add up while you're not looking.”
What you recorded earlier
From your Profit Snapshot (Module 1)
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From your Profit Leak Audit (Module 3)
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What you'll walk away with
- Audit recurring overhead — tools, subscriptions, contractors, ad spend — against actual return
- Understand fixed cost creep and why it is the easiest leak to ignore
- Cut, renegotiate or reallocate at least one structural cost
Worked example
Maya's overhead, line by line
She opens last month's bank and card statements and lists every recurring charge.
- Virtual assistant $600 — cannot name a task from the last 90 days → Cut
- Design software suite $210 — needed, but monthly billing → Renegotiate to annual
- Stock and font subscriptions $130 — one duplicates the suite → Cut one, keep one
- Website and email $110 — essential → Keep
- Operating overhead
- $1,050/mo (excludes her $3,000 pay)
- Share of revenue
- 13%
- Cut
- $665/mo
- Renegotiated saving
- $20/mo
- Projected saving
- $685/mo, $8,220/yr
Maya reallocates the $685: $400 to her own pay, $285 held as a reserve. A cut that gets spent quietly is not a structural improvement.
Plain-English definitions
The words you actually need
Overhead is the quietest leak, so it needs the sharpest definitions.
- Overhead
Costs that keep the business open regardless of what you sell — software, subscriptions, assistants, insurance, the website, and your own salary. In this module we audit operating overhead only; your pay is a cost too, but you set it deliberately in Module 7 rather than trimming it here.
In Maya's business: Maya's operating overhead is $1,050 a month: assistant $600, software and fonts $340, website and email $110. Her $3,000 salary sits on top of that, making $4,050 of total overhead.
- Overhead ratio
Operating overhead as a share of revenue. Under about 15% is comfortable for a solo service business; above 25% means the business is carrying a structure it has not earned.
Overhead ÷ revenue × 100 = overhead ratio %
In Maya's business: $1,050 ÷ $8,200 = 12.8%. Comfortable on paper — but ratio hides waste, which is why every line still gets judged individually.
- Keep, renegotiate, cut
The only three verdicts allowed per line. Keep = it earns its cost. Renegotiate = it is worth having at a lower price or annual billing. Cut = it survives on habit.
In Maya's business: Cut the $600 assistant and $65 of duplicate subscriptions. Renegotiate software to annual billing, saving 25% of $80. Keep the $110 site.
- Reallocation
Deciding in advance where a saving goes. A cut that is not reallocated is spent quietly within two months.
In Maya's business: Of $685 saved a month, $400 goes to Maya's own pay and $285 into a reserve — decided the same day as the cut.
Why this comes first
We fix overhead before we touch prices, and the order matters. In the next module you build a price floor, and part of that floor is the share of overhead every sale has to carry. If your overhead still contains a tool you never open or an assistant you no longer use, you would be building that waste into your prices and asking customers to fund it. Clean the costs first, then price on top of what is genuinely left.
No single line item feels large enough to be worth an argument. $29 here, $49 there, a $600 assistant that made sense in a busier quarter. Individually trivial, collectively the difference between a profitable month and a flat one.
The audit
- Work from last month's bank and card statements — memory badly understates this
- List every recurring line, including annual charges divided by twelve
- For each one write what it returned in the last 90 days. If you cannot, that is your answer
- Check for duplicates: two tools doing one job is the most common finding
Keep, renegotiate, cut
- Keep — you can name what it returned and it would hurt to lose
- Renegotiate — you need it, but not at this price or this plan tier. Annual billing, lower tier, or simply asking usually saves 20-30%
- Cut — you cannot name a return in 90 days. Cancel today; you can always resubscribe, and you almost never do
Ad spend is overhead until it is proven
Advertising with no tracked return is a subscription, not an investment. If you cannot say what a customer costs you to acquire and what they are worth, pause it for one month. Whatever happens to revenue will tell you more than another quarter of guessing.
Reallocate, don't just cut
Cutting $685 a month is only satisfying once. Deciding where that $685 goes — your own pay, a contractor who buys back your hours, a reserve — is what turns a cut into a structural improvement.
Your deliverable
Structural Cost Audit
Every recurring cost, judged against what it actually returns
Open your bank statement and card statement for last month and list every recurring line: software, subscriptions, retainers, contractors, ad spend, storage, that thing you signed up for in a launch. Mark each one keep, renegotiate or cut.
Context
Recurring costs
Calculated for you
- Total recurring overhead
- $0 / month
- As a share of revenue
- —
- Annual cost of your overhead
- $0
- Marked to cut
- $0 / month
- Marked to renegotiate
- $0 / month
- Projected annual saving
- $0
Cuts in full, plus a conservative 25% saving on renegotiations.
Preview mode — this template works exactly as it does in the course, but nothing is saved.
Want to see the rest?
Modules 5–7 cover the pricing leak, the delivery leak, and the 90-day profitability roadmap that turns all of this into a monthly habit.
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