5 Tips To Manage Costs And Increase Revenue
Years ago, a wonderfully bright minded man named Thomas Friedman (The World is Flat) stated the most profound thing I have heard in the business world for many years — “Don’t waste this recession!” The lessons that we have learned over the last four years should not be forgotten. They should be used as a forward-thinking blueprint for the next few years to come.
How do we grow our business with the lessons the economy has taught us? Two simple ideas come to mind every time I present for clients and conferences throughout the world: cost management and revenue generation. Here are five solid ideas that you can take to your team and then take to the bank.
- Create a utility/fuel team that has the sole responsibility to identify the cost of utility/fuel usage during each month of the year. Set a goal of a reduction of utility cost by at least 10 percent. Strategize the methods in which the cost savings could take place (time and duration of usage, shutting down certain areas during the down time, managing route and fuel consumption on vehicles) and then look at what the savings would be. Offer a “spiff” or reward for the team if the goal is met. When one of my clients in Virginia did this, they were able to save more than $250,000 over the course of the year in 2012.
- Create a safety team and look at the cost of insurance based on the injury or incidences that occur. Develop a system of rewards for accident-free days; the rewards can escalate for the increased times they can boast an accident-free workplace – from popcorn to pizza to prizes to sharing in the profits: the 4 Ps plan for 30-, 60-, 90- and 120-day increments.
- Set a goal for a particular item in the retail store that we believe will benefit the customer if they were educated about its uses and successes. Challenge the sales team to educate and consult the customer about the particular product and track how successful you are each day, based on previous year at the same time. A client in Maryland offered Soil Moist as a “beat the summer watering costs” benefit for their clients and sold 400% more over the month prior. Don’t ever underestimate the power of a unified and motivated team to deliver on the goal…it works almost every time!
- Offer the scale and scope of your buying opportunities to your local clients. One garden center owner in Phoenix, who would see his landscape contractors come in with tired tools of the trade, suggested he could buy tools at a more affordable price than they were getting at the big box. By taking this simple customer need and figuring out a cost-effective solution, the owner was able to help this customer’s immediate need, but also realize a $30,000 increase in sales from this client, who began buying more plant material from him as well.
- The final idea is a tough one and has to do with labor hours. I am amazed at how many hours of the clock tick by before someone realizes that we should let some folks go for the day. At one client, it added up to over $80,000 of labor that was wasted by not watching the clock. Develop a system where you have a pre-determined time three times a day to review the talent and tasks at hand. As the tasks are reduced, so too should the talent. This one idea is the most successful way you could both manage costs and increase profitability. If you saved 10 hours a week with your staffing over the busy magic 90 days of the season it would amount to 160 hours of saved labor. These labor costs add up fast and will kill any profit that you are working to achieve.