Tennessee: Distress brings attention to cutting costs Local company analyzes businesses' expenses

Tennessee: Distress brings attention to cutting costs Local company analyzes businesses' expenses

January 21st, 2009 by Brian Lazenby in Business

Businesses always are looking for ways to reduce their expenses, but during a recession it is even more important.

Marlene Shaner, who runs one of three local offices of Expense Reduction Analysts, examines companies' expenses to determine areas where they can save. She said her group can find an average savings of almost 20 percent.

"Depending on the type of industry, it might be in freight, transportation or payroll," Ms. Shaner said, referring to areas where savings might be found.

Expense Reduction Analysts, based in Carlsbad, Calif., has cost-cutting consultants in more than 20 countries.

Mike Lenzie, chief financial officer for Aqua-Chem, a Knoxville-based water purification company, engaged Ms. Shaner's company to find extra savings in his maintenance and supply costs.

Mr. Lenzie said Expense Reduction Analysts had predicted between 15 and 20 percent savings for Aqua-Chem but saved the company even more by helping it consolidate with a single supplier which opened a supply store in-house.

"Right now, when it is so tough economically, any nickel you can save is a good thing and this has really been good for us," Mr. Lenzie said.

Renee Ford, a partner with the accounting firm of Joseph Decosimo and Co., said that before a company can begin cutting costs, officials must understand where they are spending more than is necessary.

"When you are talking about controlling costs or reducing costs, you have to determine what is and what is not controllable," she said.

One of the easiest ways to cut costs is to locate redundancy, which is usually found in support staff duties. Those employees can be cross-trained into other areas to better use their talents. Seasonal workers or interns can be used and will often work for less than a full-time employee, Ms. Ford said.

Mitch Plumlee of Expense Reduction Analysts, who is based in Hixson, said the sagging economy is driving more companies to examine their expenses. They may first try to increase sales, but that is a difficult task in the current economic recession, he said.

"We are seeing a bit more interest now because people are beginning to see the value in it," Mr. Plumlee said.

Cutting expenses is the quickest way for a company to see added profits.

"When you cut expenses, it goes straight to the bottom line," Mr. Plumlee said. "If we save them $10,000, that's about $100,000 in sales they would have to generate to see that on their bottom line."

Ms. Shaner said a team of analysts will look at a company's expenditures for the past year and develop a report that may indicate where savings can be found. She said her favorite question to ask a company executive is, "What do you lose sleep over at night?" depending on the answer, that's where she will begin.

"Most company's focus on what their product or service is, and that takes most of their time," she said. "Most companies operate with a really lean staff and don't have the resources to do this."

Ms. Shaner said she enjoys showing a company owners how they can cut expenses and boost profits.

"There is something very rewarding about showing a company where they can save money without cutting jobs," she said.