Wake Up and Smell the Coffee:Time to cut back your business spending
The Wake-up Call
Today when I ordered my cup of coffee, I quickly became more alert. No it wasn’t the caffeine rush. It was the fact that today my morning cup of coffee costs 10% more than it did yesterday. Now I can take a lot, but don’t mess with my morning cup of coffee. Needless to say I was on edge at the shop for the rest of the day. Everyone knew my cup of coffee increased in price by 10%! On the positive side this experience caused me to think about an earlier post, Streamline Your Business Spending through Resource Efficiency. My cup of coffee was another warning shot telling me to control costs. So this morning I went on a crusade to combat inflation and reduce costs – after all I have to walk-the-talk.
Your profit margins are already tight, and rising costs don’t help…
First, some might say what inflation? The government tells us inflation isn’t an issue. I guess we are experiencing a different world from the government. In my own little world I have seen double digit price increases in select material costs during the past six months, higher fuel prices, higher food prices, smaller packaging with less volume and general reductions in product quality and service. Yes, things like lower quality and packaging with less volume is inflation even if the price hasn’t change. You are getting less for your money. This is the type of inflation that the government can’t easily quantify, but we all know it when we experience it when our dollars don’t go as far. I can guarantee you that within a few months the government will be talking more about inflation and this type of hidden inflation. Now, here is what happened when I put my words into action and started to fight inflation.
Steps Patrick took to trim back business spending
1. Buying a cup of morning coffee is finished. To make my life easier I will purchase green tea bags and I will use an instant hot pot to make hot tea in my shop each morning.
2. The quality of our lacquer thinner was recently reduced and it was no longer performing adequately. I found a better performing lacquer thinner and I am spending 60% less. That will save a couple of thousands of dollars over a year.
3. Substituted some cabinetry hardware without changing the manufacturer or quality. This will save 50% on these hardware items.
4. Changed my supplier of wood fillers to save money.
5. I upgraded the quality of my phone and internet service and lowered the price.
6. Created new finishes that use less finishing material.
You too can continue to find creative ways to reduce costs
Yes, I have been busy during my crusade. What astonished me is this isn’t the first time that I addressed these issues. These examples demonstrate to me that we always need to be looking at ways to reduce costs. We don’t live in a static world. Times change, circumstance change, products change, new products are created and prices change. Just because we reviewed our costs 12 months ago or even 6 months ago doesn’t mean can stop examining cost control. We cannot control inflation, but we can respond to it. In my examples I found substitutes, innovated by creating new finishes and found new suppliers to help control my expenses. Inflation will be with us until many others wake up and smell the coffee. So, if we want to prosper in this environment we all must strive to control our costs.
CustomMade.com member Patrick Kennedy of Superior Woodcraft is a frequent contributor to the Pro Shop blog. He is interested in hearing about your innovations and methods to control costs. If you would like to contribute articles on the business of woodworking, effective marketing, and tips on transitioning to a professional woodworking career simply comment on this post!