EVERY DOLLAR SAVED IS A DOLLAR OF PROFIT!
By Marc Gilenson
Managing Editor
The past 5 years have seen rapid growth and good times in South Florida. The housing boom has meant plenty of disposable income. Consumers have been buying everything and the companies that sold all these goods have seen record profits. Now that the housing market is slowing down and people are looking for where their disposable income is going to come from, there is a potential for a recession in 2007.
Corporate America has already identified that times will get tougher in the next year. They are:
Ø buying back in anticipation of decreased earnings
Ø investing in technology that reduces the need for knowledge workers (entry level and mid-level) in anticipation of increased payroll costs for these workers
Ø looking to move to a more virtual workforce reducing the cost of real estate
Ø searching our vendors that provide commodities for less
Ø communicating more with existing customers, increasing their revenue per customer
Ø focusing on their more profitable customers
Ø merging to maximize operations
Ø merging to acquire new clients
Ø outsourcing non-core functions
This is not a gloom and doom forecast for South Florida Entrepreneurs. In every downturn there is opportunity! That’s right! The opportunity to look at your company’s operating costs, sales costs, marketing costs, payroll costs, technology investments and unprofitable customers. Every Entrepreneur overlooks these costs during times of revenue growth. Successful Entrepreneurs are dialed into their marketplace enough to realize when things are about to change, and Entrepreneurs love change and the challenge it brings.
What’s The Entrepreneur To Do?
It’s time for Entrepreneurs to look internally at their current business processes in order to reduce costs and increase profits. Corporate America will inevitably lessen their customer service, decrease quality, worsen the customer experience in their attempts to reduce costs and increase profitability. This is where the Entrepreneur can capitalize on the coming recession. They can reduce costs and increase profitability while maintaining or even increasing their service, quality and customer experience.
The following are some ways that South Florida Entrepreneurs are reducing costs while increasing profits:
Ø Outsourcing what is not your core business is easier than you think, and you don’t even have to use a foreign company to achieve great cost savings. Myriam Cohen, President and Founder of Equilibrix says “our customers love the fact that we do all the data entry, tracking, design and delivery of their e-mail based marketing plans for much less than they can do it themselves.” Equilibrix is a South Florida based company helping over 100 South Florida entrepreneurs sell more to their existing customers and generate new customers for less.
Ø Scanning and imaging technology that reduces the need for expensive real estate to house file cabinets. This same technology can increase customer service by making document retrieval taking seconds versus hours or even days. From a few hundred dollars to a few thousand dollars, entrepreneurs can implement a digital document process that can save thousands of dollars in real estate costs, labor costs, and supplies cost, all the while increasing customer service through quicker response time.
Ø There are few commodities that can offer more immediate savings than “toner”. Office supplies, copiers, printers, office furniture all offer small or one time savings. Only “toner” is the commodity that keeps on saving. Bob Hagen, President of TonerBob.com, has spent the last two years helping South Florida Entrepreneurs’ save thousands of dollars on their toner expense. A recent study conducted by Toner Bob found that the average business in South Florida can save anywhere from $30 to $500 a month on their toner expense.
Ø Nothing is sacred! Look at everything, even those processes that seem to be working well. During times of plenty, Entrepreneurs will justify not making a money saving change with the old adage “if it ain’t broke don’t fix it.” A perfect example of this is credit card processing, where you can get a potential saving of 5% or more with the card service company doing all the transition work for you.
Ø Branding is the development of a consistent logo, look and feel that can be used for all your marketing material. According to Nancy Suchoff, President and Marketing Concierge of Suchoff Marketing, “branding allows Entrepreneurs to save money through the use of “Shells” for their marketing materials, while increasing recognition of their company logo.” All great products and services have a recognizable brand, and during a tough economic time if your brand stands for quality and value, it can make the difference between maintaining your profits or going out of business.
Ø Turning used capacity into savings through the use of Barter. Entrepreneurs have thousands of dollars of unused capacity or excess inventory that they can use to generate barter dollars that will then pay for products or services they currently pay cash for. Scott Davidson, one of the top brokers for ITEX, an international barter company, has access to thousands of companies that provide products and services on barter. Everything from restaurants to car repair can be purchased with barter dollars.
Ø Eliminating unsuccessful marketing. There is an old saying that “50% of marketing is not effective,” however most Entrepreneurs don’t know which 50%. Tracking results is not difficult, it just takes time and commitment. The potential savings can be huge. Mybizuniverse.com lists a series of workshops designed to help Entrepreneurs identify what is working and what marketing dollars can be saved.
The Top Three Benefits
Even though the benefits of reducing costs and increasing profits are obvious, I would like to review a few:
Ø Each of the dollars saved by using the above techniques are bottom line dollars. This means that every dollar you save is a dollar of additional profit
Ø To keep your business running during tough times
Ø Even if the projected recession does not arrive, you will have a stronger, more efficient and profitable company
