Dan Belanger

When the economy takes a downturn, and markets become more competitive, many businesses look for ways to reduce expenses in order to maintain sustainable service levels and profits. But are you looking in the right place? Maybe not.

Here are some methods to increase income and reduce expenses without dramatic business changes …

Try allocating your staff in the most effective fashion and build on their knowledge base. Ok. So payroll costs are a substantial expense of doing business. It’s been like that for decades. However, placing focus on minimizing payroll often times will come back to haunt you. You lose the good ones for the benefit of your competitor. Take great care in simply adjusting payroll.

For example, if your warehouse operating expense is high, and your income/sales are eroding, consider finding someone in the warehouse that would do a great job in customer service or sales and try them in those areas. Then income may increase while your warehouse expense decreases. Yes I know … cost of sales would increase but we’re talking ideas here. Maybe sales income increases six times more than the cost of sales do. I’m simply saying don’t just take the easy way out. It’s bad for business.

Review your in-house employee mix. I’ve seen companies that have three people in the finance department and one in customer service. Remember that the customer often cares more about what they see rather than the back room activities.

Your customers will always be one of the best ways to increase income and minimize expenses. Contact them on a regular basis and ensure they are pleased with the results of working with you. Ask them how you can help them succeed; don’t just sell to them. Do this with online surveys, phone calls, and face-to-face meetings. Provide training programs for them. Ask them what is most memorable about doing business with you. Customer referrals are gold.

Ask your vendors what you can do to help them. You may find that what you do today has a negative impact on timely delivery of product, and that the vendor is apprehensive about telling you because they fear losing your business.

Contact your vendors and discuss what they can do for you. Setting expectations of your vendors is good business. Monitor the success of those expectations. Keep in contact with all of your suppliers.

Review both your technical (software) and procedural systems. Take action and make adjustments where necessary. Use technology to your advantage. Estimates reveal that a company only uses 30% of their software capabilities and they only use those features that relate to specific job duties. Get some training in the features of the software and be sure to keep up on the new releases. As we say “you only know what you know.”

Spend some time where the work actually takes place. Ask questions of those doing the work. Discuss what could be done to help them do their job more efficiently. You’ll be surprised what you find out.

Keep your second major asset – inventory mix and levels where they should be. Keep your inventory accurate. Work your entire line of credit and not just the top. Be sure and process warranty and returns on a timely basis. We’re talking major interest charges and lost opportunity costs here. Oh, and EVERY storage facility should have some type of bin location system.

Do a noteworthy job managing your third major asset – your facilities. No doubt if your facility is unorganized, it will certainly have a negative impact on timely and accurate shipments. Unorganized facilities impact damaged product levels, safety goals, and overtime hours.

Well the list goes on and on, and not one of these ideas need involve staff reductions and you just might enjoy a positive impact on your sales and expense. Take ownership of what goes on in your business. Drop me a note or call if you would like to discuss.

Wishing you a successful 2011!

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