Sequester Your Way to Profitability
First, let me admit that this headline was to get your attention. I really don’t think either our federal government or business owners can “sequester” their way to profitability. However, I do believe there is a lesson to be learned from all of the political wrangling in Washington. We need action, not just talk, if we are to solve deficits—whether it’s the national debt or a profit deficit in our firms.
So how does this relate to our business and profitability? For the purpose of this discussion, I am going to assume that you are doing everything humanly possible to increase sales/revenue. I know that may be way overreaching, but bear with me here so I can make a point. The point is that I am willing to assume that in most firms in our industry, there is always room to “sequester” more money out of expenses; more than we think and are willing to take action to fix. We need action or occasionally “campaigns” to pay attention to the issue.
Here is my challenge to you: “Sequester your firm” by going on a campaign to reduce variable expenses by 5 to 10 percent before mid-year. As a legal term, sequestration means the seizure of property for creditors or the state. For our purpose, we will define it as seizing control of our expenses to increase profitability for the stakeholders.
Challenge yourself and your managers (if you are a large firm) by setting your own timetable deadline and goal for expense reduction. Remember, I said that we are assuming that you are doing all in your power to increase sales/revenue. Moreover, you can’t “legislate” your way to a revenue increase. There can be another time to go on a rant for launching a sales campaign. Stay with me here, and use your management talents to “sequester your way to increased profitability.” Here is my favorite list, not necessarily in order of importance:
- Take out a chair. If a staff member leaves, don’t replace them. If necessary, fire someone.
- Eliminate overtime unless preapproved.
- Send hourly workers home early during slow times. There is no guaranteed 40-hour week anymore.
- Get rid of Starbucks. Mountain-grown is good enough at the coffee machine. (So, I am nitpicking, it’s necessary sometimes.)
- Renegotiate your lease if you rent in exchange for a new and longer term. Look into buying while real estate is depressed.
- Turn out the lights when not in use, and replace with energy saving bulbs.
- Challenge your paper and other suppliers to find a way to lower cost of materials.
- Turn down the thermostat by a degree or two. Buy sweaters, if necessary.
- Track spoilage/reruns and give incentives for reduction/savings.
- Trade in the delivery van(s) for more fuel efficient smaller one(s).
- Set the example. Sell the Mercedes if you park it out front, and buy a cheap pick-up like Sam Walton drove.
- And so on. In other words, make up your own list.
Set your own “sequester” and have some fun with it. We all get too serious as managers, and if we create some fun around serious issues, they can become more manageable.
Carl and his wife, Judy, owned and operated their own successful Allegra franchise for nearly 20 years before selling the $2.3 million operation in 2003. He is a PrintImage International/NAQP Honorary Lifetime Member and was inducted into NAPL’s prestigious Soderstrom Society in 2010 in recognition of his contribution to the industry.