Isaac (00:09): What is up everybody? Isaac here with Civil Engineering Academy, excited to be to you on another podcast episode today, I bring a special guest on, his name is Ben Hansen, and he goes by the name of the profit doctor, and he's been giving away a ton of free resources for companies to find out where they have leaks in their businesses. And I thought it would be a great idea to bring him on because we have a lot of engineering firms that are out there, or engineers that wanna start their own company now that they've got their license, that are looking at how do I generate a profit? What's the best way to, you know, run a business so that I am profitable and I'm just not running at status quo and breaking even. And Ben shares all of these details with us. So he is big on profit and how to make more profit, which is how you create a thriving business, right? And he has helped all kinds of businesses find profit by eliminating waste, reducing things that are wasteful and really has seen tremendous growth for businesses really in the first 90 days of working with them. So I wanted to bring him on, talk about that. What are the secrets to generating more profit as a business, especially if you were an engineering firm that's out there in his previous life. He, you know, worked with Microsoft and Dell, and now he has channeled all of this energy in figuring out what his niche and what he enjoys doing. And what he did previously is finding out how to find more profit and what all of us should be doing as employees if you're working for a company to do some business development and find ways that we can make profit for the companies we work for as well. So whether you're an employee or you are becoming a business owner or you own a business, this is, there's something in here for you. So without further ado, let me get to my interview with Ben. He'll share all those cool secrets and we'll share all the resources he talks about in our show notes. So pay attention to those as well. I will go ahead and shut up. Let me get to my interview with the prophet doctor Ben Hansen. It's coming up right after this. See you in a minute.

Isaac (02:00): Alright, Ben, we are rocking and rolling. Thanks for joining me today on the Civil Engineering Academy podcast. Appreciate you doing this with me,

Ben (02:07): Isaac. I can't wait. I'm looking forward to it. I love construction, construction services, specialty trades, and even more civil engineering for god sake.

Isaac (02:16): . That's good stuff. Well, I'm excited to talk to you, learn more about what you do kinda your background and, and really, you know, how it tailors to civil engineers out there e even wanting to start a business and, and how to, how to be profitable. But let's maybe start a little bit with your own origin story a little bit. Can you walk us through that a little bit and how you ended up starting the profit doctor?

Ben (02:42): Yeah, absolutely. You know, I think some of your listeners might find the Preor story when I used to be the president of MACIs group, so I left Microsoft kind of a cushy big company job to start my own company. And then I did that for about 15 years. And what I found was I really had this superpower, or at least in my own mind at least about profitability, you know, pricing efficiency, how to do the right thing or more of the right thing and less of the wrong things that really drove profitability. And I joined a group of entrepreneurs called the Entrepreneurs Organization. Highly recommend to many of your listeners who already have a business doing a million or two in revenue. And during my membership there still a member actually. But during my time there, I talked to a lot of business owners and I just kept coming back to this idea of like, gosh, so many business owners are really struggling with profitability. And it kind of always felt like my natural superpower when I wound Maxus group down. I scratched my head for a little while and then decided, hey, I could give back and make a contribution to other business owners and you know, fellow entrepreneurs by helping them be more profitable. And that's what got me into profit, doctor.

Isaac (04:08): That's awesome. So your eyes were opened I guess a little bit. You have this talent at Microsoft of discovering the things that can cause more or generate more profit. Where do you see that being applied, I guess, into this construction or civil engineering world? How do you see, or do you see problems in this industry that you've experienced?

Ben (04:35): Whew. Like,

Isaac (04:37): That's a big question.

Ben (04:38): Where do you start in an industry who's almost like the fundamental premise for most customer purchasing decisions is like low bid wins. It is often a recipe for businesses to not be that profitable. That I think is one of the big pillars that kind of guts profitability from the industry. And then another one is a very large share of business owners and key executives in construction, construction services, specialty trades engineering. They don't come from the business side, they come from the construction and engineering side. And so if for 20 years you were the best plumber in the world, and now somehow you've got a $45 million plumbing company, what makes anyone think that automatically you'd be like super gifted at like financial management, p and ls profitability and that sort of thing. So there's just so much kind of self-taught business and not that that, that people in that, in that situation aren't smart. It just, it's like maybe that's a second language. So it takes a little bit of a, you know, extra push to kind of get over the hump. And that's one of the things that I love doing is helping those super talented, hardworking people who turned, let's just say used to be a great you know, professional engineer, registered engineer, civil engineer, and now I've got a seven and a half million dollars civil engineering, you know, consulting business, right? Mm-Hmm . Help them earn that thing from what I would call below average profitability to above average profitability.

Isaac (06:23): That would be awesome. I'm sure everybody wants that . You bring up...

Ben (06:29): Everybody wants it once, like the light bulb clicks off, but a very large share of business owners and specifically business owners that are below average profitability, let's just say they're playing checkers instead of chess, and they haven't quite got the memo that, oh, yeah, there's this whole other dimension around profitability. And maybe instead of tackling that last, you know, they kind of need to move that forward in terms of their like focus and energy and time spent on kind of getting that right first rather than all the other stuff first. And that is sort of a what's left over at the end.

Isaac (07:09): You know, one of the biggest complaints Yeah, that I hear in the civil engineering world is this drive to the bottom or a fixed, you know, they'll put in a fixed bid, which really drives kind of, you know, the rates that you're billing as an engineer. And it's kind of this drive to the bottom where we can't make a ton of profit because we have to pay our people and still try to win the work. I've seen this idea floating around on LinkedIn quite a bit of charging a percentage of what maybe the project cost would be or something along those lines, but yeah, it's a huge complaint out there about this drive to the bottom bid, especially in the civil engineering world. So is that the same in all industries? Is that kind of a common complaint that you see?

Ben (08:00): Well, yes and no. I mean, pricing pressure is a common complaint in, you know, across a whole bunch of fields. But I would say that kind of the, the secret sauce for so many successful companies is to try to figure out how to play a different game, right? Or, or create different rules. Now, speaking specifically about how to win business and civil engineering is kind of above my pay grade.

Isaac (08:27): Wow.

Isaac (08:28): But, but what I, let me just share a little bit of an example. I had a client, a hundred million dollars specialty construction services firm, right?

Isaac (08:37): Wow.

Ben (08:38): And so this company, we started to do a postmortem on what had been going on with their projects over the last couple of years. And at a very high level to kind of oversimplify basically the top 25% most profitable of all their work over the last couple years was roughly responsible for a hundred percent of their total profitability over that time.

Isaac (09:06): Wow.

Ben (09:08): The middle 50% of their work, so not the worst and not the best was also responsible for just about a hundred percent of their total profitability over that three year span. And you guessed at the bottom 25%, the worst performing projects were roughly responsible for negative a number exactly the same as their profitability. So you could almost look at it that they ended up doing about 75% of the whole shebang for three years for nothing. And really all the profitability that they accrued was associated with that top quartile of projects. Mm-Hmm. And there's a 14 lessons in this, and I think we're gonna talk about many of them during this session, but I don't wanna just drone on for 14 , you know, lessons right now.

Isaac (10:07): Well, why don't you tell us a little bit about the definition. You got profit and prophetess, could you talk about those terms

Ben (10:14): Yep.

Isaac (10:14): For the audience?

Ben (10:15): So the name of the business is Profit Doctor, trying to give it a little bit of pizazz. And so we have a little bit of a medical theme, so that's supposed to be profit, you know, not exactly like prostatitis or whatever. It sounds a lot worse. But the idea is a lot of companies have a healthy or stable top line or sales or revenue. So like money coming in the door is relatively healthy and stable, often growing, but then money that they keep at the end of the year is weak, shrinking, sickly, whatever. And so that is the definition that we've coined called Profit mm-hmm . And it basically suggests that your business is generally healthy except for the profitability. And what I find with a lot of my clients is that 95% of what they're doing is pretty much the same as what the really profitable companies in their industry are doing. But by shifting on that 5%, they can take themselves from below average and often dramatically below average net profitability to average or significantly above average. And I've gotta tell you that when you go from break even to average, you know, birds start chirping, the clouds part, you see rainbows, you all of a sudden realize that you're not a failure, you're husband or wife seems to like you more, you're having more fun, your kids work up to you. It's like a whole different thing. And not just to make light of it, but being an entrepreneur, like one of the highest rates of like suicide and depression. And it's hard man. And probably the single biggest flip of like success versus the lack of success is profitability. And it sounds like, well, of course, but when you really peel back the layer to see what people are doing at least half of entrepreneurs and business owners are spending very little time doing direct action on profitability. Much of their time is spent on revenue and operations, and they're not giving enough energy to doing the super direct things that they could tackle with profitability.

Isaac (12:35): That's a good insight.

Ben (12:36): Yeah.

Isaac (12:36): I'm curious, you know, civil engineers, they go to school, they're doing a ton of technical work, they come outta school, hit with more exams, finally get registered as a professional engineer. They miss probably some of the financial literacy that maybe they should learn when they're starting a business. They're really good at engineering, but kind of when they wear a different hat all of a sudden maybe things aren't going as smooth as they should. So I'm just curious, in your mind, is there some financial literacy or financial things that maybe an engineer should look at if they're gonna start a business or start running their business and maybe they should polish up on, on some financial skills?

Ben (13:18): Well, boy, certainly, if you're gonna be running your own business, the answer to that is, heck yeah. You need to have kind of a minimum threshold of understanding on the financials. I actually teach a program I call Profit CFO, it's how to sort of simplify your financial reports and uplevel your I won't say smarts, uplevel your experience and understanding of how to read those financial reports so you can make finance and financial reports and just reporting in general, make those numbers your friend and and use them to your advantage. Super, super important. And I think in your space, and even if we go more broadly, construction construction services, etc., You know, so many of the people in executive management are going to have come to that from like being an expert in the thing that that company delivers, right? Mm-Hmm . Engineering, construction, et cetera. And that means they probably did, did not get trained or not a Wharton graduate, you know, that's MBA school at University of Pennsylvania in, you know, finance. They didn't come from Wall Street, so to speak. So super, super important. There's some great books. But honestly, I think even so many of the good books, they kind of assume a level of literacy that is often not already there and often teach them relatively sophisticated things before they've taught some even more powerful but more simple things. And so that's what we do not to sort of like plug our stuff, but we try to make sure that people know, you know, the 20% that's gonna, or the yeah, the 20% that's gonna get 'em 80% across the finish line rather than sort of, we don't do accounting class. We're like, you know, here's five levers. You need to know how to use that. And with that you can, you know, get 80% of the way there.

Isaac (15:16): So I'm just curious, but when you come in and, and maybe you're evaluating a company, are you changing how they operate or is it just mainly like, hey, here's where you're getting most of your profit from this 20% of these, these projects or clients or whatever, and let's see if we can build on that or is it simple or do we dive into more, more things that maybe they're not doing correctly that we need to change?

Ben (15:45): Well, you know, I wouldn't say one size fits all, but I certainly have a couple of like, rules of thumb that I could sort of start with. You know, one of the fastest ways to improving profitability is what we might call addition by subtraction. And I think of that as doing less of the worst stuff. And I think that that applies there's a very strong analogy or it's analogous both for business owners, whether it's in, you know, civil engineering, construction, etc., as well as project managers team leaders and engineers responsible, you know, for project or the design of a project, right? I got a great book up here, I dunno if you can read it. It's called the 80 20 Principle. Many of you guys are gonna be familiar with the Pareto principle kind of a law of uneven distribution. The idea that, you know, the 20% most powerful parts or good parts of something are often responsible for 80% of the goodness. I like to flip that around. It's like, well, if your 20% most capable employees are responsible for 80% of the production, let's say, what in the heck is going on with your worst 20% of employees? Or if you were to think of your suppliers, if 20% of your suppliers are contributing 80% of the impact or of being on time or whatever, you know, what's going on with the worst 20% or said differently, it's also probably likely, you know, fishbone diagrams and root cause analysis that 80% of the crap and problems and messed up schedules and cost overruns are likely gonna be attributable to 20% of the crappiest problems, root causes, etc. And the crappiest 20% that's causing the problems is almost always very tightly correlated with the 20% that is the lowest contributor, right? Mm-hmm . We can kind of look at that on both ends, but as a business owner, identifying the worst 20% in terms of performance or the, the most, you know, creating the most problem 20% and eliminating that is gonna put so much time back on your calendar and for your team profitability, you know, money back in the bank and joy back in your personal gas tank. And then I think that there's a direct analogy there, you know, if you're a project manager or project lead professional engineer or trying to become a professional engineer and really responsible for whether it's the, the design or the implementation or the oversight of almost anything, right? That project is going to have the things that are driving it to its, you know, successful conclusion. How do we feed that? But maybe even more valuable is how do we nip in the bud those things that are gonna damage that project?

Isaac (18:55): Yeah. I'm sure, like you've said, this 20% of bad stuff is probably eating the majority of the time that a firm is working on projects or what not.

Ben (19:08): Absolutely, I mean, if you think about it, like if you were to look at your calendar, let's just say you're a construction lead or an engineer for a project, or the company owner or VP of a department or whatever, you know, the things that are like beating down your door, the fires that you're fighting, the fires that you're fighting are usually not your best employee, your best supplier, your best customer coming to you and saying, how could I be even better? Those things often get like, you know, shoved to the side, you know, stepchild status, whereas the fires are almost always the broken crap. Just imagine if you could cut your broken crap in half by eliminating it before it starts, and then spending some of that time like investing in the good stuff, right?

Isaac (20:00): I like that. Yeah. So when you come in and we determine we can make more profit for a company, is there a discussion also? I mean, I'm assuming that like, you know, now we've gotten to a point where we're making profit. Do you as an employee you know, you're a top performer, you're a great performer, are there discussions that CEOs have of what to do with that profit? Like is it better to have a, like an employee owned company where we're all working to grow this thing together because we wanna make a profit and it's shared among employees? Have you seen anything like that in the industry that lends to something better or worse than others?

Ben (20:44): No.

Isaac (20:44): In terms of these options for employees?

Ben (20:46): Well, I can't speak to whether or not employee owned companies are better or superior, whether it's better for the employee. Some employees who are very long-term minded or thinking long-term, take a lot of value from that employee ownership. Mm-Hmm . A lot of employees are maybe more short and medium term oriented. You know, if you're a living paycheck to paycheck, trying to make rent the idea of a piece of paper that in seven years or 17 years might pay off, you know, six to 18 months worth of salary, which is making up numbers is maybe hard to wrap your head around. But what I will say is, in my experience, most employees are not trained on how they can drive profitability for the company, are not educated on how their, if they were to drive profitability for the company, how it is in their interest for the company itself to be dramatically more profitable. And I think a lot of that fault, frankly, lies with company leadership where they are not going about that. We kinda have a module in our training programs that we call Profit Bus, which is how to get the employees on the profit bus. And what we believe is that a company that is super profitable, let's say top quartile of profitability in their industry, is gonna be a better place to work. Let's just come up with some examples. Would you rather work at Kmart or Nordstrom, Yahoo or Google, the big civil engineering company whose name, I don't know, that went outta business last year, but was a big one, or the one that keeps like growing and looks like they're crushing it because the company that's highly profitable is gonna have the resources to expand, develop in training hire and attract top talent, etc.

Ben (22:57): You know what I would also say is typically the winning formula, or, or part of the winning formula when it comes to, you know, managing and paying employees in highly profitable businesses is to gear the company to focus on profitability, be highly efficient, get rid of waste, attract and maintain the best people, but pay 'em really good because turnover is expensive and you wanna incent those people to drive company profitability and in general, slightly fewer employees than let's say average, but really good ones who are paid, let's just make up a number. 10 to 30% better than average who are focused on profitability is probably gonna make top performing employees wanna stay and be attracted there, have that company be more successful, and those people are probably gonna be happier because wouldn't you rather make 25% more wouldn with a team of superstars? Mm-Hmm. Even if they're, you know, I don't know less, we'll just call it you know, perks, like sloppy waste kind of perks, you know, like you manage the money better, but you get to keep some of that.

Isaac (24:17): Yeah. You know I've worked for smaller firms and from the leadership, they always preach that everyone does business development. You know, if you see an opportunity, we need to, you need to explore it, you know, try to build relationships with people so that we can get projects. It's, it's interesting because civil engineers work in a wide variety of different disciplines and different industries, for sure. It could be government, it could be consulting, so there's a lot of different avenues that civil engineers can make go through. But yeah, if you're just starting a firm, like everyone should be on board trying to make a profit and being, being doing some business development. I'm curious if you know this, I don't know if you do, but do you have any feel for engineers or people that want to start their own business and try to become profitable? Is there some number to that?

Ben (25:19): Hmm. I think we were teasing the idea of looking for a report that talked about engineering profitability. And I think we might have to get that into the show notes. I pulled up a report, but I think it was not only at it, what I will say is very, very commonly professional services kinds of firms on average have a profitability of roughly high single digits which is not a great place to be. So being above average, we'll call it in the teens, is certainly where you wanna be. I'll also say when you're a very small company, you will likely get, and when I say very, I won't say not to be so pejorative, but anything under let's say 5 million and certainly under a million even more, and under 500,000 even more, it's highly likely that your accountant will tell you to pay yourself salary of a very small number and take your money through distributions as being potentially more tax efficient. Mm-Hmm . And I'm not gonna tell you that that's not true because my attorney number one tells me, not make sure they don't think you're a doctor, and number two for sure that you're not an accountant. But what that does if you're like paying attention on your P & L is if your market value is a quarter million dollars a year, but you're paying yourself a W2 salary of a hundred thousand, you have underpaid yourself 150,000 from salary and maybe are taking that out if you're lucky from distributions, but that is artificially inflating your bottom line net profitability. So in that example, we are worth 250, like the job that we left to start this company, we're just making it up. We're paying ourselves a hundred thousand dollars salary so we don't get in trouble with the government. My tax accountant told me 120, that's how we did it. Um and then let's say they're taking 150,000 in distributions 150,000 and let's come up with a number on a million dollar of revenue per year, you know, that's basically 15% that is artificially inflating the profitability of your business, not your job by 15%. And if it were 3 million, I think it'd be 5%, right? So it's still a, a fairly significant number, and now if you've got three partners and they're all doing it, you could see how that can change things. You know, when companies get above 20 50 million, that dynamic becomes a lot less pronounced just because the numbers moving around are smaller in proportion to the total company,

Isaac (28:10): Right.

Ben (28:11): I think you definitely wanna be double digits after factoring in a salary that would be market for all the equity holders, right?

Isaac (28:22): Yeah.

Ben (28:22): Um yeah, I hope we didn't get too deep in the weeds there.

Isaac (28:26): No, that's good. I can tell there's a lot of knowledge and finance there that maybe engineers may not have. And it sounds like your programs, you have a course, what else do you offer there at the profit doctor that can help engineers?

Ben (28:44): Yeah. Well, first of all, we've got all sorts of free content that we pump out on LinkedIn, on YouTube and on the website. And I guess what I would say is if you're not a business owner, but you know, 85% of the people on this in this audience who are either studying to become a registered or professional engineer, and I'm not quite sure what the difference is there, honestly or already one working on kind of upleveling your career. Pretty much most of the things that I talk about when I think when I talk about profitability are going to be just as analogous for you and how to make your projects and the scope of work that you're responsible for have a higher margin a higher profitability and a greater contribution to the business. And I am certain that those people who are evaluating your performance in terms of should this person move up in the hierarchy, are certainly going to want to choose those people who have a keen eye to the financial performance of the work that they're responsible for. So like knowing that code, if you will, knowing some of those principles and applying it to your own work, the most important of which probably is either avoiding or re-architecting projects so that they're going to be profitable from the outset. You know, that was kind of the, I think I might have alluded to it, operation dog catcher with that a hundred million dollars company, you know, 25, 50, 25, it's like, how can you eliminate those worst 25% of projects and just not accept them, right? Or raise the price or whatever, right? So you could imagine how do you decline a bad project or how do you only accept it if you make a few changes and basically change the things that we're gonna make it a dog in the first place, for example...

Isaac (30:44): Make it profitable.

Ben (30:45): Yeah. It'd be a good example. We're not gonna take this one at a seven, we gotta take it at a nine because of whatever, or we know this customer, their schedules always slip, so we've gotta bake in there, you know, a different structure for change orders or schedule slips or whatever. And I mean, that's what happened in that construction company example. Most of those projects that were dogs were, you'll appreciate this, the big construction boom back then. And a lot of those were being run by poorly trained or poorly qualified project managers from the customer's side, they found one of the single most critical factors was if the customer puts in a newbie project manager and that project kind of goes to hell, well, you're downstream as a subcontractor, your schedule also gets blown up. And that's where they were going upside down. If you got a true, a crew of 20 guys to go do something and they call you, you know, we'll just say X minutes or days in advance and say, we don't need them today. We're backed up. Well, what are you gonna do with those 20 guys? You're probably paying some portion of their time for some of that delay. And that's where those projects generally went sideways,

Isaac (32:06): Man. There's a people element here that we haven't really dived into. I mean, you mentioned it, but you know, if 20% of your profit or your problems are, are people problems internally, we probably need to review what we got going on in the company, .

Ben (32:24): Yeah.

Isaac (32:25): Who are we hiring?

Ben (32:26): I got two things for you. Number one, there's a fascinating set of research work from the Gallup organization. Most people are probably familiar with Gallup because they publish all crazy types of polls, but they do this one study called the Workplaces Study and they survey 155 faculty more. Now organizations, usually these are organizations of hundreds, if not thousands of people. So they're really sure it's a big survey worldwide. And what they conclude is that 18% of employees in the US and internationally are what they refer to as actively disengaged that's below the category called disengaged.

Isaac (33:13): Is that quitting?

Ben (33:15): It's a quiet, quitting is above actively disengaged.

Isaac (33:19): Oh, man.

Speaker 2 (33:20): I substitute the word toxic for actively disengaged. You know, your mileage may vary, but the point of that is the 80 20 rule, or if you will, is alive and well when it comes to the performance distribution of most employees and most companies. And that is a very valuable place to take a look.

Isaac (33:42): Oof. Okay.

Ben (33:43): The kind of rewind you said, Hey, imagine we own our own business or we have the ear of the owner or the vp and maybe they would like to improve the profitability of their business. How can they get a hold of you ?

Isaac (33:58): Yes.

Ben (33:58): Um what I would say is come to my website and download this tool. It's free for gosh sake, it's profit doctor dot or www.profitdoctor.com/leaks, L-E-A-K-S and profit doctor, P-R-O-F-I-T, and then doctor D-O-C-T-O-R. So profit doctor.com/leaks. And we have a tool there where we help you identify of the 10 most likely places your business is leaking profitability. And that is the first step, like identifying it is the first step to fixing it. It's a cool tool. It's free. There's a couple of instructional videos and on the that you want somebody to review those numbers and help see if you got it right. We, we offer a short free like 15 minute consultation on that and it's free. So that would be the best way if you are trying to increase the profitability of your organization, that would probably be the best way to go. But I guess if you just wanted to call us up and ask for some help, we could probably accept your phone call.

Isaac (35:13): That's awesome. Yeah, Ben, it sounds like you work in an exciting field. I appreciate you jumping on and teaching us how to be more profitable in really any industry, but specifically to those in the civil engineering construction world. So thanks for jumping on doing this.

Ben (35:30): Thanks. I love doing it. I love helping business owners kind of turn things around and reclaim that dream of entrepreneurship. We have a long track record of helping entrepreneurs literally double their total profitability in 90 days or less. We'd love to help you guys. We got a lot of free stuff. Come get some of that. And for those of you who don't own your own business, but either have an eye towards it or just wanna be business-minded, you know, addition by subtraction, what is going on in your projects or in your sphere that if it wasn't there, you know, be like cutting the sandbags on a hot air balloon, you know, less ballast, the whole thing would rise. That is probably the quickest, fastest way fastest to improve the profitability of what you're working on, which might even be the quickest, fastest way to get a promotion. Not that anybody on this call is interested in managing their career upwards quickly.

Isaac (36:27): Sounds good. Maybe I need to look at civil engineering Academy too. Start.

Ben (36:31): Yeah.

Isaac (36:32): Cutting. All right. Well Ben, thank you again for doing this. I appreciate you doing this and hopefully we'll talk to you in the future.

Ben (36:39): Thanks, Isaac. I really enjoyed it and I hope we can be of service to some of your listeners.

Isaac (36:45): Thank you. See ya.