Real estate profitability webinar. Free educational online real estate seminar by industry leader, Kathleen Teare.
DOWNLOAD! Profitability Teleseminar – May 21, 2008 (Kathleen Teare)
I hear this over and over as I work with companies across the nation. Owners and managers are working and reworking the budget and it still isn’t working. Is that because they are not scrutinizing every single line item for relevance or do they simply not have a grasp on every expense? Could it be they are so used to seeing the same items year after year that they do not even question whether they even need the expense?
I would say it is a combination of all of the above. Let’s take a look at the expense items and see where we can trim. I have never seen a budget or profit and loss statement that cannot be trimmed by at least 15%.
First and foremost put profit into your expenses – you need to be profitable and not accept what is left over. I suggest 5% of your gross profit as a minimum. Next go line item by line item and question every single item as:
- Have to have;
- Like to have; and
- Can do without
An example would be equipment leases. Yes, you have to have equipment but do you have the right equipment and are you getting the best lease or purchase price. Examine your needs, talk with your vendor and negotiate your way to lower costs. If you have several printers/copiers, are you paying too much in overages? If so negotiate a contract for them as a package rather than overages being by individual machine.
When is the last time you negotiated your telephone contracts? Griffin Company Realtors in Springdale, Arkansas recently trimmed $10,000 in annual costs by requesting an audit from the vendor. They had lines they did not need and higher long distance costs because they were still on their original contract of five years ago and agents were now using their cell phones for long distance.
If you provide insurance benefits for your employees, review those costs and switch plans if needed. It may no longer be the “Cadillac” policy but it is insurance.
Review all job descriptions as Coldwell Banker Upchurch Realty in Athens, GA recently did. Many companies are still doing outdated tasks that technology has replaced but no one told anyone to stop doing them. Are you inputting the same data multiple times? Are you getting the most from your software products? You may be able to eliminate or realign a position or two just by utilizing what you already have in place. Small savings here and there can create a major impact on your bottom line.
Finally, spend some time thinking about how you can generate additional revenue streams. More on that in an upcoming column, until then, scrutinize, scrutinize, scrutinize!
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