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Reducing Expenses

I love saving. On hiking trips I tend to hoard my food so that I have more than half for the way out, just in case. Whenever I go to the local Stop & Shop and use my frequent buyer card I love to hear the computer sing out, "Savings!...Two Dollars." OK, I'm cheap! But savings isn't just about putting money in the bank or getting a good deal. It's about insuring that you'll have enough resources when times get tight.

Now that times are tight, what are you doing to maximize your business' savings? In a recent meeting with my Vistage CEO group, I asked them to think about what they're doing and thinking of doing to reduce expenses. The following includes some of the ideas from that discussion.

Wages:

For many businesses, particularly service and creative businesses like software development, salaries are the largest portion of a company's expenses. Many of the CEO's I'm working with are considering freezing salaries, reducing salaries and offering unpaid furloughs. Job vacancies are being left unfilled. They're looking long and hard at certain benefits including 401K matching. They're taking creative measures like seeking out bright interns to give them a big return on a relatively low investment. What are you doing to make sure your wages fit your current and projected levels of demand? How are you engaging your managers in the decision making process about what jobs stay and go?

Process Improvement:

These CEO's keep telling me that they think they're running lean operations during the good times. But they realize all the waste that can build up in a system after periods of rapid growth. Now that the waters have receded some of that waste is easier to see. Some leaders are engaging their teams in an analysis of their processes. They bring together all the people who are connected to a process or its output and flowchart the process on a white board to identify waste. Unnecessary steps, products and even jobs may be eliminated which saves both time, money and sometimes space. Where can you create more efficiency in your processes? Where do you have unnecessary redundancy?

Other ideas:

Have you reviewed your monthly service contracts? How about doing the office cleaning 3 times a week instead of every day or getting it done in house? Has it become a matter of course that the company provides a full spread at work meetings? Consider having the employees do it potluck style or trimming down to just bagels and coffee. What about your lease? Have you sought to renegotiate your lease and rental agreements? Some landlords are agreeing to discounts in exchange for a longer lease or some other bargaining chip. One client recently shared with me that he was able to successfully reduce rent on a building by offering company Red Sox tickets that they weren't able to use anyway. What about energy saving steps? Do you use light motion sensors in the bathrooms or make it a policy for employees to turn off the lights when a space is not in use?

Wrapping Up:

Jim Steen is the Kenyon College swim coach recently featured in a NY Times article. His men's and women's teams have won 47 N.C.A.A Division III titles. As Coach Steen says, "You can approach anything two ways: under a threat or for the challenge." If you challenged your team to save more, what would it do for your bottom line?

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