Marc Freedman is a serial entrepreneur, CEO, and best-selling author of Expense To Profit: Eliminate the Costs that Sabotage Your Growth. He has 40+ years of experience helping businesses free up cash so that it can be reinvested into helping employees, growing the business, and creating Social Impact!
His first company, Expense To Profit, has saved companies over $1 billion and Marc has extended his vision with Evolved Profits, where he helps companies extend their positive impact on the world by taking 5% of his fees and donating it to an impact fund that companies can apply to a cause-driven project, community contribution, or donation to a charity partner.
Listen to this informative Publish. Promote. Profit. episode with Marc Freedman about eliminating costs that sabotage business growth.
Here are some of the beneficial topics covered on this week’s show:
– Why it’s important for businesses to run a category expense report.
– How Evolved Profits can help your business save a lot of money.
– Why partnering with a business may be better than having the owner as a client.
– How being able to negotiate is an important business tool.
– How writing a book is a fantastic way to gain more clientele.
Connect with Marc:
Links Mentioned:
expensetoprofit.com
evolederc.com
Guest Contact Info:
Twitter
@expensetoprofit
Facebook
facebook.com/expensetoprofit
LinkedIn
linkedin.com/in/freedmanmarc
Rob Kosberg:
Hey, welcome everybody. It’s Rob here. Excited to bring you a great guest on our Publish. Promote. Profit podcast, I have Marc Freedman with us today. Marc is a 40 plus year serial entrepreneur, CEO, and of course bestselling author of Expense to Profit: Eliminate The Cost That Sabotage Your Growth. Marc loves helping people, as I said, 40 years of experience, helping businesses free up cash so that it can be reinvested into employees, growing your business, creating social impact. His first company Expense to Profit, which we’ll talk a little bit about today, has saved companies over $1 billion, that’s billion with a B, pretty significant there. Marc has extended his vision where he also helps companies to make a positive impact on the world by taking 5% of his fees, donating it into an impact fund that can then be used for cause driven projects, community contribution, or donated to some charity partner. So Marc, great to have you on the podcast today, thanks for being with us and look forward to getting into your magic and genius.
Marc Freedman:
Oh, that’s crazy. Well, thanks Rob. I appreciate that. Genius may be a little bit too far, but that’s okay.
Rob Kosberg:
So, Expense to Profit, I love what you’re doing there. Of course, most people listening know me as the book guy, we help experts to write a book, launch to bestseller, media, grow their businesses with it, but in a prior life, I owned a financial services company where we did a lot of things like debt resolution for businesses, all kinds of stuff. So I know enough to make me dangerous when it comes to that kind of thing, but I would love to hear your magic. So, you sit down with a business owner that is looking to cut expenses or looking to reinvest in things, what are the first things that you look at for business owners listening today? What are your steps in the process?
Marc Freedman:
So, the first thing we do is we have them run what we call a category expense report. So most businesses put things into general ledger accounts, so that account is an expense account. And so we have you run that and then we have you sub run it with the vendors that you use, whether it’s procurement or whether it’s a solution. So we can see who you’re spending money with and how much you’re spending. From there, we have a conversation with the business owner as to really which check they hate writing every month. And in most cases these days, it’s typically something related to health benefits, because it goes up every year, whether you want it to or not.
But beyond that, we’ll look at things and see where the opportunities are as we’re having conversations with the owner of the corporation. Just to see, where do they think they need help? And where do they not think they need help?
Rob Kosberg:
And they do, right?
Marc Freedman:
Well, it’s funny because we have a client on the West Coast that basically lays infrastructure piping for municipalities and they’re in five different states. So they have a few different, well, it used to be more, but now it’s down to three wireless providers, depending on where their projects are, determines on whether they’re using T-Mobile, AT&T, or Verizon. And so the CFO we’re talking and he says, “You don’t need to look at that because our CIO, he talks to them every six months and beats them up and we get discounts.” So I said, “Okay, that’s all right.”
Rob Kosberg:
You’re going to look at it anyway.
Marc Freedman:
“Humor me, just send me the last invoice for each one of the three providers.” And actually at the time was four, because Sprint was still there before they were bought by T-Mobile. Well, low and behold, we got them an additional 18% discount that they were not able to get on their own because they just didn’t know where market price was. And when I say market price, that’s part of the secret sauce stuff that you were talking about.
So, what we’ve done because over the last 10 years, we’ve done over 25,000 audits as a team and saved businesses quite a bit of money. We tend to know what market price is. And when I say that, when you’ve done that many audits for so many different types of businesses that we’ve done, and keep in mind, it doesn’t matter whether you’re digging ditches or whether you’re in a hospital scenario, everybody has wireless devices.
So, it’s a commodity these days, it’s a matter of knowing what the pricing are, and oh, by the way, the other thing too, that we get at that other people don’t because even though we don’t take compensation, they consider us a partner. And the funny thing was about that situation with that company was I said to the CFO, “Have your CIO call. And he will tell you the following five words, what the business, his business rep’s going to tell you, those programs do not exist.” He calls me back a half hour later, he says, “That’s exactly what he said.” I said, “They don’t exist for him, but they do exist for us because we’re considered a partner and we’ve got.” So that’s part of the secret sauce is knowing what’s available and what is the pricing, the market pricing for different services and different types of commodity, purchases, and so on and so forth for businesses.
Rob Kosberg:
So, you start with the breakdown, you want to look at that, you of course know you have the secret sauce of knowing what the market really is for these things. What are some of the other steps? What should people be thinking about themselves? Obviously just because they think they don’t need it, you’ve just explained a scenario where that’s clearly wrong. What else? What are the other steps in the process for someone?
Marc Freedman:
So, we’ll basically contact their vendor. We’ll get electronically from the vendor, what was sold to that business over the last 12 months. Because as you know, when you put things in accounting system, sometimes they don’t necessarily make it to the right column. But we know a vendor knows exactly what they sold you for the last 12 months.
Plus, it comes to us electronically, so when we get it electronically, we can then slice it and dice it as we do, to be able to understand exactly what you’re purchasing, how many you’re purchasing, if it’s a case of something you purchased, how many are in a box? How many boxes are in a case? So down to an each, so we have basically a UPC code that we can now know exactly what you’re buying, and we can then compare it to obviously our data that we have from all the different audits that we’ve done for different types of businesses. We come back to the business and we create what we call a baseline report. It basically says to them, okay, you told us to look at how you’re spending money, buying food, for instance, if it was a restaurant or a country club or something, well, here’s the results.
They then agree that in fact that’s true, that’s what they spent, and that’s the prices they’re getting. Once they do, then we basically go back to the market for them. So meaning one or two things, 90% or 91% of the time we’re able to affect positive change, positive change is a three legged stool for us. Number one, equal product quality or better. Number two, equal service levels or better, or if you’re not getting the right service level, having that conversation with the vendor. And then we look at pricing, because if you can’t get what you want, when you need it, what good is lower prices? Because 91% of the time we’re able to affect positive change like with the existing vendor, no vendor change is necessary. Especially in today’s marketplace, nobody wants to lose a customer.
So, negotiation it’s a great tactic, but once again, we’re not going to negotiate down to the point where they’re not profitable. Because everybody’s got to earn money, you got to pay rent, right? We’re going to do what we believe is fair. And so, knowing what’s fair is what’s important. And so that’s our goal. Our goal is to be fair to the business, fair to the vendor and everybody big kumbaya, and then we get a price reduction and put new pricings. Yeah. You’re saving money, and then we measure that for a period of 24 months on a monthly basis. Should the vendor decide to charge you a price that they didn’t already agree to, of course, we’ll pick that up in our audit because we do that monthly, and we go back to the vendor and say, “Hey, you charged them 36 cents and it was supposed to be 12 cents. Please credit them back.” And we put in our report to the client, saving them the aggravation because most of the times think about it, a couple percent here, a couple percent there, most clients are not even paying attention to that. Right?
But our report’s going to say, “Hey, you’re getting a credit $242 and 83 cents on this purchase that they mispriced their product on. And we’re doing that for our clients. So we give that on a monthly basis, and that helps us also track the delta, right? What you were paying, what you currently are paying, and that’s how we get compensated on a gain share basis. So for every dollar saved, client keeps 50 cents, we get 50 cents for a period of 24 months. That’s how we do it. That’s our secret sauce.
Rob Kosberg:
Obviously, you wrote a book so that, maybe a small business owner could apply some of these principles themselves, and learn how to do it, because I’d love to hear who you work with primarily. I imagine you’re looking at a certain level of revenue that a business has to bring in for this to make sense for your team to work with them. So talk to me about that. Talk to me about who you work with and then, maybe adapt some of what you’re doing for the small business owner that needs to pay attention to these things themselves, but it’s not a good fit for them to work with your company.
Marc Freedman:
Well, one thing that we’re doing for pretty much every business size right now down to 10 employees. So revenue’s not important, is in the CARES Act, they created something called the Employee Retention Credit. That Employee Retention Credit, a lot of people don’t understand it. Matter of fact, most CPAs don’t understand it. We’re working with two CPAs that don’t understand it very well. And the criteria basically there’s three, but we’re only using two of them because they’re both black and white, the third one’s a little gray. But did you have a reduction in revenue of a certain percent in 2020/2021?
Rob Kosberg:
1% approximately.
Marc Freedman:
It’s 25%.
Rob Kosberg:
No, that’s significant.
Marc Freedman:
Then the one that’s more important, which most people qualify under was your business affected by a government shutdown? So think about all the restaurants that were closed, think about all of the entertainment facilities that were closed, you can go on and on and on in all the different restaurants that actually pivoted, you still were affected. You all are able to claim this Employee Retention Credit. So it goes into payroll, it goes into taxes paid, it goes into health benefits paid, if you gave somebody off, family leave for COVID related family illness, if you gave somebody off to go get a COVID vaccination, there’s a credit. So that said, we’re finding tremendous amounts of money for all size businesses.
We had one 14-person business, we got $44,000. They got PPP, so that also has to be credited against what you potentially get for [inaudible 00:11:46] big complication, but the CPAs are doing it. And we another 14 persons company, they got $418,000. Now why the difference? The difference is because the 44,000 recovery with the 14 employees was a lower average salary and the other one happened to be an association, they had higher average salaries. So you can get up to $26,000 per employee for 2020/2021, if you qualify, which is huge dollars.
We got a national franchise pizza chain, almost $3 million, they had 350 employees, a bunch of different locations, they had a bunch of stores. We got them almost $3 million in a recovery on the ERTC. So, there is size doesn’t really matter, but for normal businesses, we’re working with $20 million revenue businesses. Because typically 50% of that is going to be payroll related, meaning belly buttons, right. People that you’re paying, as opposed to things around payroll like, benefits and payroll services and so on and so forth. So that’s $10 million for us to work with. And if we look at a million dollars in our average savings across all categories, about 18%, that’s $180,000 worth of savings for a business that size, is that meaningful? And in most cases it is.
Plus of course, as you already mentioned, we give back 5% of what we get paid to an impact fund, but the business gets to designate where that money goes. That’s how we have fun every day. And really our businesses are all different sizes, shapes, and come from all verticals. Our biggest business is a $2 trillion year business. I’ve been working with them for over six years.
Rob Kosberg:
Two trillion?
Marc Freedman:
The people would say… Two trillion. This is an international Fortune 50 business. And people would say, “Well, why don’t they have people that do what you do?” Well, they do. They still don’t know what market price is or they’re possibly overpaying. Like we saved them $186,000 on their wireless a month.
Rob Kosberg:
Well, it’s such a big business. That makes sense.
Marc Freedman:
But they have over 8,000 employees. Okay. In 8,000 devices and so on and so forth. Then we also found them $2.3 million recovery in overpaid workman’s comp premiums. The bottom line is it’s extremely worthwhile. We have conversations with a lot of different businesses that do qualify, that don’t qualify, we also have an arrangement with a GPO. For those that are below that $20 million level, that don’t qualify for our expense reduction services, where we can put them in with this GPO, where they’ll be able to save, same again about 20, 25% on their costs, and we have a gain share again on that as well, but it’s just straight GPO, be there as long as you want. You can cancel them tomorrow, if you want. You can stay in there for four, five years. Just depends on the client, we’ve got them all over the place.
Rob Kosberg:
Well, I love what you said about the Employee Retention Credit. You’re remind me when this is done, of course, I’ll leave this on the podcast, but I have several people to refer to you. One, a big influencer in the restaurant and bar space. So the Employee Retention Credit, I think would very, very directly help many of his customers, and I don’t know that they know that. They might, but I don’t know. And so I’ll definitely refer you there, I think for anybody who was impacted by the shutdowns, you need to get somebody to look into that, and of course, Marc, will get some links and whatnot at the end of the podcast, where people can get in contact with you and look into that. Because that seems like a no brainer to me and an amazing opportunity, if you were impacted by the shutdowns in some way.
So, thanks for sharing that. Let me ask you about your book. I want to go deep into it in a few minutes, but I want to ask a few things in a general sense, like your client threshold for your general programs at $20 million a year in revenue. That is probably what some people would still consider a small business, but it is probably the 0.04% of all businesses, right, in the world. To reach the eight figure a year, Marc, to reach 20 million a year. Did you write your book just for that individual or is your book really for any business of any size that could learn from it? We’re of course in a few minutes going to get into how you’re using your book and all of that, but first tell me, were you really narrow in your book to that specific customer or did you go a little broader?
Marc Freedman:
No. So I wrote the book to help anybody in business. And in the book each chapter is a different example of a business that we helped save in a specific category. So you’re going to get enough information to be able to think hard about what we’re talking about. Can you do it on your own? Possibly. Will you be as successful as we would be? The answer is not, but then again, I would say, if we save you 18%, you save yourself 9%. Well, you’re actually at the same level, because we’re going to split the savings 50/50.
Long term it’s better, when we’re involved only because we’re doing three-year contracts and you’re probably not going to get that from a vendor. Vendor’s not going to listen to you talk about how you want your pricing fixed for 12 months, 24 months, 36, but for us, they do because they know that’s the way we do business. But that said, the book is written for everybody. Anybody in business can actually glean something from this book that will help them think a little bit more about, how are they managing and monitoring how their business is spending money.
Rob Kosberg:
I think that is a great strategy because you’re helping people that probably, well, in most cases, the vast majority cases are never going to become your client. But you’re helping them, you’re making a difference in their lives. You’re making a difference in their businesses, and the people that potentially will buy that book or read that book that could become your client, you’re helping them, but you’re also showing them, look, in one sense you have nothing to lose to work with you, right? You’re only getting paid, if you’re saving them money and you have this tremendous track record of 91% of the businesses that you’ve worked with that you’re saving money. So I love that. I think that is an absolute, no brainer.
Let’s then pivot to, I think what could help a lot of people that are the authors listening to this podcast, that want to use a book to attract their right client. Look, you attract a big client, that’s doing 20 million year in revenue and that’s your lower threshold. A client is worth, I would imagine six figures or multiple six figures to your company in most cases, an average client. So getting a client for you is pretty significant. How are you using your book to get clients? Any examples you can show me or tell me would be great.
Marc Freedman:
It’s interesting when the book first came out, I wrote the book to help people be better in business. I didn’t really write the book for marketing purposes. As a matter of fact, the publisher that helped me write the book was telling me, “Oh, you got to create funnels and you got to do this.” No, I’m not interested in that. This is an informational piece. And I’m just going to share it with people, and I don’t care if I really get paid. So you’ll see if you go to Amazon that my book is not a very expensively priced book. Number one, I don’t care any money on it. I didn’t write it to make money on it.
I’m trying to educate people and hopefully that will come back, and I’ll give you that example in a second, where it has, first, my $2 trillion a year revenue business that has been a client for six years. I sent the book to the gentleman who we deal with directly, and he also went, “Oh, I didn’t realize you get guys do that stuff too. Okay. So then we got some more business there.”
Rob Kosberg:
Can you give me an idea of what we got some more business means? What did that mean revenue for you, for your company? What does that mean?
Marc Freedman:
It was a seven-figure revenue.
Rob Kosberg:
I’m glad we cleared that up, because, eh, oh, by the way, we got some more business, you got an extra million bucks or more that’s significant.
Marc Freedman:
Then I sent it to a couple partners of mine that really hadn’t referred any business, they’re referral partners, but really hadn’t sent any business. And one of the guys says to me, “Oh wow. You can procure major amounts of paper?” Yeah. “Well, I have this relationship with this printing association, maybe you can help them.” Well, that became again, a multimillion-dollar revenue opportunity. And we’re saving them 25% on what they used to pay. So again, a lot of dollars and because we have a referral business, we’re happy to pay referral fees. So not only is that partner now, who wasn’t engaged is now engaged, plus now he’s sending other business because he was like, “Whoa. Really?” So anyhow, there you have it.
Rob Kosberg:
Now, one of the things that I tell all my clients and anybody that’ll listen is the simplest thing. And oftentimes the most effective thing you can do with your book is one, get it in the hands of your current clients, which is what you did. And two, get it in the hands of potential referral partners, get them two, three, four, five books that they can give out, that they can introduce you. Obviously, one client for you could be worth seven figures or multi seven figures. But for any business, one client here, one client there from your book could be worth 5,000, 10,000, 20,000, who knows what the number is. So I love that you’re doing that, and I hope you’re continuing to do that. Not that you just did that one time.
Marc Freedman:
No, we send books out. I got to stack them here, they go out all the time. And then when we bring on new partners, they get a copy of my book. I sign a copy to them and tell them, make sure they read it to cover to cover. And if they want to get more copies, let me know. I’m happy to send them more copies that they can then send to potential business opportunities [inaudible 00:22:46]. So, it starts to expound upon the opportunity just gets bigger and bigger because of that.
Rob Kosberg:
It’s obviously making a difference in businesses. I love how you’ve used your books. I understand you don’t want to mess with funnels and that kind of thing. You should think of some other things that you could do. You could do direct mail. You could send your book in direct mail to ideal clients of yours, just send a copy, what’s it cost? Three bucks to print and another dollar or two to direct mail it to the right person in a company that’s 20 million, a 100 million, a billion a year in revenue. Just a simple direct mail campaign could be a tremendous way for you to explode that business using your book. Anyway, just a suggestion, take it or leave it. I got a couple of other ideas for you, but-
Marc Freedman:
I appreciate that.
Rob Kosberg:
I love what you’re doing. I do think it’s making a difference. Where can we send people that want to get a copy of your book? Want to learn more about you, maybe want to learn about the… What were the initials again? The…
Marc Freedman:
They can go to expensetoprofit.com. I know there’s a direct link to Amazon to buy the book.
Rob Kosberg:
Employee retention program, is that the…
Marc Freedman:
Well, I was going to say we got a separate website for that, but the book you can either buy the hard copy and that’s discounted down, and then the Kindle version is 99 cents. So if you don’t paper and you want to buy a Kindle version, I’ve got it up there right now for 99 cents for your audience. So, they can go ahead, and like I said, my goal is not to make money on the business is to educate people. On the ERTC program. We’ve got a site called evolvederc.com.
There’s a quick little application that basically tells you whether you qualify. And if you qualify, we’ll get a direct link when that comes in, we’ll basically, confirm a few things ourselves, and then we’ll introduce to one of the CPAs that would handle your project directly.
Rob Kosberg:
Awesome. So expensetoprofit.com. If you want to learn about the ERC program, evolvederc.com. Marc, thanks for being with us. Thanks for sharing your wisdom and your knowledge. I love what you do.
Marc Freedman:
Rob, thank you. I appreciate it.
