“A penny saved is a penny earned,” or so goes the old adage. When you think about improving profitability, it may be easy to spot the big ways to cut costs. But if you start looking for smaller cost-cutting measures to cut expenses, you’ll start adding some dollars to your bottom line.
Consider the numbers from 2016 Cost of Doing Business Study (CODB). Every year in this study, NRHA divides home improvement retailing operations into two groups: typical and high-profit. High profit operations are those in the top 25 percent when it comes to net profit before taxes. While these stores have a high profit, they also spend less on operating expenses. What does that tell us? High-profit retailers excel not just at making money, they are also good at spending less.
Here are a few ways to consider cutting a few pennies from your operating expenses without hurting your business. Just be careful not to start chopping money indiscriminately. Take this into consideration: Never compromise store safety, never cut promotions and never cut employee training. You don’t want to compromise customer service if you want to stay in business.
Audit your utilities. More than likely, you only have one option for where you get your utility service, but you can check to see if you are incurring any unnecessary charge or fees. An independent auditor can check your statements and look for ways to save you money. These auditors usually don’t charge a fee, they just ask for a percentage of any savings you get. In some instances, you’ll get a refund from the utility company.
Audit your trash service. If you’ve had the same trash service for many year, make sure the costs haven’t crept up. Shop around to see what others might charge. You may even be able to find a consultant who, similar to the utility consultant, will help you negotiate a better price. Look for one that will do the job for free, only taking a percentage of the savings. Also make sure they work independently of any trash service.
Audit your credit card service. Credit card fees can eat into your profit, so make sure you aren’t paying more than you should. Use your wholesaler markets to shop around and see if you can find a better deal that what you’re currently paying.
Swap out the thermostat. If you still have an old-time thermostat that has to be manually set, or even if you have one that’s programmable, you may be wasting energy dollars. New smart thermostats may cost a bit more upfront, but could pay off in energy savings down the road because they give you more control over the building’s energy use. Also, if you sell smart thermostats in the store, you have a working model to show customers interested in purchasing one.
Train on loss prevention. You can lose a lot of money through retail shrinkage, so train your employees in preventative measures to eliminate potential shoplifting situations. Also brush up on the signs of dishonest employees. Then don’t forget to review store safety with your employees. Maintaining an accident-free workplace not only keeps employees safe, but also keeps your insurance premiums down.
Combine delivery trips. Avoid letting a delivery truck or van go out half full if at all possible. Look for ways to combine delivery trips to save employees’ time as well as fuel. Consider only offering delivery between certain hours of the day so you minimize an employee’s time out of the store and can more easily combine deliveries. Also, make sure employees are plotting out their delivery ahead of time so they get the more efficient route.
Audit your office. Look for small ways to spend less money in the back office. Buy used office furniture. Purchase recycled or generic printer cartridges instead of those straight from the manufacturer. If you’re still using a fax, start using a service that manages faxes online, allowing you to eliminate another piece of office equipment. Ask house account customers if you can send their invoices via email to save postage and paper costs. Pay as many of your bills online, as that saves on postage.