The fastest way to significantly impact your company's bottom line profitability is not to generate more revenue; it's to cut costs. If I was to provide you with a magic formula, I would say there are 10 ways to cut costs and boost your bottom line:
1. Negotiate everything. Always try to get a lower price. When you positively cannot get the price any lower, ask for freebees.
2. Eliminate small, needless expenses. It's easy to blow $5 or $10 without thinking about it. The biggest culprit; office supplies. Make sure that your employees get everything they need, but not everything they want.
3. Pay your bills on time. Delaying payment only aggravates vendors, plus by paying on time, you avoid finance charges and late fees.
4. Beware of expense accounts. It's one thing to take a customer out for dinner; it's another to spend $1,000 doing it. Set limits so your employees know their boundaries. Note than many companies today don't permit reimbursement of alcoholic beverages.
5. Cut down on mistakes. Lawsuits, refunds, missed deadlines, reprints and angry customers can result in high cost and lost revenue.
6. Plan ahead. When you plan in advance, you achieve savings. You spend less on overnight shipping, rush charges, expensive last minute plane tickets, overpriced hotel rooms, etc.
7. Do it yourself! Sometimes, it's much less expensive for your company to do a task that you would normally outsource. However, you must weigh the pros and cons. I'm a firm believer in outsourcing anything that you're not good at.
8. Create a budget. It's amazing how many companies still don't use a budget.
9. Spend where it counts. Did you know that it can cost 10 times as much money (and time) to get a new customer than it would to keep the one you have?
10. Look out for rising prices. Whether it be a fuel supplier, office supplier, or any vendor; keep reviewing the invoices. Tell your suppliers to always let you know when prices change. Have your accounting team put flags in place for all major products you buy so you know if they increase dramatically.
Whether you run one truck or 10 thousand trucks, you need to focus on the fundamentals.
Andy Ahern is owner of Ahern and Associates, Phoenix, Ariz., and provides consulting in the areas of trucking acquisitions, transportation management and logistics mergers.