An Easy & Practical Guide to Plugging Financial Leaks

Money leaks are sneaky. They slip out in small & quiet ways that you barely notice.

Over time, those little leaks can drain your account faster than you expect.

Think of your business like a ship. You can have the best sails and the fastest crew, but if you have a tiny hole in the bottom, you’re still going to sink.

These leaks don’t often happen by accident.

How & Why Do Financial Leaks Happen?

We’re not talking about forgotten subscriptions or tiny fees that slipped under your nose. Leaks usually come from confusion, rushed decisions, or power imbalances, where someone else benefits from your loss.

These are some of the most common ways that leaks form in your business.

1. You trust someone, so you don’t sign a contract.

   This is the one of the biggest ways that leaks happen. Without papers, you have no proof to take to law enforcement if anything happens later.

2. A client asks for "just one little extra thing." You say yes because you want to be nice and keep them happy.

   Those "little extras" add up to hours of unpaid work. The client benefits from extra services, and you lose hours of your time… which is money.

3. You rely on a big website (like a marketplace or payment processor) to find clients or get paid.

   It’s sad that this is a source of money leaks, but it’s true. These platforms can freeze your account, hold your money for "verification," or take massive fees because you need them more than they need you.

4. You prepay for supplies, software, or marketing services that never arrive, or are totally useless.

   You sent the money but got nothing back. This is straight-up fraud, but it’s often hidden behind a professional-looking website. They know you won't spend $5,000 to hire a lawyer to get back $1,000.

5. A client tells you that doing this project for little or no money will get you "great exposure" or "portfolio pieces" that will bring you bigger clients later.

   Exposure doesn't pay your rent. They are exploiting your hope for future success to get free labor right now.

6. A client or business partner insists you use their specific vendor or supplier, who charges double the normal price.

   The partner is likely getting a "kickback" (a secret payment) from that vendor for bringing them business.

How To Prevent Financial Leaks Before They Happen

Given the list above, we can see that some ways to stop money leaks are:

• Sign a contract with everyone, including family and friends. Make sure the terms of the contract are clear and protective of you, even in the long run.

• Get paid upfront - never start work without money in your hand. This separates serious clients from people looking to steal your time.

• Do your research and vet partners seriously, even if those partners are people who are close to you.

• Use secure payment tools and platforms that are reputable. Don’t let clients pay you with cash under the table or through shady / inconsistent platforms.

And here is the biggest way to prevent financial leaks:

Draw out the “shape” of your business. Yes literally, with a pen & paper.

Here is an example:

In this example business shape above, we have a triangle.

This business makes money from 1) Youtube, 2) products on their website, and 3) 1:1 coaching sessions. The arrows represent the natural flow of how it makes income.

Customer visits Youtube, which leads them to website, which leads them to 1:1 sessions, which leads them to supplementary Youtube content… etc.

The “$$” signs and arrows are where the opportunity for leaks can happen.

This is what fraudsters look for:

• where does money enter your business?

• how attention / trust flow through your business?

Any of those areas is an opportunity for someone to create a hole in your process. Some examples are:

• a middleman inserting themselves between you and your audience

• clients being redirected to third-party booking or messaging systems you don’t control

• free content being reposted or scraped without credit

Your business shape may look complex. Really visualize what it looks like, and you’ll be able to cover vulnerable areas.

How To Stop Financial Leaks After They Happen

If you realize that you’ve been losing money, don't panic.

Most people don’t catch financial leaks right away because they’re small, gradual, and often framed as “normal.” So don’t feel bad.

Simply follow these steps:

1. Stop the flow.

   Freeze access immediately. Contact your bank or payment processor (like PayPal), and tell them you have a security breach.

2. Change all your passwords immediately.

   Use a password manager (like Bitwarden). Enable 2 factor on all of your accounts.

3. Look at your business shape.

   Find the point in your “shape” where someone else gained access. Where did expectations change? Where did access shift? Where did the rules suddenly get fuzzy? This might mean reviewing contracts, platform terms, payout reports, communication history, etc.

4. Gather evidence and document everything.

   Before you confront anyone, you need proof. Scammers rely on you not having receipts. Here are ways that you can gather evidence:

   1. Take screenshots of emails, chat logs, contract drafts, and invoices.

   2. Download bank statements that show the missing funds.

   3. If an anonymous scammer is emailing you, they have an IP address. This is the "digital address" of their computer. Use a free tool like whatismyipaddress.com to look up the IP address found in the email header.

   4. If they have a website that looks shady, you can use Wayback Machine and enter their URL. This takes a snapshot of their website as it existed in the past, preventing them from deleting evidence of their claims or promises.

   5. Check public records, especially if you’re dealing with another business. You can check your state's Secretary of State website (Business Search) and look up the company name. If they aren't registered, they are likely operating illegally. Look up their name in public court records (like Pacer in the US, or local county court sites) to see if they have been sued for fraud before.

   6. Work with a private investigator.

5. (Use your discretion here: do not to communicate with them directly if it feels dangerous.) If you know who the scammer is, send a firm demand letter that outlines the seriousness of the issue, and demand that they return your funds by a certain deadline. Scammers often rely on silence to continue their activities.

6. Once the evidence has been gathered, you can compile a police report. Even if it was a small loss, reporting helps to:

   1. Build a criminal paper trail - this will both help investigators spot patterns as well as help you build a case, in case the scammer comes back later.

   2. Boost your reputation as a business owner who is willing to fight back. This makes it less likely for the scammer to come back (or spread the word to their scammer network that you’re a great business to siphon off of).