How-To Survive and Thrive Your Business

Cut costs without cutting staff. Make your business lean and green without limiting your ability to grow and to respond to an ever-changing marketplace. Learn to turn your waste into profit, to cut overhead costs, to negotiate the best vendor contracts, to manage maintenance costs, to get the most out of service contracts, and to minimize freight costs. This book will take you through the maze of cost containment step by step.

While cost containment is not as seemingly glamorous as sales or product introductions, cost containment is going to be a primary factor in both profitability and customer satisfaction, during the foreseeable future. Having been overlooked by most firms, the man­agement of all expenses will eventually result in lower cost of prod­uct to customers, increased wages for employees, increased earnings for owners, increased sales, and greater quality of goods and/or ser­vices offered. In fact, whether your support overhead can be traced to facilities maintenance, capital equipment, or supplies, your cost of sales could be reduced by a range of 10% - 50%! Facilities managers and manufacturers should be looking at Total Productive Mainte­nance (TPM) as a means of getting to the 50% level. For almost all firms, profitability could easily dou­ble by paying attention to cost containment.

The 4 W's of Cost Cutting

Why - In an uncertain economy, which presently the United States and the rest of the world are in the midst of, it is difficult to increase sales. Sales are difficult to increase, whether you are a CPA firm or a manufacturer, due to fierce competition and reduced demand. An increase in sales during this sluggish economy can usually be ob­tained only by lowering prices.

As it is difficult to grow the business by increasing sales, a loss of business is likely if prices are raised. You cannot increase prices, be­cause customers can and will go elsewhere to buy. Customers are not loyal to firms, but are very loyal to genuine value and are very price conscious.

Caught between a rock (minimal or no increases in sales or prices) and a hard place (tax increases, health cost increases, wage in­creases, materials increases), your margins are getting slimmer by the month. For many firms, it has become difficult, if not impossible to generate the profits from which to pay rent, taxes, and salaries. Many firms have already done the obvious staff cutting and have no one left who are not vital to the running of the business. These man­agers are faced with an ugly decision of determining which portion of their business they can do without or with less, be it a reduced ac­counting, maintenance, or sales department. That decision must be made with the knowledge that a further erosion in customer satis­faction, sales and/or profit could result. Obviously, the firm will suf­fer from reduced morale and productivity. Further reductions would harm the business.

What - The accurate and timely recording of data, processed into meaningful information, will give managers the proper tools. Cou­pled with the knowledge contained within the concise chapters of this book, the process or result, will be more informed decisions by managers in the area of support expenses.

Where - Cost cutting should be evaluated at every level of a busi­ness. It should start with the top of the organization on down, AND from the bottom of an organization on up. When the profits of a firm are spent unnecessarily, it means that dollars are forever lost and cannot be made available for wages. An incentive plan to save should be introduced. Shared sacrifice should be rewarded, and not merely pocketed by the owners. If employees agree to implement a plan to reduce a popular but unnecessary expenditure, they should be given a percentage of that savings. Incentives yield results. Within an in­centive based environment, friendly competition oftentimes results between departments. A newsletter or other means of communicat­ing the cost-cutting  achievements of others should be utilized. No act should be too trivial to be recognized. Of course, senior man­agers receive more perks and earn more, so they have more to give. Switching from paper cups to a person's cup from home, should re­ceive just as much notice as when the senior manager gives up plants and/or flowers or the company car.

When - The time to act is now. Even if your firm is doing great, everyone, from the temporary staff to the owners of the firm could get used to an increase in income/earnings. Typically, people are reluctant to change anything, until a catastrophic event happens. Then, while putting out organizational fires, these same individuals are too stressed to contemplate any procedural changes.