Lessons Learned Five – How To Value A Company

Valuing your business is much more complex than you want it to be.  You want me tell you to “take your forecasted revenues and multiply them by 0.3 and add $100,000” or some easy rule of thumb.  I wish it was that easy.  Here’s the biggest problem – your business is uniquely individual.     Even if you have the 800th Pizza Goober franchise in your town, it’s still operated by you – an individual.  You have cared for it better than your peers.  It’s in a better location than your peers.  You’ve operated it at far less debt.  Your employees and customers are insanely loyal.  You are next to a high tech company that buys pizzas for its employees for lunch constantly, creating windfall lunch traffic for your Pizza Goober restaurant.  Whatever the reason, it’s just not as easy as tossing out a quick number.

In God We Trust, All Others Please Bring Data

There is an inordinate amount of research that goes into valuing your business.  Your appraiser will do a thorough study of the economy in general, the local economy of your business, as well as the industry you belong in.  That’s just the start.  You appraiser is going to input and review 3-5 years of performance data for your company and create a forecast that goes out a number of years.  Your appraiser is going to read all your legal documents.  He/she is going to absorb an insane amount of information about your company.  All that research and number-crunching takes time and experience.  You want your valuation expert to be able to sort through all the data and make a value conclusion that is objective and fair.  Too much is riding on the outcome of your business valuation, you should demand the best.

There Are Almost As Many Ways of Valuing Your Business as There Are Kardashians

There are tons of ways to value your company.  There is book value, net book value, adjusted book value, liquidation value, guideline public company method, direct market data method, discounted future cash flows method, capitalization of earnings method, and the excess earnings method.  There are controlling interests, non-controlling interests, discounts and premiums.  It is important for you and your business that you hire an appraiser that knows which methods are the right methods for your business.

Do You Want A Little Number or a Big Number?

I worked with an accountant who, every time you asked him for a number, he would ask, “Do you want a little number or a big number?”  There is, indeed, a fair amount of subjectivity in the valuation of your business.  However, any business appraiser worth his/her salt, even though he/she might be able to guess at how high a valuation you are looking for given the reason for the valuation, will approach your valuation with complete objectivity.  Telling a client that the company he thinks is worth millions is actually worth a handful of beans is tough, but it is why you should seek out a certified professional.  Knowing the real value of your business gives you some real leverage in planning future steps.

Pick a Certified Business Appraiser That You Like

From experience, I can tell you that there a lot of really great business valuation professionals who do really good work.  I recommend a certified business appraiser because they have been put through a pretty daunting certification process.  I also recommend you pick someone you like working with.  You will be discussing your business and your philosophies in intimate detail with your business appraiser.  You will tell him/her things you may not tell your spouse or the IRS or your accountant.  It’s an intimate process.  Find an appraiser who you think is a pleasure to work with.  It’s your company, it’s your money, and it’s your blood pressure.  Surround yourself with advisors who are easy to work with, who do exceptional work, and who understand just how unique you and your business really are. 





Lessons Learned Four

A Good Forecast is Better Than a Good Budget

Your company’s budget is an important tool, but it is short-sighted in scope.  A properly prepared forecast can be infinitely more helpful in planning your company’s future. However, it is not uncommon to walk into a company, ask for a forecast, and be told that one doesn’t exist. A forecast is a tool that helps you see farther out into the future, and a good one can be used for many things.  If your company is engaged in scenario planning, a solid forecast can be the foundation for your scenario planning.  I have constructed forecasts for many reasons including but not limited to – sales forecasts, production forecasts, expense forecasts, cost of goods forecasts, and cash flow forecasts.  I think companies should engage in forecasting for a minimum of at least 5 years in the future, but extending it out to 10 years is even more helpful. My preferred forecast model extends out to 10 years.

Not Having a Forecast Can Put Your Company at Risk

Not having a forecast means that your company is not planning for its future.  In a company with no forecast beyond the current budget, you have myopic vision.  Forecasting farther out means being able to anticipate opportunities, as well as threats.  Looking farther ahead helps you anticipate financing requirements, equipment purchases and labor additions.  Being rigorous around forecasting, helps predict when swings in your business are likely to occur and enables you to plan for those swings.

Sales People Aren’t Always the Best Forecasters

Sales people are naturally optimistic, some might say overly so. Their jobs depend on them being that way. From my experience, they are especially bad at forecasts. They are prone to produce what I like to call “happy numbers.” It is a natural extension of their background and position.  Who wants to hire a salesperson that says “I don’t think it can be done?”  No one would. I’m also not sure that a salesperson who says that is still working in sales.  They are predetermined to turn in optimistic numbers – to be the cheerleaders. In one company I worked at, I took whatever annual forecast the salespeople gave me and cut it in half.  It was a pretty good approach.

A Poor Forecast Can Really Disrupt Your Business

If the sales department puts out an unrealistic forecast, huge disruptions and unnecessary cash expenditures can result.  A “happy” forecast can result in too many raw materials being purchased.  Depending on their expiration dates, they could go obsolete before they are needed on the production line.  On the extreme end, too high a forecast could result in excess manufacturing capacity being built and too many people being hired to staff production lines that aren’t needed.  Large amounts of resources can be dissipated by an unrealistic forecast.  On the other hand, if your forecast is way too low, you will be on your heels playing catch up – trying to find production materials, trying to hire people quickly, and missing revenue opportunities.

Be Willing to Get Input From Others

From my experience, the number one hazard of forecasting is becoming enamored with the process and ignoring the results.  When your forecast is complete, it is critical that you step back and ask yourself, “Does this make sense?”  It is also helpful to gather a team in a conference room and start reviewing the forecast together.  Invariably, someone always spots something that can be calculated better, improving the forecast.  As the forecast builder, it is important to get input from others – the more people engaged in the process, the more sound the final result will be.

Forecasting is An Art

Sometimes it is tempting to take a 5-10 year forecast and turn it into an accounting exercise.  A forecast model can include hypothetical R & D projects, new product launches, and capital forecasts for the retooling of manufacturing plants.  It is difficult, if not impossible to drive down to a low level of detail on every line item of the forecast. A good forecast necessarily has holes in it.  The trick is to minimize the places where the forecast is soft, and being aware of where the weaknesses are.  The best forecasters in the business have trouble nailing it every time – the Fed does an outstanding job of forecasting economic shifts, but it still misses important signposts.   I live in Los Angeles, where you  would think a weather forecaster could say “sunny and in the mid-seventies” almost every day and be right 97% of the time, but it is surprising how often they miss. Forecasting anything takes knowledge, a good model, a lot of hard work and a little alchemy.  Forecasting takes time and requires experience to do it well.

Forecasts Come in Many Flavors

There are many ways to build a forecast.  For business purposes, I like to build forecasts that link the three financial statements – income statement, balance sheet and statement of cash flows.  I usually hook it to a financial ratio page that also shows the effect of the forecast on the company’s financial ratios – profitability ratios, performance ratios and leverage ratios – to look for potential pitfalls the company may be heading for.   I like to take that platform and use it as a starting point to build scenarios.  At the end of the forecasting process, we will have a pretty good idea what some of the key drivers of the business are, what a realistic picture of the business is over the coming years, and we have a handful of scenarios in our toolbox with some strategies for growing the business or reacting to external factors when they rise.

Improve Your Vision

Businesses really benefit from a forecast that is well researched, fully thought out, built using a solid mathematical platform, and has been screened and critiqued by a large audience to ensure no gaping holes exist.  Your company depends on a good forecast. It allows you to broaden your horizons and “see farther.”

Copyright 2012 Red Hawk Consulting, LLC.  All Rights Reserved

Lessons Learned Two

Manage Like You Were Climbing a Mountain

For over 20 years I climbed mountains in the Pacific Northwest with a couple of friends of mine, Stuart and Jimmy.  The thing about mountain climbing is that it gives you a lot of time to think; because you are breathing so hard you really can’t talk or do much of anything else.  Over the years, it occurred to me that one should run a business exactly the way one climbs a mountain


Be Prepared.

Mountain climbing requires a lot of preparation, both physically and mentally.  I only went onto a mountain if I knew I was fit enough to get to the top.  I reviewed the routes in my head.  I was prepared for the pain, the lack of oxygen, the night after night in a tent sleeping on hard ground.  In business, you also need to be prepared.  Do your homework.   Make sure you know the topography before you set out to tackle the hill.  Be prepared for possible hardships.


Pick a Great Team.

Mountain climbing is a high risk endeavor.  It is a completely intimate experience with your climbing partners.  So is being in business.  You need to associate yourself with people you trust.  People with the right attitude.  People that will not let you down when the going gets tough.  Even a couple days on a mountain can be a nightmare if you are roped in with the wrong people. Pick good people.  Be selective.  Of course, when you’re in business your life doesn’t depend on it, but your livelihood does.  And the day will still go by a lot more pleasantly if you surround yourself with competent achievers.


Take Risks.

It would be very difficult to get to the top of any mountain without taking risks.  Being on a mountain at all is risky.  Being in business is risky also.  The reward associated with both endeavors is tremendous.  You have to think about your strategy, but over-thinking it or lingering  too long at important decision points  are mistakes.  To overcome the risks you need to make decisions very quickly.  Don’t believe me?  Try falling in a crevasse (I have, on Mt. Baker).  Over-thinking your situation will get you nowhere. You’re trapped in a huge hole in the ground.  Get out, NOW!


Be Flexible.

Even the best thought out plan is riddled with holes.  You cannot foresee all the obstacles. There is always something coming your way.  On a mountain it could be a landslide, falling rocks or a newly formed crevasse.  In business it could be a customer cancelling, a new customer with a big order you’re unprepared for, or your star employee leaving to pursue another opportunity.  In any case, it is important to be able to “adjust your swing” and adapt to the new situation.  My friend, Marj, used to always say “There is nothing as constant as change.”  She was right.  Be ready for surprises and face them with a calm demeanor.  Remember, you can always change course or pull back and attack the hill another day. Inflexibility can result in bad things. There are many routes to the top.  Be willing to try an alternate route when the one you are on becomes impassable.


Manage Your Inventory.

This concept has stayed with me my entire life.  When you are packing your backpack to go up a mountain, you have to have the right inventory – your life depends on it.  But too much inventory represents extra hardship and effort as you haul it up the hill.  Too much inventory in business is equally burdensome.  When I was a kid, I was a clerk at a major grocery store. The store manager was always reviewing the extra inventory in the back room to help reduce waste.  He wasn’t very understanding if we over-ordered something.   When I was an Industrial Engineer later in my career with the same organization, we would make store visits to help evaluate and improve performance.  I was always drawn to the back of the store to see what had been thrown away.  Anything that had been thrown away unopened represented wasted dollars – someone ordered too much.   The zeal to manage inventory has been with me ever since.


Have the Right Equipment.

Much like inventory, mountain climbers have to have the right equipment.  If you are trying to melt drinking water on a glacier with no stove, you won’t get very far.  Expense matters – when I started climbing, and I didn’t know if I was going to pursue it as a hobby, I bought a pair of wool pants at an Army/Navy surplus store in Pike Place Market.  They were something like $5 compared to the $200 you can pay for light, sexy climbing pants.  Once I decided climbing was something I was going to do a lot, I purchased the more expensive pants.  It’s okay to test the waters with an inexpensive prototype before paying big bucks for the machine of your dreams.  But don’t pursue your business without having the essentials.

Keep Up With Technology.

New technology keeps adding more fun and more safety to the sport of mountain climbing.  It is comforting to have a GPS and an emergency beacon in your pack in case of you get into trouble.  You know the helicopter will find you.  Back in the day, the only tool you had was your climbing route filed with the local park ranger.   Products keep getting lighter and more utilitarian.  In your business, it makes sense to weigh the benefits of new technology against the costs, but in many cases there will be technological advances available that will improve efficiency.  Be open to them.


Endurance Pays Off.

Be in it to get to the top.  I tell everyone who asks me about climbing to be ready to go to the top.  If you can’t see yourself at the top, you won’t succeed.  I once climbed the Shurman route on Mt. Rainier during a period of time when a huge crevasse had opened up near the summit.   It had turned away every single climber before us that weekend.  We talked with people at base camp who attempted the summit, and they all said it was too dangerous to pass.  Bernie, a friend who was roped in with us for the climb, asked if we were going to the crevasse in the morning and turning around.  “Bernie, put it in your mind that we are going to the summit, or we might as well stay in our sleeping bags and keep warm,” was my reply.  The next morning, we headed out with the thought of making it to the top. We jumped the crevasse and became the first people that made it to the summit in days. After that, others saw what we had done and copied us.  Reaching the top of a mountain takes faith and prayer and hard work and determination.  Succeeding in business does too. It is a long haul proposition.  Yes, there can be good luck at times, but most often, success comes from hard work.


Take Small Steps.

A wise man once said, “Every journey begins with a single step.”  A climb up a mountain, when seen as a whole, might seem like an insurmountable journey.  If I ever start to get discouraged, I take small steps. Even small steps, when coupled with determination, will get you to the top of the tallest mountain.  In your business, you always want to keep progressing.  If you start hitting the wall, go slower, but keep reaching for your goals.


Trust data, but be intuitive. 

Once we were in an avalanche chute on Mt. Deception.  I know, just that sentence sounds crazy.  “We were in an avalanche chute” probably shouldn’t be the start of any story, but there we were.  Everything seemed to be going well.  We were only 100-200 feet from the top of the wall. We were climbing the far side of the chute, and I kept getting a nagging feeling.  No data supported it – there was no reason to be alarmed, but I FELT something.  I kept nagging my co-climbers to turn around.  We were discussing why we should when, all of a sudden, half the hill started sliding away beneath us. We turned tail and ran across the sloughing snow as fast as we could, in time to reach a rock outcropping and sat and watched as tons of snow sailed 1,400 feet over a cliff beneath us.  We could have been dead if we had stayed where we were. Sometimes, it just pays to listen to that voice inside your head.   Don’t get me wrong, I believe in studying your data and relying on it, but sometimes numbers don’ tell the whole story. You have to be willing to trust your intuition as well.  Don’t get locked into one set of numbers or one strategy and be unwilling to survey your surroundings.    Always be willing to listen.


Keep your head. 

I have said this at work for a long time – “If you lose your head in an avalanche, you are dead.”  It pays to keep your wits about you and look for a way out.  It is the same in business.  Hopefully it never happens, but if big things come at you, keep calm, figure out your options and act on the best one.  Your partners or employees or coworkers will be impressed.  More importantly, they will stay calm too, creating a better climate in which to solve the crisis.


Enjoy the ride.

Lastly, enjoy the ride.  Mountain climbing is really hard.  It is a huge risk.  It is scary.  I would have never kept doing it if it also wasn’t so rewarding and fun. The view is definitely better from the top.  By doing the things I have mentioned in this article, you reduce risk and create an environment where the journey is almost as enjoyable as reaching the goal.  If you aren’t feeling rewarded or you aren’t enjoying the trip, you might be doing something wrong.   Enjoy the ride.  The people who depend on you will see that you are enjoying what you are doing. It’s contagious and it makes all the difference in the world.

Copyright 2012, Red Hawk Consulting, LLC.   All rights reserved.

Lessons Learned Three

A Little Budgeting Goes a Long Way, but a Little Budget Doesn’t

I have been involved in budgeting in one way or another for over 25 years.  I have seen it done in huge companies (a giant aircraft manufacturer) and small companies (a start up biotech).  I have seen it done quickly, and I have seen it take an inordinate amount of time.  While many would consider budgeting to be a nuisance, I consider it to be necessary.  It is a road map of what your company is going to look like over the next twelve months.  Done correctly, it allows business owners time to manage cash, plan capital expenditures, and ensure raw materials are purchased in a timely manner.  If your budget includes a list of all your contractual obligations, it reminds you which agreements you want to carry forward, and which agreements you should terminate in the upcoming year.   By creating a budget, you will be forced to think about next year’s sales, what you want to do to reward employees, where opportunities for expense reduction exist, and a multitude of other positive things.

Complex Budgets Work for Complicated Businesses, Simple Budgets Work for Simple Ones

There are a million ways to budget.  I have seen budgets built from the ground up, starting with last year’s invoices.  I have seen budgets done in a single day using run rates from previous periods.  I have seen CFO’s dictate the annual budget for all departments, and I have seen budgets built all the way from the bottom up.   Every method has trade-offs.  I will talk about why I like or dislike a couple methods, and then I will tell you how I like to do it.  In some of the companies I was at, my manager liked the run rate method, and we created the budget in a very short time.  Using run rates means you figure out, what your average usage was over a certain previous period, by account and project it out for the next year.  Let’s say we were using the prior year’s run rates.  It isn’t a bad approach if you are looking for brevity, but it’s not going to work well if you are looking for accuracy in a complicated business model.  There are a couple of obvious reasons why using run rates is not necessarily the right approach.  First, if you have stock-piled inventories of raw materials, your supply budget contains over-estimated usage.  Second, your utility bills are not flat over the year, even though your monthly budget is. You may spend the entire year explaining why you didn’t follow the expense profile in the budget on a monthly basis.  In addition, management may look for specific detail during the year.  You will be unable to adequately explain variances based on the budgeting method selected.

Real Numbers Matter

In companies where “padding” the budget is allowed, it is difficult for upper management to adequately forecast cash requirements.  In addition, it reserves resources where they are not necessarily needed; perhaps limiting other projects that would help fuel the company’s growth.  To me, it is important that managers try to hit their budget as closely and as reasonably possible, but most budgets are wrong the minute they are printed.  I have seen inordinate amounts of effort go into flogging people who miss their budget, which ends up creating incentives for them to pad their budgets the next year.  On the other hand, I have been in companies where no attention was paid whatsoever to the departmental budget, making it impossible to accurately guess where the company would end the year financially.  Requiring real numbers from your employees allows you to better plan for the future.

The Process Matters

Here are some things I have seen used that make the budget process go smoother, and the resultant budget more meaningful:

Give guidance.  As leaders of your company, managers and employees at all levels are waiting for you to set the tone.  At budget time give them a set of guidelines or assumptions that outline your expectations for the forthcoming year.  If nothing else, you should provide a meaningful sales forecast and a list of priority projects for the year.

Make a calendar and stick to it.  In many cases the annual budget is officially kicked off, but no calendar provided.   Hand out calendars and notify people immediately if the deadlines move around by issuing a revised calendar.

Get your employees buy-in by having an official “Kick-Off.”  In a big company, this can be cumbersome, but I like to schedule kick-off meetings with managers and above so we can go through the assumptions, expectations, calendar, templates, and areas of particular importance with everyone that’s impacted. That way, I know we are all on the same page, and I am confident the process will be much smoother in the end.  I have all the templates and definitions ready before the meeting, and either hand them out then or email them to the group directly afterwards. Additionally, I’m always willing and available to help anyone at any level fill out their templates.  It takes more of my time up front, but it makes the process more successful all the way around. And all parties are now vested in the process.

Big Items Matter; focus most of your attention on them.  Ultimately, a budget is a best guess on any given day, but guessing about nickels and dimes is a fruitless endeavor.  In general, I like to worry about four things the most – headcount, capital expenditures, contractual commitments and outside contractors.  Each industry will have unique practices that make a couple of other things rank higher than the others.  For example, in a biotech that is conducting clinical trials, you will want to know how many patients are expected in the upcoming year and how much it costs to include a single patient in the trial.  Those costs can be considerable and should be accounted for as accurately as possible.  By being confident about annual expenditures on the 3-5 big ticket items at the top of your company’s list, you will improve the accuracy of your budget.

Be involved.  Don’t wait until the deadline comes to check in with people and make sure things are going smoothly.  When I have people reporting to me, I have them check in with each department manager once a week to make sure they are hitting their milestones.  If I don’t have people reporting to me, I do it myself.  Treat budget owners like customers, and the process will go better for everyone involved.  Be ready to help your customers, and the final product will be much more accurate and useful.

Have a review

Ask tough questions.  I like reviews after the submissions have been received.  Each department manager comes in front of at least the CFO and the Finance department, hopefully, a broader range of leaders, and presents their budget and supports their annual budget submission.  I find if people know they have to support their product, they will do a more thoughtful job of compiling their budget.  It also makes them more knowledgeable about variances as the year progresses.

Hire Good Help

Have one or more great finance analyst working with you.  Nothing makes budgeting easier than having great finance employees helping with the process.

Turn around the budget quickly

I have never met a CFO who wanted you to take your time and get back to them at your leisure with the results of the annual budget process.  We have a strict policy of turning around, at least the bottom line numbers, by noon the day after submissions are due. We know that if we give managers until “noon on September 22nd” it means we will be working until the wee hours to turn the budget quickly.  I never mind because, to me, it’s game day.  If the number is in the right range, the CFO can relax and worry about something else.  If it is out of range the CFO can be out solving problems early.  By the end of the second day you should have totals by account by department and a comparison to YTD, or last year total expenditures, or some other bench mark.  The full compilation and reporting process should take less than a week.  If reviews are scheduled, it is helpful to know in advance if you have any issues with a certain department’s budget request.

Communicate fully

Communicate throughout the entire process.  If you keep everyone in the loop, everyone from the CEO to the person compiling the budget, you will all be better able to meet each others’ needs, the budget will be more accurate, and the experience will go better and more smoothly for all involved. Your budget is your roadmap for your near future. Invest in it wisely.

Copyright 2012 Red Hawk Consulting, LLC.  All Rights Reserved

Lessons Learned One

Lessons Learned One – It All Adds Up

I think a company should continually look for ways to cut costs.  It is easy to be complacent and stop worrying about costs when times are good.  The trouble is, you never know when times are going to be “less good.”  By keeping your business as cost-effective as it can be, you are prepared when fortunes take a dip, and you maximize your profits when things are cranking.  It all adds up.

Make Visible Changes – Engage Your Employees

You can start by pulling a list of all your vendors and the amounts you have spent on them over the last year. If you Pareto your spend (rank from highest to lowest) you can learn some pretty shocking things about your business.  Look for vendors whose charges look high.   Find a highly visible expense, so you can raise the employee’s awareness of what you are doing.  If you sort your vendors and you find, for instance, that your coffee vendor payments seem high, get some bids and lower your costs.  The employees will notice what you have done and start asking questions.  When anyone asks, tell them you are trying to cut costs and nothing will escape scrutiny.  Hold all employee meetings and show them charts and graphs about how cost of goods are calculated and explain that  you are going to be attacking cost of goods in order to increase your efficiency. Worry about ALL expenses, not just the cost of goods.  Give the employees as much data as you can and ask for their help.  I have seen tremendous ideas come from all over by using this approach.

Shop Around

Start at the top of the list.  Take that vendor’s invoices and pull them from your system (if you have one) or have someone type up the detail on the invoices if they are on hard copy.  Here again, sort from the highest to lowest.  Look for items that appear too high.  Go on the internet and look for substitutes at lower prices.  Go through the list of the highest items.  If you find ways you can substitute, you could switch vendors.  I actually recommend calling the representative in for the vendor in question and sharing your findings with them and asking them to help you lower costs.  I have found this approach to be 1) refreshingly easy and 2) surprisingly effective.  When you engage your vendors, they can also be very responsive.

Question Everything

Another example is your utility bills. Traditionally, business people think of utilities as being a fixed cost. I disagree with that notion. Your local utility has representatives who are happy to come out and discuss ways you can become more cost efficient with your utility bills.   I have worked with several, and they are extremely helpful.  I have seen recommendations made by utility representatives add up to huge savings on utility spending.  If you question everything, you will turn up some real gems.

Be Willing To Make Changes

Manufacturing labor is another place you can become more efficient.  You can graph out the flow of your manufacturing staffing or the staffing associated with the services you offer and compare it to the actual flow of goods and services and look for gaps.  For example, if your employees work 8 hours a day, 5 days a week and your product flows through manufacturing in a way that is better serviced by 10 hour shifts, you might want to consider switching to 4 x 10 hour shifts to better optimize labor.  In many cases, employees actually want to work a hybrid shift.  Obviously, it doesn’t work for all employees.  By being honest with them about what you are doing and why, and engaging them as experts, you will undoubtedly come up with a non-traditional shift structure that creates more throughput through your business, and lowers costs.

Turn Over Lots of Stones

Examine each and everything you can in order to cut costs.  Tour your building and look for opportunities.  Another example is copiers and printers.  If you are leasing your printers, you probably originally committed to more capacity than you needed.  Your vendor might work with you to downgrade your capacity where practical to lower your equipment costs.  Also, many printing vendors charge more for color copies.  By defaulting your copiers to black and white and making employees override the default when they want color copies, you eliminate a bunch of money being spent for color copies you don’t need. Also, if people are printing copies of presentations and handing them out at meetings, but the presentation is being shown on the conference room screen, consider e-mailing the presentation to people after the meeting and eliminate the color copies.  It will surprise you how many ways you can find to cut costs on things that won’t even be noticed in the workplace.

No Savings Is Too Small

The list goes on and on. Look at your list of people with company paid blackberries or cell phones and evaluate their usage.  Cut out the ones that aren’t essential.  Remember – you have engaged your employees to help, so they won’t push back too much when you make changes.  Consider stocking your first aid kits with your own staff, instead of paying vendors.  Don’t worry about how small the savings are – take them all.

 The Impact Is Dramatic

Depending on the size and nature of your business, you can save, literally, millions of dollars by starting a cost reduction program.  Engage your employees.  Engage your vendors. Use data to guide the way.   You can make big gains in productivity and cost reduction by paying attention to details and being willing to question everything.  It all adds up.

Copyright 2012, Red Hawk Consulting, LLC.   All rights reserved.