We’ve talked about this before.
There are three ways to create more profit for your business:
Increase gross revenue, reduce costs of goods sold including labor, and reduce other expenses.
Today’s focus is on the latter way, expense reduction.
I like to think about what motivated me to put together my e-book, “7 Hidden Sources of Money in Your Business” and what comes to mind is that most of the juicy money-saving goodness is found in this strategy anyway.
You don’t want to scrimp and pinch where you need specific services to provide the best possible outcome for your client, but at the same time waste and bloat will drag you down like a leaky canoe.
Spoiler alert: Software as a Service (SaaS) will kill you if you aren’t diligent, because the billing is recurring in most cases. You end up paying for something monthly you’re no longer using if you don’t audit that occasionally.
What Were They Thinking?
I’m writing about this today because of a phenomenon my wife and I have had happen more than once, and it’s bizarre to the point of hilarity.
Have you ever actually tracked a package day-by-day to follow its progress from origin point to destination on FedEx.
Sorry/not sorry, FedEx. The case for libel can only be made if I speak falsely in print.
The story you are about to hear is true, and the names have NOT been changed.
To protect the unwary.
Most recently I bought a box of carb-replacement gels from a company that makes them in the most delicious apple-cinnamon flavor.
For those of you that don’t run distances, this is a small foil pouch you tear the top off of while running, and suck a thick flavored goo-like substance out of to fuel your body. They’re generally 90 or 100 calories, and they’re a staple of a successful half- or full marathon.
I love this one brand because they don’t use sugar or glucose, and also because they taste like a little shot of apple pie without the crust.
I have to buy about 70 of them to beat shipping costs, so they come in a cubical box about 7 inches a side.
Generally, by FedEx.
So…Whitefish is north of Missoula, a town I am familiar with even though I’ve never been to Hammer Gel headquarters, and I live on the Front Range of Colorado.
Down whatever highway up there to I-90, I-90 to I-25 and boom, Colorado Springs.
So why, two days after my purchase, are they in Nashville, Tennessee?
What were they thinking about?
That has to add at least an additional 1,000 miles of fuel and driving labor charges to the shipment, and it’s on them because Hammer Gel has already paid whatever it costs.
This is logistical bloat, it defies common sense, and it is avoidable.
Any “explanation” the dispatch department could possibly conceive of? I can’t imagine it sounding like anything other than a poor excuse.
To pile on the bad publicity (sorry/not sorry), this happens more often than not with them.
The Lesson in All of This
This next part is going to be slap on the forehead “I coulda had a V-8” obvious.
Don’t be like FedEx.
Transparency in financial reporting, in a successful business operation, needs to go beyond the Sarbanes-Oxley Act guidelines mandated in a post-Enron world.
And it’s not just for publicly traded companies, either.
I can’t help but think about who the knucklehead is in these wasteful situations whose job it is monitor and supervise the supply chain.
These guys are global, and this has to be adding up to millions of dollars.
At the more human level, where we small and mid-sized businesses live and move and have our being, a lot of little things may be adding up to costing you the value of real tangible money you could be spending on yourself and your family instead.
Are you paying somebody time to shop for something on the ground that a V.A. could be getting for you online?
Driving out of the way for supplies that are available somewhere closer?
How about leaving a Facebook ad running without having tracked its performance for several days?
Come on, there are two types of entrepreneurs out there. Those that have done this, and those that haven’t yet.
Logistics can be the difference between a nice hotel and a motel with huge spaces under the street-facing doors on your next vacation.
Common sense logistics matter, people. Count on it.
And if you’re interested in knowing how a holistic level of metrics and proactivity can change your business world for the better…?