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.

Cutting costs without cutting your throat

Last time we talked about building trust and confidence.
Today we’re going to talk about cutting operating costs.
Here are two field-tested ideas from our Gatlinburg, TN, seminar.
We were at the Park Vista Hotel with the Lakeway Publishers group.
It was exhilarating. They are enthusiastic people with great ideas.
Idea #1: Don’t invite your people to cheat on their mileage reports.
How do you do this? Simply check odometers randomly.
Make sure the odometer readings match their mileage reports.
Our publisher caught one sales person several hundred miles off.
She had given herself a raise by claiming excessive mileage.
If you put temptation in someone's way, they might take it.
Idea #2: Pay them on miles driven, not a standard gas allowance.
A publisher friend asked how to get one of her sales people moving.
He stayed in the office and made calls by phone and on the Internet.
She paid him $200 a month for gas.
No wonder he stayed in the office.
If he didn’t burn gas, he made money.
We advised paying him on miles driven only.
Cut out the allowance and get him off his you-know-what.
Next time we’ll talk about building sales and revenues.
For more cost-saving strategies, click here.