The book Moneyball written by Michael Lewis is about Billy Bean, the general manager for the Oakland Athletics and his unique approach to building a winning team. According to the book, Bean realized that instead of trying to recruit expensive superstar players (that he couldn’t afford), he could build a winning team by using analytics and picking players that were good but undervalued. The point being is that Billy Bean took a kind of boring approach to winning.
You can do something similar with your pallet business. Instead of looking for some big play or chasing the next shiny object, you can focus on fundamentals and small boring improvements that add up to an improved bottom line.
So, what are some mundane or even minor changes you can make to improve the bottom line at your pallet company? You have two primary areas to work on – revenue and costs.
Increasing Revenue
• Increase Sales from Existing Customers – You can do this by making sure your customers know about everything that you sell and every value-added service you provide. Don’t be the guy who finds out his best customer has been buying something that you sell simply because they didn’t know you sold it.
• Take Advantage of Referrals – Another low-cost way to increase sales is to ask for referrals from your existing customers; you could even provide them with an incentive to do this. Referrals are the best sales leads and the easiest to close. And if you can get just a few extra referrals each month or quarter, they can make a big difference in sales performance.
• Raise Your Prices – Don’t assume your customers won’t pay more for your goods and services until you investigate. Before you raise prices, do the research to find out what competitors are charging and determine if your prices are too low. If your prices are on the low end of the market, then you may be able to successfully raise them.
Cutting Costs
• Cut Energy Expenses – Reducing your energy consumption can cost money up front, but it is often one of the biggest expenses. It might even be worthwhile to spend some capital on improvements that can help you achieve energy savings. Depending on your business size, you may be able to get some free help from cost-reduction consultants who will figure out an energy reduction plan for you. These experts are sometimes paid a percentage of the savings they realize for you. There are also a lot of small low- or no-cost measures you can take to cut energy consumption like making sure lights and office equipment are turned off at night, and servicing HVAC equipment. Your local utility company might offer energy audits to help you find ways to save.
• Compare Rates for Workers’ Compensation Insurance – Focusing on getting the lowest quote at renewal time and doing everything you can to become a better risk for carriers can dramatically lower workers’ compensation premiums.
• Ensure You’re Getting the Best Deal on Property & Casualty Insurance – If you are simply renewing insurance on equipment and facilities each year and not paying much attention to this expense, you may be missing a good opportunity to reduce costs. Getting multiple agencies or carriers to compete for your business can reduce premiums, especially if you have a good claims history.
• Evaluate Telecom and Phone Expenses – Your phone system, telecom and cell phone service can be good places to cut expenses. If you have an out-of-date phone system or service, evaluate switching to VoIP or a virtual PBX. And if you have company cell phones, you may be able to lower this expense by simply reviewing your usage or plan and making changes.
The things mentioned here are not exciting. They’re boring. But the dollars added to your bottom line are exciting and worth the effort.
