No-Pinch Belt Tightening

Have you heard the rumor that the Grand Canyon was created by a Scotsman who lost a coin? With a bit of Scots-Irish blood, I can vouch for the Scots inclination to go a bit overboard when it comes to money. But being “Scots-minded” about your business might be just what your bottom line needs. So…

• Turn off the lights. Completely. All day and night. Actually, cut off all the electricity. That will shut down most computers so folks actually have to talk to each other and can quit using e-mail to push responsibility around. Faxes are somewhat redundant, so no loss there. Too extreme?

  OK, then. Visit your gas and electric company's Web site to find a middle ground between what you're spending on energy now and using no electricity at all. Some such sites have business sections that can help you with rebates or incentives, energy suggestions and even provide small business resources and newsletters.

  Don't miss Energy Star's site (www.energystar.gov), where the government-sponsored energy-efficiency program posts an energy savings calculator for small businesses and a financial value calculator for large ones. No true Scotsman would ever buy any heating or cooling products, electronics, appliances and lights that aren't Energy Star-qualified; they use less energy, protect the environment and save money.

  For other items that can help you cut energy costs, turn to the many catalogers in our industry such as Realgoods.com, Shophomegoods.com and Improvements.com, which offer solutions to wasted energy expense.

• Dump the phone. Give up land-based phones altogether. For smaller companies, VoIP (voice over Internet protocol) can be much cheaper and more flexible. In October, Fortune Small Business reported OneUnited Bank stating that while it cost $250,000 for the changeover to VoIP, it expects to save $600,000 by 2007.

  With VoIP a company has a virtual office number so employees can work seamlessly at home or on the road. In one tidy location you have a phone, voice mail and fax capability. As Entrepreneur magazine noted this past September, “In a recent survey by Sage Research, the increased productivity enabled by Internet telephony added up to 3.9 hours per week per employee.” Before committing to a full changeover, test with a few employees.

• Ixnay on travel. Slash the number of employees going to conferences and seminars. Don't give them up altogether, as you can't afford to lose the all-important networking opportunity they provide.

  Sources abound for intelligent, useful information delivered to your computer. Just two are Directmag.com (yes, this magazine's home page will link you to a variety of Webinars). The Direct Marketing Association also has an assortment of Webinars, called Virtual Seminars, at www.the-dma.org/eventcalendar/.

• Fire your creative agency and prepress vendor. Yep, if you have enough mailings of enough pages, you can pretty much do everything up to printing in house. Don't make the agency mad, though. Sometimes in-house creative can get a bit stale; you may well need outside help to freshen things up.

  Dennis Worth, vice president of marketing and creative services for Seta Corp. (parent of the Palm Beach Jewelry catalog), found that his company saved $358,000 the year it brought prepress inside. For most catalogers, prepress covers top-notch digital photography, a file server to store images, a color-accurate proofing system, creation of Portable Document Format (PDF) files, and trained internal resources to handle it all.

  If you do bring creative and production in house, be certain your staff has the equipment to make its work as efficient as possible. Be up on programs that provide tools to ensure accuracy and save time, such as auto-pricing (a function that links to inventory and updates prices as needed), template management, workflow routing, change tracking and automatic digital archiving.

  Put Gutenberg's press behind you. You want the latest and the fastest printing and bindery equipment available. Newer and better translates into fewer printing employees, faster “make-readies” and speedier printing — which should equal lower costs for you. Knowing what printer has what feature shouldn't take a lot of research. If it has the most recent technology it's likely to be bragging about it, and rightfully so. Start with printers' Web sites.

  Other ways your printer should be acting like a Scotsman with your budget is knowing every possible configuration needed to pay the U.S. Postal Service as little as possible; testing whether commingling with another cataloger makes financial sense (it almost always costs less, but does the adapted schedule and size really gibe with when and what you should be mailing?); and making certain you're not paying for more ink and paper than you actually use.

• Cut your paper costs without reducing quality or size. Like many catalogers, if you buy paper from a printer, you may be under-consuming. In essence, you could be paying for paper that was left over after your job was printed. Leftover paper isn't automatically credited to you; it can be used by the printer for another job.

  Talk to a paper merchant. If you have sufficient quantities and regular print runs you can gain control by turning paper purchases into a fixed rather than a flexible cost. Some printers charge a negotiable handling fee. Since buying your own paper negatively affects cash flow, balance cash flow with savings.

• Resurrect the dead. Merchandise isn't dead; it's just resting. Enough time may have gone by that offering a “dead” best seller again — assuming your vendors still have inventory or the ability to make it — may revive a winner without the expense of development and sourcing.

• Negotiate, negotiate, negotiate. Never assume what you're paying is what you should be paying. Look for less expense but also more extended payment terms. Conversely, if your cash flow allows, solicit a discount for quick payments. Know how well or how poorly a particular industry is doing so you can present your needs when the vendor is more open than usual.

KATIE MULDOON (kmuldoon@muldoonandbaer.com) is president of DM/catalog consulting firm Muldoon & Baer Inc., Palm Beach Gardens, FL.