Occasionally I encounter businesspeople who dismiss the value of expense reduction analysis without a thought –“I’m great at keeping my costs down,” they say. Most likely, they are great at it, so why should they consider engaging an expense reduction consultant? Here are a few compelling reasons:
A Holistic View of Expense Reduction
A seasoned expense reduction analyst finds cost savings in expense areas that business owners may not have contemplated. Often they identify additional cost reduction opportunities in expense areas that business owners have already optimized. As an example, Simple Business Solutions’ expense reduction analysis studies more than 70 areas of business overhead expense.
Specialized Expense Reduction Knowledge
An experienced cost reduction consultant applies specialized knowledge that many business owners do not possess. For example, they know:
- How to determine whether the costs of a commercial property (building) or leasehold improvements have been allocated to the appropriate depreciation schedule to maximize cash flow
- Which fees in the “Taxes & Surcharges” section of a telephone bill are negotiable because they aren’t actually tax mandated by the government
- Which pricing option delivers the maximum possible savings on credit card processing fees
- How to assess and adjust payment processing procedures to minimize the number of transactions that downgrade to more expensive interchange categories
- Whether waste and recycling container size and pick-up frequencies are optimized to minimize cost
Multiple Expense Reduction Strategies
A comprehensive, thorough expense reduction analysis goes far beyond a simple reverse auction or competitive bidding process. To maximize your benefit, multiple cost reduction strategies should be employed by the consulting firm. Simple’s cost reduction methodology embraces these strategies:
- Process, system or technological improvements
- Behavior modifications
- Correction of billing errors
- Elimination of overcharges and/or unnecessary services
- Rate reductions from current providers
- Savings from alternate providers
Business Owners Have Too Many Important Things to Do
Because other important responsibilities dominate their time, many business owners are unable to perform an expense reduction analysis that is as comprehensive and thorough as one performed by a cost reduction consulting firm. In some instances the cost reduction project is delegated to someone else in the business who does not possess the specialized knowledge of an expense reduction consultant and who simply employs a competitive bidding process.
Additionally, a good expense reduction analyst will coordinate the implementation of the expense reduction recommendations as quickly as possible to improve the client’s cash flow.
Performance Based Compensation
A successful consulting firm will perform your expense reduction analysis on contingency which means the firm is paid only if cost savings are found for the business. Because the expense reduction analyst earns a percentage of the cost savings, the analyst is extremely motivated to identify the maximum possible cost savings. The best thing is: If no expense reduction opportunities are identified, the client owes the consultant absolutely nothing.
See How Much You Can Save
To see if our 73 point expense reduction analysis can increase cash flow for your business, schedule a no cost, no obligation consultation with Simple Business Solutions.