Firing up your team

Last time we talked about cutting operating costs.
Today we’re going to talk about profit margins and bottom lines.
One strategy we discussed in Gatlinburg last week was this:
Set firm revenue and cost goals for the next quarter and next year.
Lets say you project sales to top $1 million next year.
To turn a 20% profit margin, you must hold costs to $800,000.
Lets say your costs were about $800,000 last year.
Your numbers crunchers project costs will rise 4% to 5% next year.
That means an extra $40,000 in costs cutting into your profits.
You challenge your team to cut costs 10%.
A 10% cut will save $80,000. That’s $40,000 more than needed.
To excite them you offer to share 50% of the savings with everyone.
That creates a pool of $40,000 to be divided equally.
With 20 employees, each would be eligible for a $2,000 bonus.
You get smart and make quarterly cost control goals.
Everyone will get $500 a quarter and not have to wait till year’s end.
Now they’re cutting off unneeded lights and adjusting thermostats.
They’re clustering calls and using the Internet instead of toll calls.
They’re treating office supplies like they paid for them.
They’re even working to reduce health insurance premiums.
That’s what you can do when you get everyone involved.
We’ll talk more about this next time.
Meantime, for help with your costs, click here.