Attack of the Penny Savers

Small companies don their creative cost-cutting caps to shore up cash reserves and ride out the downturn.

Seth Rosenstein, MWW’s finance chief, says he went to all the vendors the firm deals with from an operations standpoint — providers of everything from telecommunications and travel to printing and carpet cleaning — and demanded a rate reduction of at least 25%, threatening to switch to their competitors if they didn’t comply.

Rosenstein had not appraised the competitors to determine if that would be a viable plan, so the threat amounted to a bluff — but one that the suppliers did not call. “Every one of them gave us revised rates,” he says. The move saved “several hundred thousand” dollars.

MWW saved another big pile of coin by shedding many of its contracts with car services and directing employees, when possible, to use self-drive cars from ZipCar. The company provides low hourly rates and abundant pickup and drop-off locations in the 13 major metropolitan areas where it does business. Using ZipCar, plus a reduction in nonessential car usage, will put $150,000 on MWW’s bottom line this year, according to Rosenstein.

Moving down the savings list, the firm also has cut down on the number of seats it buys at the many charity events it attends with clients that support nonprofit organizations. Many of the seats it does buy have been reduced in price, so overall spending on these events has fallen 40% this year.

And a decision to stop providing free sodas and juice for staff is saving $1,200 a month just at MWW’s New Jersey office. “Our revenue is a function of our clients’ budgets, and they’ve cut those budgets, so we needed to react to that through our operating expenses,” says Rosenstein.

This, That, and the Kitchen Sink

Joe Money Machinery, a regional dealer of heavy construction equipment with five locations in the Southeast, has been hard hit by the steep falloff in building that has accompanied the recession. The flow of economic stimulus funds from the government has improved the company’s outlook somewhat, but CFO Ron Box is not easing his soup-to-nuts vigilance on costs.

Common types of savings have come from reductions in salaries and workers’ hours, cutting in half the 401(k) program employer-match percentage, and debt retirement that will save $85,000 in interest expense this year. Then the creativity starts. “We took the attitude that no savings were too small to be worthwhile,” says Box.

On a credenza in Box’s office are two remote scanning machines provided by banks where Joe Money has accounts. The devices allow users to make deposits from their offices by scanning checks. Some banks started offering this service for small and midsize companies a few years ago, but usage is still relatively low. Box thinks the recession could change that: he says that after netting out nominal transaction fees for making the remote deposits, he’s saving about $1,500 a month in transportation costs and lost productivity that come with sending employees to make in-person deposits. Scanning checks directly into a bank account also dramatically reduces delays in the availability of the funds, Box notes.

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