Today I realised I am actually very good at this and I have a passion for this type of thing and need to proceed at some point opening up this "Top Ten" idea and follow through on it by helping other companies.
Those of you that follow me would know I am busy sorting out my brothers in laws business by creating another one that will deliver what they need for far less. This is the logistics side of he business that they crucially need, but cannot afford to outsource due to the what I would call ridiculously high prices.
The idea of working to a fixed allowance and seeing no profit from that made no sense so the allowance has a built in profit margin. This is a must have as some months will be more costly than others which cannot be surprises as who likes surprises when you are paying for them.
I gave him his answer today even though he only needed it by Wednesday and I have one important loose end to tie up on Wednesday. That is with the new land lords and cutting down the warehouse space by 34%. They currently have 3600 square meters and the reason why they were moving originally was the insurance company would not insure their stock without the fire sprinklers. If the space is under 2500 square meters then you don't need this and why 34% is going to be removed off the expenses. I don't envision any issues with this and confident enough to move forward with the plans.
The task was to hit a monthly budget which would make the business viable and last night and today hit the target required removing 30% of the expenses. Taking their top 10 monthly expenses there was plenty of wastage including a contract that has expired for security cameras they are still paying for. I know I will recover another 10% on top of the 30% before this business goes live on January 1st. Keeping the staff who added value and those that can do more than one job was crucial and they will be saved.
The manufacturing business which will be starting in February basically now has a free warehouse space making it even more profitable from day 1. This is important even though it is a totally a separate business as it gives it a chance to stand on it's own two feet without huge expenses. There is actually quite a big upside besides the manufacturing business as there is a retail showroom that generates decent income and is more profit.
Trimming the monthly rental by 34% was only a small part of the savings as the logistics side was where the horror stories were uncovered. The profits the companies were making off them was criminal and just on this section alone I recovered 20% and have allowed for a growth in business by as much as 40% so you can only imagine how much they have been ripped off over the years.
Every business I have been involved in whether as an employee or an employer I have always always made sure that the money spent is market related dealing directly with the source and no middle men taking their slice.
This is a profitable business that involves my family and the restructure cements their jobs and why it had to happen. The economy has been taking strain so I expect many businesses are or have bene in a similar position and need to take stock and reflect on the way forward.
Their problems started a few months ago where an international brand they were the agents for decided to take it back due to the increased sales volumes. This left them short of cash for their other products that they do leaving them in a tight spot for the next 6 months and why the need for cutting back became a priority.
This has turned out to be a great exercise as this has highlighted the wasted expenses a company generates and they weren't even aware of this. Coming from the outside knowing the business finding the savings was not exactly difficult. This is rather scary at the same time that literally millions of Rand were being wasted each year. Not everyone thinks like you do and why I cannot blame any particular person for this as it is down to ignorance and not being trained in how to think. Unfortunately I know the majority of businesses are throwing away small fortunes from negligence and ignorance and they need to take a closer look at themselves. Staff don't care and are generally lazy when it comes to collecting quotes and even then are open to bribes.
