Money Savers for Your Business

Sometimes the easiest way to make money is not to try. We put so much effort into the making of money that we forget that $1 saved is just as valuable as a $1 earned. In fact, its worth more because we normally only get to keep about $0.10 profit for every dollar earned. If you save $1, you get to keep the whole $1.

To start saving money, you must look at your overhead. That may sound like a no- brainer, but we shall soon discover it’s not as easy as it sounds. To make sure we are all talking about the same thing, let me give you our working definition. Overhead is all expense items that are reoccurring such as rent, salaries, electricity, supplies, etc.

When looking at your overhead, the first mistake is to assume that just because the items have been reoccurring they must continue to reoccur. To be critical about your overhead means you must always question the necessity of each item. I remember when we first started our business; we had a refrigerator in the office. I thought it would be a nice idea to keep soft drinks in it, and I would keep it stocked as a treat for employees. As the company grew, my treat bill began to rise. One day, I discovered I was paying $250-$300 per month so everyone could go in and grab a free Coke anytime they wanted. My generosity put me in a spot. I was now incurring an expense that was growing out of hand, and my employees didn’t want it eliminated. Of course, they didn’t. Even though my monthly bill was more than some of the employees made in a week, it was now somehow their right to have free drinks. We now have a vending machine. Sorry.

Electricity – Electricity is another problem. Not everyone operates at the same temperature. Someone will always be too hot or too cold. The thermostat will constantly be adjusted by anyone who walks by it, and the resulting hot/cold conditions will soon increase sick leave. Constantly, adjusting the thermostat also results in a higher electricity bill because of the stops and the starts. The answer to temperature control is to pick a reasonable temperature, slightly on the cool side because it’s easier to add clothes (or at least more work conducive to keep people more alert). Put a lock on the thermostat, and you keep the key.

Supplies – Office supplies are always a source of management irritation. You want to make sure your staff always has everything they need to do their job. Unfortunately, the needs are open to interpretation. Human nature is such that given the opportunity to buy what they need, your employees’ needs will exceed yours.

After a calendar episode, we adopted a policy that works. Every employee should be given a standard package of office supplies. If they want anything different, they may buy it at their option. Some people do actually upgrade and buy a few personal items, but for most, the standard works well.

What happens when supplies need reordering? They are handled by one person who has the office policy in mind. This person is taught to shop and compare, but there is a time factor that also must be considered. Everyday supplies are accessible, but the quantity is restricted. In other words, if an employee goes to get a pen and several boxes are available, he will take a box. If only one box is available, he will take a pen. Why this self-restricting occurs, I’m not sure. I am suspicious it came from getting our hand slapped when we took too much food from the platter being passed at the dinner table. In any event, it works no matter what the reason.

While it may be common sense to many of you, don’t forget to buy generic. I can assure you, if it’s acceptable to buy generic drugs (and it is in most cases), it’s OK to buy generic office products. You’ll save 25-40 percent.

Business Cards – Everybody wants them, few people need them and the cost is getting out of hand. First, price them carefully. Printing quotes are wildly different. Second, be generous with your salesmen. A good salesman can actually make money by properly giving out his business card to prospects. Your executives will expect them, so you might as well order them. For everyone else, design a generic company card with a place for the employee to sign his own name. Give each employee a small supply, and you have probably solved your business card problems about as inexpensively as you can.

Rent – As if you don’t know, office space isn’t cheap. Unfortunately, most people overpay. The reason is because the landlords tend to know more about leasing than tenants, and they can take advantage of you in a multiplicity of different ways before you even know about it. Some of this is changing. Market considerations have caused high competition among landlords and many have educated tenants by showing them why the current deal they had wasn’t nearly as good as the one the new landlord is offering. Additionally, a new procession of consultants who represent tenants has developed putting the tenant in an equal, if not better, bargaining position than the landlord.

Since rent is such a large portion of overhead, I encourage anyone who is inexperienced in both real estate and negotiation to consider having a broker who works with tenants representing you.

One of my first businesses was forced to combine locations one year because of an economic slow down. The landlord was less than pleased when I broke the news of our departure and attempted to hold me personally liable for the period of the entire lease. Fortunately, I had been careful to make each of my business locations separate companies and had always signed the documents on behalf of the company as a corporate officer. The court ruled in my favor. Many years later, having now been a landlord, I understand his displeasure, but that’s business. What you get is what you bargain for. If you don’t know how to restrict your liability, no one is going to tell you unless you hire someone to represent you. If you don’t know the difference between net rentable square feet and gross rentable, it will cost you thousands of dollars over the term of your lease.

These are just a few of the extremely complicated issues facing you as you select your business space. You will also find that most tenants overestimate their space needs, frequently by as much as 50 percent. This probably can be greatly mitigated by using a space planner who will layout your space ahead of time. Still, a new business will particularly face planning problems because of being unable to determine potential growth as easily as an established company. I would urge you to use the most flexible design possible, using more open space and less individual offices.

Furniture And Equipment – Since I talked about open space design, I thought it important to jump into furniture. There is no question that modular furniture with movable partitions is the most practical furniture for businesses today. It is much easier to expand and contract with the times.

Furniture is a major expense for any company, especially new ones. My suggestion for new companies is that you open with rental furniture and spend time looking for good prices on the type of furniture you want. Because there is great turnover in business, patience is frequently rewarded. If you think new cars drop value when you drive them off the showroom floor, furniture drops even more. If you can find used business furniture, you will get a substantial savings.

The same analogy also applies to equipment. Unfortunately, it is additionally hit by technology changes, which makes today’s wonder, tomorrow’s junk.

Look around for government auctions and warehouse sales. I’ve been to the auctions, and you truly can buy at cents on the dollar. Make sure you take someone with you who knows computers because they mix what they sell, and unless you know what you’re doing, it’s hard to compare apples to apples.

If you aren’t part of a major warehouse discount club, (Costco, Price, Pace, Sam’s, BJs), join one today. The savings are tremendous. In fact, the prices are so good, I know some retailers who buy at these clubs and resell in their own stores. Since anyone can join, I don’t understand why people don’t. You’ll find the savings more than worthwhile.

Printing– This is a personal pet peeve of mine, so I’ll admit it up front. Printers will kill you with their prices. (Sorry printers.)

To begin with, there are a lot of printers out there. If you send something out for a bid, you will get a wide range of prices. There are many printers who are also willing to “buy your business” by giving you very low prices in the beginning to get your business. They know that after a while of checking their prices, you’ll get lulled into satisfaction, and they can begin to raise their prices. Since most printing jobs are slightly different, it is very difficult to notice what’s happening unless you rate compare similar type work over a period of time. For any of you, who may be thinking that this isn’t happening to you, let me suggest that you check your bills. It is done in very subtle ways. For instance, let’s say you normally order 1,000 sheets of stationary but, because your business is picking up, this time you order 1,500. Your printer charges you the same price per piece for the additional 500 sheets. It sounds fair, but it’s not. The incremental cost of the additional 500 sheets is nothing compared to the cost of the first 500. Remember, he had to set up the machine, layout your work, etc. (all those things he told you to justify his price in the first place). Now, all he needs to do is let his press run. His real incremental cost is paper, ink, and the time to run the press.

The best way to handle your printing situation is to continue to check your bills and bid the work out every once in a while just to keep everyone in their toes.

Telephone – Sometimes I think you need a degree in telecommunications just to read your phone bill. The choices are growing, and between both land lines and cell phones it can get very expensive.

At a minimum, you should review your equipment and line charges at least once every six months and adjust what you can. As your business changes, you may not need the extra lines you ordered six months ago. Reviewing your bill specifically for this purpose will keep your needs in focus.

The new trend for office phones is not to have desk phones but use cell phones connected to a land-line system. I’m not there yet in our office, but it will be a growing trend especially for new businesses. Having purchased many desk phones over the years, at a ridiculous price, which soon became obsolete; this will be a good idea to investigate.

Shipping Costs – “FedEx it” has gotten too generic by me and everyone else. They are the best but often the most expensive. SHOP, SHOP, SHOP and make sure you train your staff on how to decide which service to chose. Each shipping carrier has an advantage, but they are different so make sure your staff knows and understands the differences as they apply to your business or you will waste money.

JACK’S RULE: Spend time saving money and you won’t need to make as much.

JW Dicks, Esq. is an attorney, best selling author, entrepreneur and business strategist. He has spent his entire 35-year career building successful businesses for himself and his clients bringing his golden touch to the marketing and sales of over $500 million of products and services. His professional versatility affords him a unique insight into the opportunities available for today’s business owners along with the knowledge of how to structure and position a business to take advantage of them.

He is the senior partner of Dicks & Nanton P.A.: The Business Growth Lawyers™, representing clients in the growth of their business using franchises, area exclusive licensing, coaching, idea licensing, info-marketing, joint ventures, syndications and explosion marketing to accomplish their goals. Jack has worked with a diverse set of clients ranging from an Inc. 500 fastest growing company with sales over $250 Million, public companies, down to a small start up that made fishing lures. He loves the challenge and excitement of them all.

In addition to coaching and consulting with clients nationwide, Jack is also a successful entrepreneur. He has built his own businesses, with annual sales over $35 Million, developed real estate in excess of $200 Million and both created, and sold intellectual property rights for as much as $1.8 Million.

Jack has led national conferences and conventions and has spoken to over 150,000 business leaders on venture capital formation, syndication, investing, and business growth strategies. He is the best-selling author of numerous legal and financial books including the 50 Volume set, How to Start a Corporation and Operate in Any State, Moonlight Investing, The Florida Investor, Mutual Fund Investing Strategies, The Small Business Legal Kit, The 100 best Investments For Your Retirement, Financial CPR, Operation Financial Freedom, and How to Buy and Sell Real Estate .

In addition to his Juris Doctorate degree, Jack holds securities licenses, 22, 7, 65, and 24. He is also a registered securities principal, registered investment advisor, and real estate broker. Although technically proficient in several professions, his clients consider his greatest attributes to be his innate creativity, visionary focus and ability to design and implement multi-layered profit centers for companies and individuals seeking long-term financial growth and protection.

Jack is a graduate of the University of Florida and George Mason College of Law. He is a member of the American Bar Association, NASD, National Association of Realtors, the Florida Bar and the Virginia Bar.

Jack’s business address is Orlando and his play address is at his beach house where he spends as much time as he can with his wife, Linda, of 32 years, two daughters, two son-in-laws, and two Yorkies. His major hobby is fishing although the fish are rumored to be safe.

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