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Newsletter
Profits Weekly
- Free Newsletter
Energize your profits with
a list of valuable
Cost
Reduction and Profit Improvement ideas
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And claim your FREE Cost
Reduction Report
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The
top 5 cost reduction tactics used during
the current economic downturn
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Plus 22 effective
strategies used by client companies for
cost reduction and profit improvement to increase their bottom
line profits
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See what other successful
companies have done.
Here are five sample issues of our
FREE Profits Weekly Newsletter
worth over $440,000
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$95,000
Savings
Space is an asset
until it is no longer producing adequate income. Then it becomes an
anchor on profits. Remember that the costs of using space go far
beyond rent, lease payments, mortgages, taxes and utilities. Here
are four steps to take to see if you can reduce your space costs:
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Dig deep and
find out what the true cost of ownership is for every space you
have.
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Review how
productive each space is for your business. How much revenue
does it support or generate? Retail space is usually
measured in revenue per unit space (e.g. $/square foot).
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Ask yourself
what would happen if we reduced or eliminated this space?
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Once you know
the answers to #3, see if you can eliminate the space, reduce the
space or put it to other productive uses.
One of our
clients that did this reduced costs by $95,000 per year and then
sold an entire building for a significant profit. |
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$85,000
Savings
A typical office
may have anywhere from 4 to 20 different types and brands of paper
in its inventory at any one time. This may not seem to be a
significant issue but paper costs anywhere from $0.006 (low-end
standard copy paper) to $1.00 (fancy letterhead) or more per sheet
when all costs are included.
An analysis for
one organization found that the lack of standardized purchasing
allowed them to spend about $85,000 each year in extra costs just
for copy paper. We conducted the analysis in this manner:
-Examine
purchasing invoices for copy paper
-Tabulate the
costs paid for each quantity
-Calculate the
savings possible if the lowest cost supplier had been used
The
recommendations were to centralize purchasing decisions and to
communicate standardized purchasing procedures to those people who
managed the paper inventories at dispersed locations.
The analysis did
not determine how much could have been saved if less paper had been
used but the qualitative judgment was that the savings could have
exceeded the purchasing savings. |
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$150,000 - $900,000 Savings
How much money
are you losing by giving interest free loans to your customers -
$150,000 to $900,000 per year? This is a valid target for cost
reduction and profit improvement.
Take a quick look
at the accounts receivable line on your balance sheet. What is that
amount? Now look at the line item(s) on your financial reports that
capture your interest payments. Do the math to calculate what your
borrowing costs are to carry the amount you are loaning to your
customers.
Two
companies I worked with, for example, were able to take steps to
recapture $150,000 and $900,000 per year respectively by being more
aggressive with accounts receivable, more selective with credit
limits and by monitoring and managing cash as a “business” within
the business. |
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Reconcile now or pay $600,000
A local law
office reported that they lost well over $600,000 to embezzlement by
their bookkeeper over a 5 year period. The perpetrator was caught,
convicted and sentenced to jail for up to 4 years and to pay
restitution of $400 per month for 16 years ($76,800).
There are two
primary reasons for reconciling your bank accounts every time a
statement comes out.
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The
reconciliation allows you to maintain the accuracy of your
accounting records and those of the bank. The sooner an error is
caught, the easier it is to correct.
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A bank
reconciliation is an opportunity to detect fraud and theft.
Either of these
reasons should be adequate so don’t let reconciliations fall through
the cracks. Small businesses with small accounting departments are
especially vulnerable to fraud and theft so it is wise to use this
powerful and inexpensive tool. Oh yes, it is absolutely necessary
that someone you trust do the reconciliations. |
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Cycle
time savings $110,000
Measuring the
time that repetitive operations take from start to finish (cycle
time) gives you the opportunity to make better use of time. One
business, for example, examined the time it took for customer
service to process orders and found that by making several process
improvements they could reduce their headcount and save $110,000 per
year.
Another business
looked at cycle times and found that they could run a number of
operations concurrently rather than sequentially and were able to
increase productivity and revenues significantly.
It doesn’t matter
if you are making pizza or processing an order. Cycle time
information is fundamental to understanding the capacity and
throughput of any manufacturing or business operation.
Time is money.
Time is opportunity gained or lost. Reference “Instant
Profits: Making Your Business Pay” which contains examples of
how to apply cycle time and time lines for business improvement. |
While everyone else around you is lighting
candles, electrify your profits with the speed of thought. Our
one and two-day
Power Idea Sessions are
guaranteed to mine your intellectual potential and drive maximum
profits straight to the bottom line...beyond cost reduction.
How do your cost reduction and profit improvement
initiatives stack up against the the best? Try the
profit evaluations? Are you
ready for the recession? Here are
business strategies for a recession
or business slowdown you can use today.
Cost Reduction and Profit
Improvement Secrets: Sixteen myths, secrets and pieces
of insider’s information about cost reduction and profit improvement
that will help you succeed in maximizing your profits.
For experts only:
Internal company cost
reduction and profit improvement experts and leaders
-
For established
Business consultants only who are interested in expanding their cost
reduction and profit improvement practice
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A world-class profit improvement initiative is as much about building as
it is about cutting. |
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