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Monday Mornings with Madison

MADISON COMMERCIAL REAL ESTATE SERVICES MADISON COMMERCIAL REAL ESTATE SERVICES
#114


BE ‘BUSINESS FRUGAL’

Given the economy, there is scarcely a business that can afford not to be ‘business frugal.’  That is the term I use to describe a heightened awareness and control of unnecessary costs and expenses at work… even more than usual.  ‘Business frugal’ means finding ways to save on cell phone bills, eliminate waste of office supplies and postage, reduce courier costs, and a myriad of other strategies that, combined, can save companies a lot of money each month.  The best managers are always ‘business frugal’.  Here are six strategies that can help you be more ‘business frugal.’

1.  Reduce cell phone overage charges
Is your monthly mobile-phone bill high enough without having to worrying about overage charges — those incurred by exceeding your allotted minutes?  By subscribing to Overmyminutes.com, you can be alerted via e-mail and/or text message when you are approaching your minute limit, thus preventing unwelcome surprises when your bill arrives.  Obviously you can check your own account to find out how much gabtime you have left for the month — but you must remember to do that. OverMyMinutes.com is a set-it-and-forget-it solution, a kind of gal-Friday for minute monitoring.  Accounts are free.  Configure a few settings, and presto, you’re all set. There’s no software to install — unless you elect to use the new OverMyMinutes Alerter iPhone app, which enables you to create an account and configure alert settings right on your device. The app has the added advantage of reporting text-message usage as well as minutes: alerts arrive as you hit “five texts left” and then “one text left.” (Thankfully, any text-message alerts you receive come by way of the app itself, so they don’t subtract from your available number.) The only hitch is that you have to provide your carrier username and password. OverMyMinutes swears total privacy and protection, but that requirement may not sit well with some.  But if you routinely exceed your monthly minutes (or come close), OverMyMinutes.com is a money-saving, no-brainer.

2.  Cut supply expenses
During a major downturn, businesses can save cash by spending down inventories of supplies.  If an item is recognized as inventory on the balance sheet, cutting into inventory will not result in an expense saving, since this will just reduce an asset the next time supplies are inventoried. It will save cash, however, and this generally the most important goal.  If the supply is expensed when purchased, using up excess stock will reduce both general ledger expense and cash outflow.

3.  Cut back on sales and seminar travel expenses
Cutting education / training may be a negative in the long run, but surviving to make the long run may require cutbacks. Alternatives such as webinars and distance presentations may prove to be more efficient and equally valuable.  Services like Adobe’s Connect Pro or Go To Webinar allow companies to have webinars at a minimal cost per month. 

  1. Go To Webinar allows companies to do as many webinars as desired in a month with up to 1000 participants in each seminar for $99 per month.  The webinar allows all participants to view the host’s online, on-screen presentation and dial in to get live audio. 
  2. Adobe’s Connect Pro offers a similar service for unlimited webinars for up to 100 participants including both an on-screen presentation and a web-cam with live video feed of the presenter, as well as live audio.  The cost is $55 per month. 

There are other vendors who offer similar, competitive programs.  Webinar services also can be used for sales presentations.  Webinars minimize travel expenses while exponentially leveraging the company’s best sales talent. 

4.  Use e-mail instead of postage when possible
The U.S. Postal price increased to 44 cents for a one-ounce, first-class stamp.  This is the sixth increase since 2001, during which rates have gone up over 25%.  Combine that with increases in the cost of paper, envelopes, ink and printing, and most companies are learning that doing business through postage mail is far more costly than e-mail.  Move company newsletters, trade publications and sales catalogs that you know clients will want to see/read to digital distribution or online.  This not only cuts costs but is also environmentally friendly.  In order for this strategy to work, though, you need to have a strong CRM (Customer Relationship Management) system and a clean, well-maintained database of all contacts. 

5.  Cut back on postage in other ways
Given the rising cost of postage referenced above, savings on postage throughout a year can be substantial.  For things you must mail, postage costs can be reduced in several key ways.

  1. Clean your database of undeliverable addresses, and update your mailing list regularly. You can do this in-house or get help through software and companies providing list-maintenance services.
  2. Ensure your mail reaches the correct destinations. Bar codes and addresses including ZIP+4 codes help.
  3. Choose 20- or 24-pound stock over heavyweight paper, Tyvek envelopes over manila, and certain sizes of envelopes to save.
  4. Take advantage of U.S. Postal Service options that especially benefit businesses, such as bulk mail and online postage.
  5. Try postcard mailings – they're cheaper than letters.
  6. For large mailings (10,000+ pieces at one time), use a mailhouse.  Though you are paying for the service, a mailhouse can bundle and sort mail to get the best postal rates, which can save, um well, a bundle.

6.  Reduce the cost of printed materials

  1. On fairly traditional projects such as postcards, business cards and letterhead, shop online for printers that offer highly competitive pricing because they are located in parts of the country where the cost of overhead is lower. 
  2. Always get three bids on every job you are going to print.  Why?  If you may have a company that you love, trust and always does a great job and gives you the most competitive rates, getting three quotes will ensure they continue to do so.  Most of the time, though, printers quote highly competitive rates when to land an account and then increase prices after they’ve established a relationship and built a rapport.  Just remember to compare apples to apples when getting quotes.  You don’t want to compare digital printing with offset, or 60 lb. paper with 100 lb. card stock. 
  3. Simply by ordering larger quantities of printed materials like forms and letterhead less frequently, you can take advantage of a printer's bulk discount.

7.  Reduce other expenses
Short-term savings can be achieved by cutting other non-necessary items.  For example, anything that is bought from vendors outside the company should be questioned. If a service can be brought inhouse using current staff, employees are better utilized and expenses reduced.   Also, by using one vendor for office supplies rather than three, the company could place larger orders and pay less.

Of course, being ‘business frugal’ can go too far.  The goal is to cut overhead expenses without sacrificing inventory, daily necessities, employees and – perhaps most importantly - image.  For instance, don’t reduce the quality of the paper stock for your brochures if image is key to your business.  Heavy card stock, spot varnishes, die cuts and other printing touches can really differentiate a brochure and help a company stand out from the competition.  On the other hand, if your clients are never going to choose your company over a competitor by looking at your brochure, then don’t spend the money to have one with too many bells and whistles.  Weigh your company’s brand and priorities against possible savings and decide when it makes sense to cut costs.

QUOTE OF THE WEEK

"Without frugality none can be rich, and with it very few would be poor." Samuel Johnson

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