Andrea Arena

Now cutting costs, operating our businesses as lean as possible
is both urgent and extremely important. It certainly is for me. After 17
years in business, I returned from maternity leave to the news that
three large national accounts had decided not to renew their contracts
with our company. They all reported that we provided superb service, but
the economic crisis they were facing required drastic measures. It
wasn't a nightmare, it was real life. Our overhead devoured our profit
at an alarming rate and we quickly found ourselves operating in the red.
We fought back and we're back in the black.

I began the process of examining how we spend (possibly waste)
money within my organization by requesting an accounts payable report
from my account department. An obvious first step, but how many of us
have ever examined exactly who we pay and how much? Then I generated a
list of questions about my vendors.

       - When does our contract end with our document storage company
and what do we have there anyway?

       - What are the terms of our commercial lease and when do I think
I can renegotiate it?

It seems like nickels and dimes, but they all add up to savings.

Second, I made ruthless cuts and restricted spending. I notified
all managers that there will be a freeze on all non-essential spending
and instituted an approval process for spending over a certain dollar
amount. We laid off all non-essential staff and notified all employees
of a freeze on pay increases and changed the employees' monthly rewards
program.

The third step was to call in the professionals. I went to my
forum members within the Entrepreneur Organization (EO) for help with
the big-ticket items. These are like-minded CEOs with a host of
expertise. Like many companies, communications (T-1 lines, company cell
phones, PBX systems, long-distance service, etc.) was a relatively large
expenditure for us. One of my fellow business leaders with a specialty
in this area offered to audit our communications spending.

Within a week I received a detailed checklist of the changes I
needed to make to save approximately 40 percent in this one area. Now, I
have a plan and the opportunity to save provides all the incentive I
need to make sure this plan is put into action. Commercial insurance was
another large expenditure.

The fourth and final step was to renegotiate current contracts
and look for discounts with our existing vendors. We now get a 5 percent
discount of our Federal Express charges simply by paying them on our corporate
American Express card. I was able to rework the agreement with
our accountant, stretch the terms with our Web designers, change to a
cheaper service package with our technology support team and reduce the
cost of our liability insurance by $10,000 while staying with the same
coverage and the same provider. I systematically went through our entire
vendor list and simply asked for a better rate. Many offered to cut our
costs in half in lieu of losing our business.

In three months we were able to go from $20,000 in the hole back
to profitability. With the financial house in order, we are able to
focus on our sales efforts and have three large national accounts
launching this quarter and the strongest sales pipeline we've had in
years.

My only question is what took me so long?

We learn these lessons now and make the changes - regardless how
small. The real test is whether we retain these good practices in a
healthier economy. We all know our companies would be healthier for it.

In hindsight, I didn't create miracles. I certainly didn't turn
water into wine. But, the positive impact on my bottom line tastes so
sweet.

Arena is the president of Atlanta-based 2 Places At 1 Time Inc.,
which provides errand-running and concierge services as an employee
benefit or customer loyalty program for corporations throughout North
America, and a member of the Entrepreneur Organization, an
entrepreneurs-only global network of more than 7,000 business owners
that enables entrepreneurs to learn and grow from each other.