Seven Ways to Stop Wasting Money
Carelessness, complacency and failing to ask the right questions of staff and customers has resulted in Australian businesses paying dearly in both time and money.
In any economy and industry, the only two ways to boost a business’ bottom line is either by increasing revenue or decreasing expense. In the recent global credit crises, increasing revenue has proved somewhat of a challenge, so businesses refocused instead on cutting expense.
I have witnessed companies across varying sectors and industries waste their valuable resources following an identical pattern and I have identified the most common seven ways they do this.
Firstly, companies, small and large, seem to be immune to considering alternate methods of doing business that may save them money. The phrase ‘we have always done it that way,’ is costing companies’ money without necessarily adding any value to their bottom line. For example, an airline that took on the suggestion of a flight attendant and stopped serving the lettuce garnish with the passengers’ meals saved over $1.5 million over the course of a year, without making any significant difference to their clients’ experience.
The second most common way that business is costing the economy money is by carelessness during the course of the normal working day.
The cost of wasted materials and the time cost of re-work is a huge factor in most organisations. This can be very simply solved by taking a moment to check that the letterhead is loaded the right way up in the printer before printing multiple copies, for example.
Further to this, companies are not bothering to seek alternative quotes from suppliers, and simply continuing to do business year after year with the same supplier.
Loyalty is important but long term suppliers often become complacent so it is a good use of time to occasionally get a couple of alternative quotes and ask your existing supplier if they can meet those. Be careful not to spend countless hours trying to save a few cents, as your time is also valuable.
Seeking the opinion of both employees and customers is vital to ensuring quality is kept while dollars are saved.
Allow every staff member to realise it is not the boss but the customer who pays their salary, and encourage them to contribute solutions to cost-cutting.
Furthermore, as it is your customers who are keeping you all afloat, get their input as to where you could rather be focusing your time and money to provide them with the best service. For example, do you over service by excess packaging, or by sending clients a 20 page report when they really only need a three page one?
Bureaucracy can often contribute to time and money wasting.
Consider whether you need two people in the meeting, or five or a dozen? It’s not often likely to be the latter and there seems to be an inverse relationship between the number of people present and a successful outcome.
And, finally, the seventh way in which companies waste valuable resources and cost the economy dearly is by refusing to consider eco-friendly solutions, however simple or trivial they may appear.
Eco-friendly is more often than not also economical. I always share a story told to me about 20 years ago by Paul Cotton, the then New Zealand Consul General. He told me that he had never spent a cent on the purchase of paper clips. He said he figured that as many paper clips must come into the office as go out of the office so he insisted that staff remove them, prior to throwing the paper in the bin. Just like my mum often chastised me when I was a child that money doesn’t grow on trees, likewise, paper clips don’t grow on trees!
Tough economic times offer a great incentive to eliminate waste and stimulate value.
Clients of mine who have taken some of my suggestions have reported saving $300,000 or improved productivity by 40 per cent.
- The 7 most expensive words in any organisation are:”We have always done it that way.”
- Avoid re-work. ‘Measure twice - cut once.’
- Ask suppliers to sharpen their pencils and get alternative quotes.
- Ask customers. Listen and learn as perception is reality, and packaging often useless.
- Encourage staff suggestions as part of the solution.
- Bust bureaucracy and eliminate meaningless meetings.
- Eco-friendly can also be economic.
Catherine DeVrye, the Australian Keynote Speaker of the Year 2010, is the author of eight books including the recently released Paperclips Don’t Grow on Trees. She has a wealth of invaluable experience acquired as an executive with IBM globally for a decade, state government and the CEO of a not-for-profit organisation. She is now a small business owner of CDV Management Pty Ltd. For further information visit www.catherinedevrye.com.