Four easy fixes for overpriced overhead
By Gordon Hecht, YSN Contributor
Happy New Year and welcome to 2022!
I generally offer recommendations on how to generate more sales (aka income). Here’s some ways you can keep more dollars on those sales (aka earnings).
In our retail world money is generated from sales, but the net profit is earned from efficient operations and the way you monitor your expenses. Many of those costs are difficult to modify, such as occupancy or payments on equipment. Every business, however, has expenses that when uncontrolled can become like termites and gnats — bothersome and prone to eating your profits a nibble at a time.
The good news is that it only takes a small amount of time to make changes that can bring big savings today and for the balance of this new year.
At home it only takes 12 gallons of regular to fill up our Screaming Yellow Zonker. Since we only buy about two tanks of gas a month it’s not a big deal if I spend an extra nickel a gallon to refuel at the closest service station. In fact, it would be a waste of money to drive five miles to save that nickel.
But it’s not the same with your delivery and service trucks. They are driven 40,000 to 60,000 miles a year, often topping out at 12 miles a gallon. That comes out to as much as 5,000 gallons of gas.
In five minutes you can sign up for a fuel price app like Gas Buddy or the app from your favorite gasoline brand and monitor local prices to combine convenience with cost. In my neck of the woods there’s a range of 14 cents between the lowest and highest price, all within a five-mile radius. That equates to $700 extra earnings in 2022. Insist your drivers fill up at the end of every day at the low-cost station to always have a full tank and never overpay.
The 2 Percent Solution
It doesn’t seem like a lot but that 2 percent rate that gets deducted from customer credit card payments adds up quickly. Few people pay by cash or check and are more likely to whip out the plastic when it comes time to settle up at the register. Smaller retailers can easily take $400,000 annually in credit card transactions and mid-size shops are collecting more than $1 million.
Based on those amounts, you can see that a reduction of even one-eighth of a point can earn you a lot. Figure $500 a year at the lower end and $1,250 or more in the middle.
Comparing bank card processing vendors can seem like an awesome and time-consuming task. Candidly, I’d rather read 50 volumes of IKEA assembly directions than one bank card statement.
Instead, seek out an expert review. Companies like BrandSource partner Heartland Payment Systems and Benchmark Payment Systems can review your processing costs and help you seek out a program that simply puts more money in your bank account. In less that 15 minutes you can upload a few monthly statements, and they do the rest. And should there be a better solution, it’s another 15 minutes to change to a new supplier.
Brighter, Cooler, Cheaper
No, it’s not Superman’s new slogan, but it is the effect of changing to LED lighting fixtures in your shop. LEDs radiate a soft white light that helps your merchandise look its best. Additionally, LEDs don’t emit anything close to the heat generated by incandescent bulbs, thereby reducing summer HVAC costs. And the LED bulbs or tubes will outlast traditional lighting by three times or more, meaning less replacement costs and labor.
You might be thinking, “Sure, I want to reduce energy costs and earn more, but it must cost an arm and a leg to change over.” Well, you don’t need to remove an appendage to save some dough. Power suppliers are willing to help you make the change, and will even cover part of the costs through rebates or grants.
A 20-minute call (five minutes of pushing phone buttons to get the right department, 12 minutes on hold, and a three-minute conversation) will get you started. Many power companies offer a free onsite audit and make it super easy to get the rebates. I have heard of shops converting to LEDs for as low as a dime per square foot and reaping the power savings from day one.
Your power bill will drop around $100 a month, and even with a $500 investment in fixtures, you’ll net out with $700 more net profit next New Year’s Eve.
Can You Hear Me Now?
You’ve heard that the price of technology drops over time, and the time is now to review your mobile phone program, especially if you’re spending $50 a month or more per line.
Prepaid mobile plans are a great place to start. They offer easy transfer, allowing you to keep your current phone and phone number(s); their charges include all fees and taxes; and you are always on a month-to-month basis. Most prepaid providers (MVNOs) either piggyback their service on a major cellular carrier or are operated by one, so you’ll still be using Verizon, AT&T or T-Mobile towers. Choose Cricket (AT&T), Boost Mobile (DISH Network) or Metro (T-Mobile) and you’ll be south of $40 per line for services more unlimited than a Golden Corral on “Kid’s Eat Free” night.
If you are in the 50-year-old-plus category, check out AARP’s Consumer Cellular, where $38 a month will get you more data than you can use. Budget plans start at under $20. Walmart and Target also offer some great deals in their stores.
You can normally change providers in about 30 minutes online or in a local retail outlet. Store personnel can import your contacts and pictures while you wait an extra 15 minutes.
Reducing costs by $12/month on a four-phone plan will earn you almost an extra $600 for your one-hour time investment.
Many things can’t be controlled, like in-store foot traffic, competitive brands, shopping promotions, and my desire for Dreyer’s Moose Tracks ice cream. But make it a point to find the four hours it takes to trim the costs you can control.
In 2022 it’s not how much you make that counts; it’s how much you earn.
Gordon Hecht is a business growth and development consultant to the retail home furnishings industry and a regular contributor to YSN. You can reach him at Gordon.Hecht@aol.com.