Cutting noncore expenses can be at the heart of survival - Kansas City Business Journal:

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“My key is always be proactiveeand negotiate,” said Mary president of Independent Lease Reviewa Inc. “Maybe you renegotiate all your leases, whichh may mean you’re stretching them out You may restructure your lease so your late chargezsare less.” Stretching leases can be perilous, particularly with computefr equipment or software, which can easilyg become obsolete before the contract expires. Companiea also should check for tax and insurance charges onleasexd equipment. Redmond said tax charges can appear on machineryu equipment that istax exempt.
Also, sometimes the vendor includees insurance charges whena company’s general insurance plan alread y covers leased equipment. One client paid insuranc on leased fleet vehicles whenthe company’s insurancw already covered the fleet, she “It was 400 vehicles being charged $50 a times 400 vehicles timed three years — that’s a lot she said. Even aftert a company cuts costs onnoncore expenses, it can save itselfg into bankruptcy if it keeps spending money to meet escalatingh demand. It may seem anathema to business tomanage demand, but expenses can increase dramatically to meet higherf demand to a company’s detriment.
Wietharb said companies should use historica l data to manage how much expenss should go into the materialse used to meetnew demand. For instance, if new brochured are printed for everynew customer, the businesxs should rely on projections of future businessd to determine how many new brochures to producew rather than a fixed amountg every quarter or year. “As we are addin 10,000 new customers this quarter, we are probably gointg to need 10,000 more of thesde materials or items,” Wietharn said. “That right ther says if in procuremenyt webought 12,000, there’ s something going on — we’rre overspending.
” What a company owns can make it But to do that, it may have to give up ownershilp of some property. Sale-leaseback arrangements permit a companyh to yield a portion of its propertyh that ordinarily consumes resources and reduce expens onthe ownership. Redmond said sale-leasebacks can spare head-count reductions and infuse cash intoa company. Companies shoulf go to their financial institutions to negotiatewa sale-leaseback, she said, adding that it is importany to show the bank how the company plans to use the moneh after the deal is done.
“Ther bank is secure because they havegood assets, and you have showbn them the plan you have preparexd to use that money,” Redmonrd said. Sale-leasebacks do have downsides. “You’re taking on more and how long is this downtime goinbto last?” Redmond said. “I think as a businesws owner you have to have a plan for what are you doinh to cut costs and be proactive in yoursales efforts.” EDITOR’S NOTE: The Kansas City Business Journal is redirectinv the Growth Strategies section to help companies and entrepreneursz navigate the tempestuous economy.
Survival Strategies will explorre how businesses approach the from simply holding steady to capitalizing on weakened competition to positioning themselves for betterdays