Working smarter to be more profitable: Five ways to save money and be more profitable in the process.

Own a company or manage somebody else's?

If you have budget control in a work setting or one kind or another, you know—at least you certainly should know—that a prime way to increase profitability is to manage costs more effectively compared to budgeted or historical performance levels.  After all, every dollar “saved” from operational use, falls to the bottom line and profitability is improved by the same amount of money!  Even though I’m trained to think like a marketing guy, my experience as a manager has taught me that solely chasing prospective new customers is not as good a plan as saving operational money to serve the ones you have or will get better—and making more dough in the process. 

In effect, the small business or division with decision autonomy can frequently manage smarter and more profitably by simply trying new ways of taking care of old business.  In a recent article in Fortune, I ran across a terrific contribution by Verne Harnish, CEO of Gazelles Inc., an executive education firm, on how to save—and, in the end, make—more money.  Here’s exactly what he wrote in the Fortune piece:

Ditch assigned seating…
Private offices are an expensive addiction. Ask John DeHart, co-CEO of home health care provider Nurse Next Door. The company reduced office space while expanding from 28 people to 45 at its Vancouver headquarters last year. How? By making all desks available on a first-come, first-served basis. "Even I don't have my own desk," says DeHart. The company saved $60,000 in rent and $40,000 in IT infrastructure costs. 

Sell faster…
Why wait until products are in stock to promote them? Steve Hall, founder and president of Dallas's Driversselect, peddles the used cars on his website from the moment he purchases them at auction instead of waiting till they're delivered. That cuts the time cars sit in his lots from 44 to 36 days, saving $14,400 a month on interest, insurance, and storage. Sales at the company which he says is like "a Zappos for used cars" are on pace to reach $91 million in 2011. 

Ask for a better deal…
It's easy to fall into the mindset that routine expenses like utilities are nonnegotiable. Frustrated by the monthly cable bill at Denver's Cherry Creek Dance, Lee Prosenjak asked Comcast for lower rates and got them minutes later. Doing the same with most recurring bills, he reduced monthly costs by $1,650 at the firm, which had more than $1.6 million in revenue for 2010. "We negotiated a better rate every single time," he says. 

Reduce debit card fees…
Jason Canapp saved $30,000 at Veterinary Orthopedic & Sports Medicine Group in Annapolis Junction, Md., by changing transaction-processing firms. "It really is a commoditized service," says Canapp, a founder of the profitable clinic, with about $6.5 million in annual sales. He took advantage of an offer to shave another 1% off transaction costs by getting debit card users to enter their PINs on a keypad instead of swiping them. 

Try the cloud…
Many business owners are still uneasy about hosting sensitive data off-site. But it's brought savings of almost $33,000 annually to Choice Translating, which has offices in Charlotte and Lima, Peru. Since getting rid of seven servers and two firewalls, co-owner Vernon Menard III no longer pays $15,600 annually for IT support. Other savings: cheaper backups, lower electric bills, and no downtime caused by hardware and software problems.

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