30 easy ways to cut costs without cutting service

Jan. 16, 2009
It’s impossible to save your way to prosperity. It’s dangerous to even try since it creates an atmosphere of scarcity. Instead of looking for opportunity, you start defending against loss, practically guaranteeing it.

It’s impossible to save your way to prosperity. It’s dangerous to even try since it creates an atmosphere of scarcity. Instead of looking for opportunity, you start defending against loss, practically guaranteeing it.

Nevertheless, when your costs rise and your customers act frightened, it’s not bad to patch a few profit leaks. In truth, you should patch profit leaks in good times as well as bad. It’s like weeding your garden. It requires constant attention.

Just make sure you don’t cut back on the fertilizer. Don’t cut your marketing. Don’t cut your sales force. Don’t cut your moneymakers. In fact, when sales are hard to find, you should invest more in finding sales.

Based on a Service Roundtable checklist of 129 simple ways contractors can boost the bottom line without changing the top line was referenced to prepare this list of 30 easy ways to cut costs without cutting service. Some suggestions you will already do. Some may not apply. Yet others will.

Some of the suggestions hold the potential for significant savings, while the savings from others are minor. Yet, while some may not account for much in isolation, the cumulative impact can be significant.

Review the suggestions listed here. Choose those you want to implement. Then, assign someone with the task of implementation. Do not assign anyone more than one task at a time. Pick the most important and assign it. Once it’s complete, assign the next task.

The practices outlined here are wise to follow in good times or bad. Yet, it sometimes takes a challenging economic environment to spur action in these areas.

If economic circumstance is prompting you to act, be sure that you make reasoned cost reductions. Never cut in a panic. If your business is off due to a sluggish economy, it’s important to remain calm. Though sales may be temporarily off the normal pace, you can recover. If, however, you take a slash and burn approach you are likely cause damage that will take years to repair. Act rationally and strategically.

1. Pricing
Do not let your pricing get out of date. Review your pricing semi-annually, if not quarterly and adjust your flat rate books. It is not an expense to spend a few thousand that pays back a multiple in less than a month.

2. Lighting
Switch to compact fluorescent light bulbs where appropriate, as incandescent bulbs burn out.

3. Occupancy Sensors
Install switch plate occupancy sensors.

4. HVAC Tune-Up
Practice what you preach. Tune-up your building’s heating and air conditioning system. You really can cut utility expense when your HVAC system is well maintained.

5. Setback Thermostats
Use a building automation system or setback thermostats to reduce energy usage when the building is unoccupied.

6. Dye Test Toilets
Dye test your toilets and repair any water leaks.

7. Low Flow
Replace old toilets with ultra low flow models.

8. Lease To Conserve Cash
Lease major equipment like jetters and sewer cameras.

9. Pay Early
See if you can get a discount for paying early (e.g., 2% for payment in 10 days).

10. Eliminate Unnecessary Charges
Assign someone to review telephone, credit card, merchant services, and bank statements each month to look for unnecessary or mistaken charges.

11. Cut Inventory
See inventory as piles of cash. Minimize the cash laying around the shop and in your trucks. Return it to your suppliers.

12. Get Cash Back
Use a credit card that offers cash back for all payments, and pay the credit card on time.

13. Maintain Vehicles
Make sure all company vehicles receive an oil change every 3,000 miles, a tune-up every 30,000 miles, and that tires are checked weekly.

14. Defensive Driving
Require and pay for all employees who drive company vehicles to take a defensive driving annually. Many insurers will reduce your auto premiums by 10% if a defensive driving course has been completed in the previous year.

15. Don’t Pay For Idle Vehicles
If a vehicle will be idle for a period of several months and you do not want to sell it, park it, remove the tags, and cancel the insurance. Be sure to return or redistribute the truck stock.

16. Sweep Account
Arrange for a “sweep” account with your bank, where funds above a preset amount are “swept” from your checking account into an interest bearing account.

17. Yellow Pages
If you are not in the first three positions, reduce your Yellow Pages presence and increase your Internet search engine marketing.

18. Reduce Property Taxes
If you own your building, ask a real estate agent to pull “comps” on commercial property and contest your annual real estate tax valuation.

19. Barter
Barter your services with other small businesses. Create a barter agreement and year-end settlement statement.

20. Craig’s List
Use Craig’s List to reduce classified advertising costs for new hires.

21. Incentive Pay
Switch as much compensation as possible from wages and salary to commissions and incentives.

22. Dispatch From Home
Dispatch to the first job from the field service person’s home. Make sure field personnel do not do any pre-planning (including planning the travel route) from home before the first call or you are liable for the individual’s pay for planning and travel time.

23. Incentivize Dispatch
Offer dispatchers an incentive inversely related to service mileage.

24. Free Software
When possible and practical, use free or low-cost public domain or open source software, such as Open Office.

25. Return Warranty Parts
Return any warranty parts lying around the shop because the paperwork is incomplete.

26. Replace Postage With Email
Use email or fax instead of mail when feasible.

27. Cross Market
Reduce direct marketing expense by cross marketing with other service companies to split the cost of printing and mailing.

28. Reduce Windshield Time
Reduce you marketing radius by concentrating your marketing within a five-mile radius of your shop or a 10-mile diameter of your community with the most attractive demographics. This increases the effectiveness of your marketing and reduces travel time and mileage.

29. Recycle Copy & Printer Paper
Use the back of copier or printer paper for notes. Take the paper to a copy center to have to have it cut in quarters and padded.

30. Sell Advertising
If your suppliers spend money on national consumer advertising, ask those suppliers to advertise in your consumer newsletter.

Matt Michel is the CEO of the Service Roundtable. To subscribe to his free marketing newsletter, visit www.ComancheMarketing.com. To learn more about the Service Roundtable, visit www.ServiceRoundtable.com. To contact Matt direct, email [email protected] or call his mobile at 214/995-8889.

About the Author

Matt Michel | Chief Executive Officer

Matt Michel is CEO of the Service Roundtable (ServiceRoundtable.com). The Service Roundtable is an organization founded to help contractors improve their sales, marketing, operations, and profitability. The Service Nation Alliance is a part of this overall organization.

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