How Low Can You Go?: There Are Some Unique Ways to Cut Your Fixed Costs
By: Dan Schneider
If you have a telephone at any of your franchise locations, you are most likely being overcharged. If you have trash service at any of your franchise locations, you are probably paying more than you have to. If you pay for worker's compensation at any of your franchise locations, there are almost assuredly errors in the way your coverage was categorized. To put it more simply, if you have walls, doors, workers, and customers, the monthly bills you're getting are probably too high.
Recurring monthly expenses like phone, Internet, trash, and alarm services can be a wasteland of, well, waste...especially for owners of multiple franchise units. Multiple locations spread over even one metropolitan area most likely means separate service bills and contracts for each service at each location. And rates and providers for everything from phone to trash to Internet can vary literally from block to block. That can make tracking and checking bills for accuracy an almost impossible task.
Analysis done by our company found that multi-unit franchisees spend anywhere from $300-1,500 per month more than they ought to on their monthly services - and that's per location. The problem is that it is usually not as easy as simply looking at a bill to spot a glaring error, or checking with other service providers to find out if they have better rates. Most business owners often do not have the time or in-house expertise to find these potential savings on their own, despite the fact that the savings can be huge.
Here are some examples:
One restaurant was being charged for 30 toll free-numbers. 30! Now, the phone bill didn't say "30 toll-numbers." The charges were listed under other innocuous and vague categories. But those innocuous and vague categories added up to about $10,000 in overcharges for a two-year period.
Another restaurant group found thousands of dollars in erroneous trash removal surcharges alone.
Another company signed up for a plan that had international calls at 8-cents a minute. And while the actual bill said 8-cents a minute, there were errors in some of the taxes and surcharges that made the cost actually $3.75 a minute - that's a 4,600 percent increase.
At another company, there were 40 cell phone lines that should have been canceled but were not: word had never gotten back to the accounts payable department and the bills kept getting paid.
Finally, another group received a $50,000 workers compensation insurance refund after discovering an error that the insurance company's own auditors made.
So what can be done? Do you hire someone in-house just to focus on analyzing monthly expenses? Maybe. But there's no guarantee that person will find enough savings to justify their salary. And there's no way one person will have nationwide knowledge of prices, plans, and providers across a wide range of monthly services. At this point, the best bet is to hire outside experts.
That's where companies like ours can help. We've assisted franchisees with brands like Sonic and Bojangles' all across the U.S. save money by investigating and fixing erroneous charges on their monthly expenses, and by finding better deals. Best of all, in our case, clients only pay us when we are successful. We get a percentage of the dollar amount we save our clients every month. There are no startup, consulting, or hourly fees. Just real savings without any additional spending. All of the savings examples mentioned above are real cases where we found money for our clients, and we weren't paid until we did.
There are only two ways for multi-unit franchisees to raise profits: sell more products and services or reduce costs. Performance-based external savings experts can help multi-unit franchisees reduce costs without cutting back on any service, quality, or staff, and with no additional spending at all.
Think of the time, effort, and money you might have to expend in order to raise revenues by $500/month per location. An aggressive, results-based cost savings program could net the same amount with far less risk and expense.
Dan Schneider is the founder and CEO of SIB Development & Consulting. Â Based in Charleston, SC, SIB has Fortune 20 companies, hospital groups, major franchisee groups, and universities among its nationwide clientele.
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