American Express OPEN Forum

Follow:

Highlights:

Employee Management
Money
Social Media
See More
- Topics
  - The World
  - Technology
  - Money
  - Marketing
  - Managing
  - Lifestyle
  - Innovation
- Features
Search

Search OPEN Forum

Search OPEN Forum

Learning to Cut to Win

Shira Levine Contributing writer and columnist, Business Insider Recent Posts

0 Comment

Tumblr
Email

June 30, 2009

OPEN Forum Message

Business Forecasting 2012

Our special feature on forecasting sheds light on how to choose the right model, offers advice from Jack Stack and more.

Get started

Be the first to comment on this article

If only everyone had cut out all the excessive crap back in 2006 when it might have mattered. Since most small businesses didn’t, many have streamlined and are quickly learning how to tighten things up without going under. The bottom line: every business still in business has discovered that keeping things in-house, local, and renegotiating and communicating offline with clients and vendors has helped cut corners in this trying economy. The old fashioned “it can’t hurt to ask” doesn’t hurt after all.
Keep Miscellaneous Costs Down
Ken Nye, the owner of the three Manhattan Ninth Street Espressos can’t do anything about the cost of his coffee or the specialized equipment used without compromising the quality, so he reached out to his vendors and strategized with them on costs cutting methods. He switched paper good brands and bought miscellaneous necessities in bulk. “I got a better deal by buying in larger quantities and then warehousing the products.” Asking to pay in 15-day increments vs. the 30-day terms helped too. Cash on delivery was yet another incentive that brought prices down. Nye has also spoken with his landlord about negotiating his lease. He’s also vigilant about waste.

Building contractor Nobert Akas of NOA Construction Group LLC hasn’t seen his material costs go down in price. “Metal and other materials have all gone up. What we can cut on is when a client wants something of a certain brand. Then we’ll suggest a lesser-known name for the same product.” Akas has strategized how to do things faster to keep labor costs down. He’s got his timing down to the T-square. “Typically I’d drop samples or papers off in person to a client, but FedEx is cheaper. Now I have my time and I cut gas costs.”

Offer Alternatives and Incentives
Dairy was a big cost for Nye. He exclusively used organic milk. Rather than raise coffee prices he introduced conventional milk and now charges extra to those loyal to organic. “Less people drink organic,” admits Nye. Without compromising the integrity of his original concept, Nye finally broke down to provide free wifi for customers and brought in local baked goods for added variety and more business.

Don’t Outsource
Nye has a staff of 20 and besides himself has his employees trained to do in-house technical support. He uses all local carpenters, plumbers and electricians only when needed, and he has asked and gotten reduced rates with all. “We’re very self-contained. We’re certified in all of our equipment brands as technicians. We don’t have to hire people.”

And he hasn’t had to fire people either. “Instead do laying people off I asked if people were willing to work less hours --maybe 5 hours -- and then I spread schedules out evenly,” says Nye, who recently added healthcare benefits for his employees. “That way they hold onto their job.”

Akas found he now dedicates more time to project management vs. business management. “I had to cut pay about 15% last year,” said Akas, whose company employs four other people. “Toward the end of last year I put myself on payroll, and by January 2009 I took myself off.”

Freelance commercial and editorial photographer, Francine Daveta switched to in-house too. She stopped renting photo equipment from a rental shop and now rents from her fully equipped and lower cost assistant. “He’s already coming on the shoot with me so he gets extra money and I don’t have to pay a delivery fee,” says Daveta. If the gear isn’t too heavy, she’ll forgo a cab for the subway. “If it’s easy on time and my back, then I’ll take the subway.”

“The recession for me was a great wakeup call for where I got lazy,” says Nye. “The reality is it made me take a closer looks at how I run my stores. As a result, I’ve tightened things up.”