www'richmondscore'org

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• First Friday Forum
• Cost-SavingToday
• February 6, 2009

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Your Speaker

• Michael McDermott
• Volunteer Richmond SCORE
• Principal, Enterprise Tune-Up, LLC
• Expertise in profit improvement,
• productivity improvement, LEAN/Six
• Sigma for service companies.

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SCORE

• Service Corps Of Retired Executives
• A volunteer organization dedicated to helping
  emerging and existing small businesses.
• The nearly 400 chapters nationwide are partially
  funded through a grant from the U.S. Small
  Business Administration.
• SCORE counselors are retired or actively employed
  experienced business executives and technical
  experts, some from major Fortune 500 companies,
  or successful small business owners. They agree
  to work under high ethical principles without
  compensation.

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SCORE Services

• Monthly How to Start a Small Business and
  periodic
• specialty workshops
• Practical Mini-Workshops on a range of small
  business
• issues
• Unlimited free one-on-one counseling
• Email counseling
• Veterans assistance
• Referral to business information on the Internet
  and
• elsewhere
• A valuable source for local networking contacts
• Mentoring from sage professionals with decades
  of real-
• world experience.

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Cost Reduction
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How To Start with Cost Reduction

• Use the 80/20 Rule (Pareto Principle).
  Chances are that 20 of your expenses are
  responsible for 80 of your cost. Make a
  detailed list of ALL expenses and break budget
  items down into specifics. For example, break
  office supplies and transportation and
  shipping down into their smallest components.
  Sort them from largest at the top to smallest
  on the bottom and work on reducing the top 20.

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Cost Reduction Tips

• Make sure that the owner approves ALL expenses
  and signs all checks.
• Try to negotiate better terms with banks,
  vendors. Ask for longer pay terms volume
  discounts. Shop around for a bank with better
  business rates and fees. There are reports that
  some credit card companies are lowering rates if
  you just call and ask them to.
• Take advantage of interest-bearing checking
  accounts.
• Get lines of credit at two different banks before
  you need the funds. Shop for rates and terms. If
  the bank threatens to stop your line for lack of
  use, draw on your line and put it into a savings
  account at another bank.

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Cost Reduction Tips

• Try renegotiating a lease ask for downward
  rental adjustments. Your landlord may be better
  off reducing your rent than trying to find
  another tenant. It cant hurt to ask owners are
  MUCH more flexible now.
• Sublease unused office or other space.
• Accept credit card payments from customers.
  There is a fee from the credit card company
  (typically 2-5) but, on the plus side, your
  cash flow improves and it may result in the
  addition of customers who didnt use you before.
  More people use credit cards in a recession.
• Consider borrowing against the cash-surrender
  values of life insurance policies. Check with
  your insurance broker.
• Interest rates are WAY DOWN. Refinance
  outstanding loans or consolidate loans to obtain
  a lower interest rate.

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Cost Reduction Tips (cont)

• Join a barter network. There is a fee to join
  and research them before joining. (Some have been
  investigated for fraud.) You must report bartered
  goods as income. The good news your tax
  liabilityparticularly if you do a lot of
  barteringis lower since the fair market value of
  bartered goods is usually less. You may get some
  inventory turnover or use some of your available
  services time. There are two in Richmond
• BancMarc www.bancmarc.com
• James River Trade Exchange www.jamesrivertrade.c
  om

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Cost Reduction Tips (cont)

• Sell idle assets, inventory, machinery, displays,
  etc. using craigslist.com, auctions.yahoo.com
  and ebay.com and to buy inexpensively. Get over
  it the value of anything is what someone will
  pay for it TODAY not how much you paid for it
  six months ago or how much you sold it for two
  weeks ago. Remember that youre paying interest
  every month on the money you borrowed to buy the
  materials and keep it in inventory.
• Printer ink and copier toner cartridges. Save 50
  to 75 off the price of brand new cartridges by
  using re-filled ink cartridges available online
  and a local company will pick-up deliver
  refilled doug.hendrickson_at_rapidrefillink.net
• Consider converting from a weekly payroll
  schedule to semi-monthly or every two weeks. Give
  employees PLENTY of notice.

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Cost Reduction Tips (cont)

• Save on postage and delivery by using email. For
  large email files as attachments, check out
  services such as yousendit.com, mailbigfile.com,
  dropbox.com. Digital and emailed contracts are
  generally binding as long as the recipient
  provides some sort of electronic signature (which
  can be as informal as simply typing their name).
• Earn points from loyalty programs. Credit card
  companies (whether issuer or merchant accounts)
  commonly offer discounts and bonuses based on
  customer loyalty. This may include frequent flyer
  miles, discounts on hotels and rent-a-cars, and
  program points redeemable for office supplies or
  other merchandise.

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Cost Reduction Tips (cont)

• Shipping the U.S. Postal Service offers
  flat-rate shipping to everywhere in the domestic
  U.S. if you use their flat-rate envelopes or
  flat-rate boxes. As long as your items fit
  inside, you pay one price for shipping whether
  it's going across the state or across the
  country--plus you get the boxes and envelopes
  free. This can be especially valuable for
  shipping small but heavy items.
• Check your postal scale 9 pennies should show
  one ounce.
• Join your trade and industry associations they
  offer many cost-saving deals from rental cars to
  office supplies to insurance. In addition these
  organizations may provide you with information
  regarding inventory and profit ratios within your
  industryan important way to track your success.
  Retail Merchants Association!

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Cost Reduction Tips (cont)

• Watch employee theft. Lock up supplies if
  necessary, develop a sign-out system. Establish
  an anonymous feedback system to allow honest
  employees to alert you to dishonest employees.
  Shrinkage is one of the top reasons for profit
  slippage in retail operations.
• Cut your long distance and telephone charges.
  Look into Internet telephone services such as
  Skype or Vonage that allow you to communicate
  nationally and internationally at a fraction of
  normal telephone rates by calling over the
  Internet. Double check that you are getting the
  best value on your phone service with a FREE,
  no-strings-attached, telecommunications
  evaluation from Telepath 804-339-3532,
  jspacek63_at_gmail.com, www.telepathinc.com
• Call suppliers or customers on their 800 numbers.

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Cost Reduction Tips (cont)

• Consider adjusting business hours to meet
  customer demand (open Sunday Noon- 4pm?)
• Start an incentive program or paid Suggestion
  Program for ideas on how to save money/time,
  increase productivity, increase customer
  satisfaction.
• Lease rather than purchase vehicles and real
  estate. For vehicles, consider a Terminal Rental
  Adjustment Clause (TRAC) lease that guarantees
  your business a certain residual price for the
  vehicle when the lease expires. This is the most
  common type of lease for business owners who want
  the option of buying the vehicle for a
  pre-determined price at the end of the
  lease.ALWAYS read the contract fine print!
• Cancel insurance on vehicles and equipment not in
  use

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SCORE Counseling

• Cost-savings ALONE may give you a 20
  improvement, at best. If you are smart enough to
  attend this forum, then you could benefit from a
  complete review of your business tactics and
  strategy.
• You can request FREE one-to-one business
  counseling sessions at
• www.richmondscore.org
• which can be held at
• The SCORE office in downtown Richmond
• Another location more convenient to you and
  your counselor such as libraries, Hispanic C of
  C, Goochland C of C, Barnes Noble and other
  bookstores, Starbucks, Panera Bread, etc
• Online

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Chapter 12 Richmond,VA
2004 National Chapter of the Year
Federal Building ? 400 North 8th Street ? Suite
1150 P.O. Box 10126 ? Richmond, Virginia ?
23240-0126 Website www.richmondscore.org E-mail
info_at_richmondscore.org Tel [phone], ext 131