Two dozen small company CEOs who belong to the Virginia Council of CEOs gathered last week to share ideas for cutting costs in their businesses. Here is a summary of the ideas they generated.
It Takes A Village
- Give immediate rewards to employees for cost savings or streamlining processes.
- Incent staff on cost savings and profitability.
- Link paychecks to productivity.
- Ask staff to rethink the steps in everything they do.
- Communicate frequently and openly with staff, placing your business challenges in the context of what they read/hear in the news.
- Three questions to open up dialogue with staff, customers, vendors:
- What should we start doing?
- What should we stop doing?
- What should we keep doing?
- Make a list of things your people can do if things are slow and they have time on their hands.
- Reduce / Reuse / Recycle
Look for Savings
- Telework eliminates overhead. Telework VA provides grants for consulting and hardware.
- Use utility and telecom auditors to find savings and overcharges.Their fee is usually paid out of any savings they find.
- Put out new RFPs for everything you think you can get cheaper – e.g. freight, printing, employee benefits.
- Tighten the belt and cut services that are nice to have, but don’t contribute to the bottom line.
- Consider smart investments in equipment that is more efficient, uses less energy or is cheaper to maintain.
Cash is King
- Work your AR – the squeaky wheel gets paid.
- Use (even suggest) early payment terms to save on purchases.
- Ask your landlord for a break(being a good, stable tenant must be worth something), or consider moving to save overhead.
- Consider not accepting credit cards for some or all business.
- Study your company’s credit cards and eliminate those that charge daily interest.Consider lines of credit if cheaper.
- Tighten discount and return policies.
- Tighten credit terms.
- Fire unprofitable customers.
- Incent your sales staff to collect promptly – reduce commission after 30/60/90 days.Don’t pay commissions at all until bill is paid.
- Court your vendors for coop marketing funds./li>
People Cost A Ton o’ Money
- Measure revenue per head and utilization.
- Consider outsourcing where it makes sense.
- Now is a good time to cut the deadwood.