Rem Oculee, the Founder and CEO of Confidence Wealth Management, outlines the often-overlooked issue of Phantom Losses, explains what they are, how to find them, and how to motivate yourself to fix them.
What are Phantom Losses?
You’ve now learned about the product, the infrastructure, and the conversation, all central parts of the Exit Mindset and your company’s success. Still, there’s another vital piece to the puzzle that you haven’t considered: Phantom Losses.
These are the revenues that you could be realistically making, but aren’t, because you haven’t yet decided to put in the effort. Whenever you can improve your company’s profits but don’t, you are experiencing Phantom Losses.
Why are they important?
You might be thinking, “How can I lose what I never had in the first place? Why should I care if I’m still making noticeable profits?” Rem created a perfect example that answers these questions.
Imagine that someone standing in front of you asks to see a chunk of your revenue. You say “Sure” and hand it to that person. But then they throw that money into a fireplace. Obviously, you’re going to have the reasonable reaction of asking them why they did that and accusing them of losing their mind. You’re watching your money burn right in front of you, and you’re upset about it.
That’s what’s happening with Phantom Losses. Just less visibly.
You wouldn’t want to watch pieces of your profits go up in smoke in front of you, so why turn a blind eye to Phantom Losses? That’s why Rem’s handing you a fire extinguisher, because it’s a recurring factor in all facets of your business and affects all three principles of the Exit Mindset.
You might have this fantastic idea to create a second product that would increase your profits, but instead of putting in the time and effort to create it, you choose to focus on something less important or less tied to increasing revenue.
Or maybe you’ve figured out a more optimized version of your infrastructure that would increase your yield and work-life balance, but you don’t implement it. Or you’ve got this perfect marketing tactic that’s just sitting in your back pocket and waiting to be shown to customers, but it just sits there.
All of these are the same issue and take away from your revenue in different areas of your business. That’s why Phantom Losses are so essential to understand and eradicate.
Obviously, with Phantom Losses, we’re not talking about a start-up having the potential of making $300 billion in its first month. That’s not realistic. You’ve got to base Phantom Losses on the reasonable, correct amount of revenue that you could generate with your current company and its resources.
How do you find them?
Phantom Losses are just that, issues that aren’t glaringly obvious. That’s why so many businesses suffer from them. Because how are you supposed to see the profits never made? But your resources to solve these problems are right in front of you because no one else knows your company the way you do.
Fixing Phantom Losses is as simple as taking your current business understanding and experiences, leaning into those brilliant ideas that get lost in excuses and distractions, and not being afraid to take risks.
Action is everything.
You have ideas come to you all the time. “Oh, what if I sent out this advertisement?” “What if I made a version of my product in this color?” Or “I wonder how this would work if my company trained employees this way?”
All of these could be saving graces for your business, but if you never attempt to implement any of them, you’ll never know the improvements they’ll cause.
Sometimes these ideas will come from mentally dissecting your company. Looking at it from a top-down view and seeing where there are gaps. And while doing this, you might come across an idea that makes you uncomfortable or feel risky. But progress never comes from being safe.
If you laid down and never got up again because gravity felt too overwhelming, you’d never be able to go down the street, let alone run a marathon.
Excuses, we’ve all got them.
We’re all busy. As a business owner, you’re aware of this more than anyone. You have tons of pieces moving at once, and a colossal pile of things to do today. That’s why it’s easy to get caught up in issues that are less vital and make excuses for why you haven’t removed the factors creating Phantom Losses. And that’s why it’s essential to prioritize and use your valuable time properly.
One of the major reasons why these excuses take over your time is because you want to get everything completed yourself. It’s your company, right? Your baby and your livelihood. But it’s not the only way to get things done. Spending every moment of your time doing all the little things your company needs might feel like productivity, but that’s not entirely true.
Many business owners often fall into this and forget that there’s another option. Write a check. Get someone else to do the little things for you. That way, you can focus on solving those big-picture issues, and not get bogged down by the low-level priorities.
Optimize your time by writing checks and delegating. Sacrifice the need to do everything yourself. You’ll optimize the way your company works, save yourself the headache and stress of focusing on too much at once, and be able to solve the underlying issues of Phantom Losses.
Act like the owner.
Not only do you want to optimize your business and earn what you deserve, but as the owner of a company, you also have a responsibility to everyone you do business with, including vendors, customers, and employees.
You have to step in and change things that need to be changed, even if there is resistance and hesitance. Change can be scary and nerve-wracking, but it’s necessary to improve, and you know what’s best for your company.
Once you’ve discovered these Phantom Losses and fixed them, your company will work better and improve everyone’s lives. It’s your responsibility to guarantee that as much as you possibly can. But no one is going to make these hard decisions for you.
Think Like a Buyer
Whether you want to optimize your company and your work-life balance, or your goal is to build the most optimized company and see it go for the highest profit, you have to think like a buyer would. That’s exactly why Rem’s created the Exit Mindset for you, and why it’s vital to eliminate these Phantom Losses now. It’s all about having the correct lenses and perspectives to look through when dissecting your business.
A buyer would see the minimized Phantom Losses and the maximized profits and want it. They’ll offer you precisely what it’s worth, and reward you for all of the time and effort you’ve put into it because it’s a good investment.
Even if you don’t decide to sell your business, consider all of this work as a future investment.
Everyone Experiences It
Don’t think you’re alone in having Phantom Losses in your company. It’s a natural and easy trap to fall into, and everyone has done it in the past, even Rem. That’s why he knows how important it is to eliminate them from your business, and why he wants to help you learn from his mistakes.
The vital lesson here is that you need to take action today and put in the effort to earn what you deserve from your company. That’s what’s going to be the difference between you and every other business owner out there. So why waste time and throw more money away?
You have the skills and knowledge to start fixing your company today. Don’t let your reservations hold you back.