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Saving a Buck or Two

(February 2002) posted on Fri Mar 01, 2002

Identifying ways to conserve cash can quickly become overwhelming and time-consuming for any manager. Combs outlines three methods to save money and ways to balance these tasks with regular job duties to avoid sacrificing the bottom line.


By Terry Combs

As with any longtime manager in the screen-printing industry, I've had my share of experiences in trying to enhance the bottom line by shaving a few dollars from higher up in the business-finance equation. I'm sure there are sales representatives out there who will laugh and tell you I take some kind of sadistic pleasure in working them over for a really great price (a practice I highly recommend). Over the years, I've found that you can accomplish the task of saving a buck or two through three methods: shrewd purchasing, shrewd consumption, and the surgical cutting of corners. And you can accomplish these money-saving measures without stretching other areas of your business too thin. All three methods can work positively for your company by leading to cost savings, or conversely, work negatively against your operation if the cost-saving exercises make you overlook other important job duties. While attempting to save money, you can spend all day looking for better ink prices, comparing shipping rates, calculating film costs, theorizing about production rates as compared to spoilage losses, and so on. It's enough to make you a little crazy, because as soon as you make a choice, someone else is on the phone offering you a new plateful of savings options to digest. While saving money in your various business processes and purchases has to be a part of your mix of tasks, you have to be reasonable about the effort you dedicate to the effort. Below, I outline a few ways to save a buck or two without ignoring your other revenue-generating responsibilities. Purchasing First of all, a "great deal" on any product is not a great deal if the product isn't right for your operation. Anyone who says "White ink is white ink is white ink," doesn't know anything about white ink. Those who have worked on the production floor will tell you that all inks are not created equal, and the same rule applies to emulsions, mesh, automatic presses, etc. Some products may suit your needs far better than others in the same category, so stick with what you know is best. No "better deal" on an inferior product is worth it if it compromises your quality or efficiency. On the other hand, there are some products and services that are, for the most part, interchangeable. The key is identifying which ones fall into this category. I've paid way too much for Pellon strike-off squares, and I've also paid pennies. I decided that for this particular product, I'd go with the penny version. Also, I was paying far too much for far too many business cards, until I discovered I could purchase then online at a cost of only $9.95 per 500 cards. If there are similar products available that fulfill your needs without sacrificing your business goals, then go with lower-price option. When you're locked into one particular product group or service provider because no other product compares in terms of performance, work the best deal you can get. Try using blanket-order commitments to gain quantity discounts or tie in the purchase with other products from the vendor to earn a dollar-volume discount. Additionally, you can price shop for generic products or the name brands that are available from more than one source. Sometimes, vendors outside your area will offer free shipping in exchange for the opportunity to compete with a local vendor for your business. Pick up the phone and call some of those vendors. To keep from going crazy with sales reps and solicitors vying for your business, set a time during the year when you will review new products, prices, and programs. I want to make good purchasing decisions as much as the next guy, but I just don't have the time to stop dead in my tracks and make price comparisons every time someone calls with an offer. This goes for inks as well as health insurance, office supplies, emulsions, long-distance services, and trash pickup. Set aside a few days or week each year during which you will give your full attention and time to studying prices and options. As an added benefit of this approach, you have the wonderful opportunity to say to vendors, "I'll review those prices/products/rates in February. Feel free to send me a quote/sample/proposal at that time." Then just hang up the phone. Vendors will know that this will be their one opportunity to get into your shop, so they'll get their best deals polished up and on the table by then.Terry Combs Consumption The next area to consider relates to the consumables and services you use in your day-to-day operations. Consuming products In the screen-printing industry, we use a wide variety of products. We consume quantities of ink, quantities of film, quantities of screen mesh, and even quantities of coffee in the breakroom. If any of these items are left unchecked, however, our usage can get out of hand. Yet, consider how much more ink an employee would salvage from a used screen if that employee was the one writing the check to pay for the ink. Waste in all areas of business consumption is an important issue to you and your bottom line. Or at least it should be. Communicate this concept to your staff, and reducing product waste will become important to them as well. The attitude of careful consumption comes from the top down, so be aware of the example you set. Consuming services Just as with certain products, we also consume services, including shipping, health insurance packages, maintenance and repair services, and dozens of others. And just as with the leftover ink in the screen, overlooking those questionable incoming toll-free calls and those stacks of overnight packages that go out your the door may be hurting your bottom line. You need to watch out for wasteful spending in this area too. I can't begin to count the number of times that I've questioned a next-day package going to a sales rep, vendor, or customer. The intended recipient may say, "We need it right away," to which I respond, "Do you need it tomorrow, or is it okay to get this package of brochures/order forms/color swatches/letterhead/ samples there by regular mail or ground shipment in two to three days?" Nine times out of ten, the package is not critical at all. A smart buyer spends only a dollar or two whenever possible and keeps $10-plus services, such as next-day delivery, to a minimum. Cutting corners I sat in a budget meeting once, listening to each department make their case for their slice of the annual budget pie. The company was doing well, steadily increasing in sales, with healthy projected increases for the coming year. When it came my turn to discuss the production department (art through shipping), the owner said he had in mind to cut the production payroll budget by 10% the following year. (That budget item fed about 75% of the company staff.) After I gave him my very best perplexed expression, he explained that production payroll was the only place that he could see for us to "cut some corners." He gave no particular reason for the cuts, other than to pad the bottom line. This is a first-hand example of cutting a corner simply for the sake of cutting. Cutting corners can be a good thing, as long as the reductions make reasonable and rational sense. In this last experience, they did not. Before deciding to make a cut, ask yourself, "Do you really need this person, service, or thing to accomplish your task?" From my example above, it was my intention going into the budget meeting to support a 10% increase in production while keeping my payroll number unchanged. In the end, my suggestion provided enough of a corner cut without burdening the department with an arbitrary additional cut. Another good way to cut corners is to take a step back, observe processes in your organization, and question the value each step has in accomplishing the task of selling and producing products. Is there a new and better way to accomplish a task? Can you redesign a process so that it translates into less money out of the company pocket? It's easy to fall into the habit of duplicating processes or procedures that have little value to the final product or that should have been eliminated when other company procedures changed. It's also easy to fall into the habit of buying a higher-value product than is necessary. Do you always need the name brand, or will the generic work just the same? As the owner or manager, you have to be the physician who makes that decision on what cuts to make. This includes looking at what your company is spending money on. I still remember an office manager strolling into my office one day with an armload of freshly purchased supplies. She asked the question, "Do you want one of these?" I answered "no" and then went about my work, only to stop a few minutes later and think, "She just asked me if I wanted it, not if I needed it." I got up from my desk and checked out the office supply cabinets, where I found huge quantities of items that had been purchased apparently for the sole purpose of filling shelf space, rather than filling the needs of the company and staff. In this case, explaining your business objectives to employees one more time might do the trick. Otherwise, it's easy for your staff to become wasteful with company money. Smart savings If you look hard enough, you'll likely find at least 100 opportunities to save a buck in your company right now. Learn to invest some time to explore these money-saving ideas and you may find more available dollars at the bottom of your ledger. Just be certain your decisions won't cost your business a buck or two more in wasted time or resources.


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