Cost-Cutting Measures

A short list of quick cost cuts that have helped a small woodworking company stay in business through tough times. June 7, 2011

I've been surprised how few companies have gone under in my area as a result of the downturn. I think everyone must be doing the same thing - finding ways to cut costs. I think it would be interesting to look at how others have accomplished this. It's sort of funny that it takes a major recession to do stuff we really should have been doing all along.

I'll be the first to put out where I've found excess cash.
1) Bought a smaller/more efficient compressor - cut my power bills by 1/3.
2) Shopped my insurance - cut the bill by 1/3.
3) Got rid of my non-performers as soon as the banking crisis hit.1/3 fewer in the shop with 90% of the work still going through. Big hit on the unemployment insurance though.
4) Implemented Microvellum. Will save 2/3 on outsourced shop drawings while at the same time lowering CNC programming time.
5) Renegotiated phone bill - 1/4 saving.
6) Renegotiated trash bill - 1/3 saving.
7) Started using knock-off hardware (slides/hinges) - 1/2 saving.

An interesting point coming out of all of this is people think product prices will "return to normal" once the recession is over. I don't think so... We've all found so many ways to cut costs without cutting quality that there will be new benchmarks for pricing going forward.

Forum Responses
(Business and Management Forum)

From contributor D:
#1 to 6 are common business exp. Good advice to the newbies. #7 I would not cut on hardware. Bad advice. I agree that there will be new benchmarks. Let's hope they will provide us the opportunity to pay our workers a living wage.

From contributor J:
No to #7 - we increased quality, not decreased.

From contributor M:
Along the lines of number 3, while getting more efficient use of employees, I have also become more involved in the physical work being done. As a temporary solution, I find I can stand in and help with the work as opposed to having another person on the payroll. While I may actually earn less for my labor, the overall benefits make it well worth my while.

As for using cheaper/import hardware, the industry made that decision for me a couple of years ago. All interior shutter hardware is now imported, none is currently available from domestic sources. While I appreciate the lower prices, the quality is some worse, but still usable.

From contributor L:
#4 might be wishful thinking.

We just had a discussion about unreliable employees that figure out ways to have more clock time and produce less per hour. I'm not a fan of Chinese hardware, but see most of my competitors using it and no negative issues from the customers. Customers don't care, they just want it big, fast and cheap. When you do bid work, the assumption is they want it to minimally meet their standards (often undefined) at the very lowest price they can get.

From contributor C:
I always remain pretty much conscious about #5.