business matters

JIM Denton
L edger Lines

Protecting the Margins is Protecting Your Business

rowing up with penny-pinching

parents who were reared in the
1930s during the Great Depression caused my personal aversion to
bologna sandwiches and Cragmont pop
(Safeways house brand of soda). Although
our vacations were fun and memorable, our
sleeping accommodations were usually in
the car at roadside parks. My mom gave us
bi-weekly haircuts (a really bad idea) and we
usually wore handmade shirts or secondhand items. We werent poor, but I know
what its like to save money. I cant say that
I enjoyed it. But in the end, we went to
college, they had enough money to retire
and my brother and I had experiences to
remember. Lessons learned.
As a business owner, I was thinking
about those times and how they affect my
own habits today. I stand guilty of overspending and overpaying for many things
for no good reason. I also look around
and see how clients run their businesses in
frugal and non-frugal ways. Overspending
is really unhealthy. Overpaying for things is
just not smart. Overspending and overpaying lead to less profit, less stability and
ultimately the demise of our businesses,
our families and our governments. Below
is a list of ideas for better use of time and
money in our businesses. I think some of
them will likely benefit almost any business.
1. Do away with contracted help and utilize
under-productive employees for nonskilled tasks.
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March 2015 | The Business Times

2. For specialized tasks that require formal

training, execute contracts with consultants to avoid the fixed costs of additional high paid employees.
3. Implement an employee cost-saving suggestion plan reward useful suggestions
with 10% of the first years savings.
4. Conduct an energy audit. Install programmable thermostats. Insulate your
structure where needed and stuff cracks
to reduce heating and air conditioning
bills.
5. Create in-house training with knowledgeable employees teaching each other and
younger staff.
6. Review software contracts and eliminate
extra seats/users as necessary.
7. Review charge cards for recurring underutilized services. Eliminate charge cards
altogether.
8. Restructure jobs of less-than-fully-busy
people. Confront the problem of underperformers.
9. Raise sales/revenue goals.
10. Reduce automatic pay increases to less
than two percent. Make substantive
pay increases based on performance
and specific criteria.
11. Buy recycled printer cartridges.
12. Buy used equipment.
13. Raise your deductible on your
insurance.
14. Be reluctant to grant credit. Require
payment when services are due.

15. Seek bids on everything. If you obtain

a lower quote, current suppliers will
usually work with you to come to an acceptable price to retain your business.
16. Trade (barter) excess product or services
for another companys product or
services. Be aware that bartered goods
and services are taxable transactions.
17. Get larger businesses to sponsor your
events in exchange for advertising. Its
usually a good trade for both the small
business and the sponsor.
18. Create a marketing partnership with
another company that has a similar customer base. For example, bridal shops
and wedding photographers can share
ad space and help each other.
19. Reward your profit-makers by spending
more for their profitable behavior. For
example, rewarding bonuses for closing
sales quicker and thereby reducing
overall costs.
20. Instead of catering a meal for employees, have potluck dinners with a theme,
such as Asian, Italian and Mexican.I
just threw the last one in for fun but
you get the picture. I think we all can
work on overspending. I know I can.
JIM DENTON is a CPA and a managing
partner with Arledge & Associates P.C. in Edmond. He may be reached via email at
jim@jmacpas.com.