Monday, November 3, 2008

Cut Costs

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.
Posted by Scot McRoberts at 5:11 pm

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