Volume 44, Issue 5 - May 2009

Buyer’s Block

Cutting Costs
Tips for Reducing Costs When Times Are Tight 
by Paul Bieber 

In my own informal survey of glass shops, about two-thirds of vendor purchases are glass and metal. Let’s look at how we can save on the last third—the expenses that don’t directly correspond to revenue.

Your Utilities
Some states grant exemptions for sales tax on electricity used in the manufacturing of goods for resale. Call your local utility—it is your job to check and then apply for the tax exemption. If you fabricate a single mirror in your shop, part of your bill is eligible for this exemption.

Utilities have hundreds of different rate plans. If your usage has changed in the last couple of years, don’t count on your utility to change your rate plan—this is something you have to do yourself. Every city has a service company that will look at your phone and/or electric rates to find overcharges. The usual fee is 50 percent of the savings for one to three years. These companies are usually very effective. Ask a few friends if they have a recommendation, or Google “utility bill auditors” for someone in your region. 

Cut one of your phone lines if you have three or more. You don’t need a private line in your office. Use one less fax line for the whole company. Train your employees to use the phone book or search engines to look up phone numbers, rather than dialing 411, which costs about $1.50 per call.

If you have a maintenance contract with a phone repair service, analyze how much you spent last year versus how much you would have spent just by paying service call bills. If you are keeping the contract, call this vendor and tell them you are taking 10 percent off next month’s bill. You will look to put it back on in six months. If you have paid your bills on time, and have not abused the service contract, you will hear “yes” more often than “no.” Now, do this with every service contract you have. You really will see savings.

Your Rent
If you don’t own your own building, meet with your landlord. Tell Mr. Landlord that you must reduce your cost by 25 percent, no matter what your lease says. In this economy, most property owners will accept a reduction in rent to keep you in their building. Yes, you had a contract for a number of months at a rate. A contract can be changed with the mutual consent of both parties. It costs you nothing to ask now. If your contract is up in a year or two, tell Mr. Landlord you want this new lower rate until renewal. If your lease is longer, put a finite date when the rent will increase again; usually two to three years of rent relief at ten to 15 percent savings is what I am hearing.

If you can’t get this reduction, ask for a renovation now, at the landlord’s expense. Negotiate a rent increase to go into effect two years after the renovation is done. A sparkling showroom will help you gain additional sales.

Your Insurance
Combine all of your policies with one company for the best discounts. Your broker should bring you at least four or five quotes. If he says you have the best rate and you don’t need to do a search, then search for a new broker. Look at all of your policy provisions and eliminate two riders that cover the least likely event to happen. This is one situation where you have to take the gamble. Tell your broker you need a minimum 20-percent reduction, whether through changing carriers, changing coverage or asking them to reduce their commissions. Before you ask your employees to pay more for their benefits, push the carriers to reduce your costs. 

Paul Bieber has 30 years in the glass industry, including nine years with C.R. Laurence Co. Inc., and 21 years as the executive vice president of Floral Glass in Hauppauge, N.Y., from which he retired in 2005. Mr. Bieber’s opinions are solely his own and do not necessarily reflect the views of this magazine.

USG
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