Submitted By David Gaiser – President of Project CFO
Unless any business or organization is always questioning, “Are we doing everything we can to keep our costs down”, that organization could benefit from adopting a “No-Drip Culture”.
A No-Drip Culture is simply the process of attending to every “leaky tap” in your organization: the evergreen equipment lease that automatically renews, the contract that hasn’t gone out to bid in several years, the fee structure that no longer provides the best service or price for your current business activity but is based on an old relationship. The more you look around, the more leaks you are likely to find.
If your business is like most, you are always trying to replace lost revenue and profits by increasing sales (taxes) or customers (taxpayers). But reducing expenses or stopping the leaks one drip at a time is another way to contribute to the bottom line (or balancing the budget).
An even greater concern is the possibility that an indifference to leaks of money spent for small, seemingly unimportant expenses may also extend to your company or organization’s primary costs or programs. It is this type of attitude or indifference that can put the entire organization at risk.
The pursuit of a No-Drip Culture is not difficult or complicated. It’s simply questioning every expense. A No-Drip Culture is also not a one-time exercise. You don’t just do something once and then sit back and think “okay, done”! Rather, it’s a culture that needs to be kept alive and well in any organization. If actively pursued, a No-Drip Culture ensures that everyone in the organization is constantly checking for leaks. Every time a drip is discovered, no matter how small, it must be addressed.
No-Drip Culture is about eliminating waste, not cutting out necessary and productive business tasks or programs. By adopting a No-Drip Culture as part of the business plan, the goal of saving money will permeate every part of your organization and lead to increased available funds or profits.
For example, taking some very simple steps to recycle can staunch the flow of money needlessly leaving your organization. Do you have drawers full of outdated non-confidential documents? Ask you commercial printer to cut and glue them into scratch paper pads (a service your vendor may likely provide free of charge). Another alternative is to use shredded paper as packaging material when shipping goods.
A veterinary hospital found a way to slow down leaks by laminating worksheets that listed their standard procedures and fees, giving a worksheet to each pet owner visiting the office. At the end of the day, data jotted down on the sheets by the staff was logged into a computer and the forms were wiped clean for reuse the following day.
One manufacturer’s junk can also be another’s jewel. Rather than paying fees to have a by-product hauled away, do some research and find out whether it has other uses. You may be able to sell your waste and actually add to your bottom line. Remember that improvements to recycled toner cartridges have made their use attractive in terms of both price and quality.
Here are a few guidelines for bringing a No-Drip Culture into an organization:
Do not overlook any costs (no matter how small) when looking for profit leaks. No business expense is sacred.
- Constantly ask, “Is this expense really necessary?” If your answer is “We’ve always done it this way”, that’s a sure sign of a cost that can be reduced or even eliminated altogether.
- Write down the savings you expect for a particular area of cost – then double it. Most of the time we limit our efforts to our expectations. Why be satisfied with saving 10% when you may have easily achieved a 20% savings?
- Ensure the changes you identify are implemented. Many good money-saving ideas are lost simply through a lack of action and the drip continues.
- Make sure you can measure the savings. That’s the only way you can be sure you have achieved actual cost reductions. Reward yourself by recording the results of your efforts.
As your record grows, you will be well on your way to a No-Drip Culture that continues to improve the overall performance of the organization by adding to the available revenue.
David Gaiser - David is the President of Project CFO. He works with organizations to incorporate the disciplines of finance to other areas of the company and assists with improving cash-flows and accessing supply chain risks. David works with an international cost management firm where in addition to directly assisting clients, he has been a Best Practices advisor for the firm, supporting the manufacturing segment.