His work is hard to describe. Neil Blanchard, a former engineer of 20 years turned entrepreneur, sat down with me to talk about his new business of “finding hidden profits” in Fargo – and, to be honest, at first I was a little lost.
But finally I ask, “So you’re kind of like a doctor for businesses?” and he nods enthusiastically. “Exactly,” he says.
What Blanchard has developed is an original program that allows him to approach a business, plug in their financial numbers, and unearth what he calls “hidden profits.” In other words, money that’s being wasted through overspending or unawareness. These hidden profits typically run from 7-10% of gross sales, Blanchard said.
“That can be a really big number,” he said.
Blanchard finds that these hidden profits often fall at the hand of three things: employee issues, inventory management, and receivables. A wrong hire, losing a key employee, or a fear of asking others to pay money they owe, can cost business owners hundreds of thousands of dollars, he said.
Since implementing his program, which began under the parent company Advanced Business Solutions LLC (ABS) and is now Profit Pros, Blanchard has been able to successfully recover on average 60% of those lost profits.
“The least I’ve ever been able to recover was about 5k on an 80k company,” he said. “The most was about $750,000, but that was on a much bigger company. It’s all relative.”
The need for affordable consulting
Blanchard first began to recognize a need for this type of consulting during his early years as an entrepreneur. After 20 years as an engineer, he got sick of the cubicle and started his own business. But he quickly realized the lack of support there is for business owners.
“I’m not your typical entrepreneur because I’m not 25 years old,” said Blanchard, who said many of his friends thought his transition to entrepreneurship was an odd choice.
“As I made mistakes, I was reaching out and all I could find were these high-priced consultants who were charging $20-30,000.”
So he started a consultancy company. The endeavor was very successful, growing to a large team of employees with a base of about 5,000 clients. But one thing kept reoccurring. He would begin each session asking the business owners what their main issues were, and then followed-up by fixing those issues. In the process, however, he’d find much deeper problems.
“As I’d dig into their business, I’d always find some underlying things that were going on, some things pretty major. But they [business owners] often didn’t understand what that really meant,” he said. “They would point out the squeaky hinge on the door, but fixing that is really just a band-aid.”
Blanchard was still unsure how to move beyond the band-aid fix when 2008 hit, and everything fell apart for him and his company. His wife decided that was their cue to move back to her hometown of Fargo, ND.
Uncovering the moneypits
This was Blanchard’s fresh start. As he continued to do private consulting, he dove into developing a solution that would uncover those black holes that were sucking away company profits.
“I realized I could quantify and monetize what those issues were,” he said.
He did this by building a program on Excel that would show business owners the hard numbers of what certain aspects of the company were costing them.
He developed features which can process 4 years of historical data, a break-even burn-rate calculator for proving the viability of the business and/or its products and services, coupled with a budget builder feature.
Now, when business owners pointed out different issues, Blanchard could plug in their numbers and say, “Well that only cost you a grand. But this over here cost you $68,000. Why is that?”
“When you start talking real dollars, that gets people’s attention,” Blanchard said.
The more clients he met and worked with, the more he could fine-tune his Excel document so that it pin-pointed the hidden profits. Over the course of 2013 – 2014 and consulting with about 100 different business, what began as a 7 page document became a 30 page document.
Blanchard eventually realized he needed a way to scale his program, and began working with local web development company On Sharp to turn the Excel doc. into an online software subscription service. After 10 long months the program is now complete.
What makes his work different from that of accountants, he said, is that he focuses on the cash-flow and profitability while most accountants focus on meeting the tax preparation, regulations and deadlines. They look at the same numbers, he said, but for two different reasons.
“It’s not glamorous, it’s not like the drones,” Blanchard said. “Numbers aren’t sexy, but the results are amazing.”
As far as growing his company, Blanchard hit every mark on the checklist. He qualified for the TBEG Grant, and he went through all the boot camps at Innovate ND.
He and his business partner Josh Hoper are now releasing Profit Pros as a subscription based service for accounting firms, as well as a software that other private consultants can buy a license to use.
Already, he said, he has consulted with about 100 companies on a referral-based system, and impacted over 1,200 employees.
“What’s interesting with what I do is I’m always learning something new because every business is different,” Blanchard said. “Right now I’m working with a building contractor, the other day was a carpet business. The week before that it was medical It’s so cool, the different elements I get myself into.”
In the next 4-5 years, Blanchard sees Profit Pros impacting over 15,000 businesses and 150,000 employees nationally.
“Those are just projections, but I’m very confident this is going to take off,” he said.
But it’s not all about the big numbers for Blanchard. His sweet spot, he said, is working with smaller companies, like those in the startup scene here in Fargo.
“My focus is to help both startups and businesses,” he said. “When I built this model I wanted to make sure it wasn’t limited to an industry or size of the business. Today we work with everything – I think the smallest was doing $60,000 a year to the largest doing multi-millions with a several hundred employees.”
What caused me to see Blanchard as a startup doctor of sorts, was when he described his consulting process. He first charges a flat fee to go into your business and discover the hidden profits; I imagine a doctor with a stethoscope, checking the cash-flow pulse, the “heartbeat of a business,” as Blanchard described.
Then comes the diagnosis, the prescriptions, the instruction on how to proceed. And, just as a person would, over 70% of these companies schedule annual check-ups with Blanchard to ensure things are still running smoothly, still healthy.
“I’ve yet to find a perfect business,” he said. “If we can catch an issue early on, it’s easier to fix.”
Learn more about Profit Pros, here.
Photos courtesy of Neil Blanchard.