DL Expo Lessons Learned - Cash Flow Part 2 - Reduce Expenses

Last week, I shared with you the 10 tactics to increase sales from my presentation at the DL Expo West on October 5th. You can check the DLI Archives for last week’s email about the 10 tactics to increase sales.

For the seminar I presented, I discussed how to increase cash flow in your business. I gave 10 tactics to increase sales, and also 10 tactics for decreasing expenses. The combination of increasing sales with decreasing expenses results in an increase in cash flow.

Here are my favorite 10 tactics to decrease expenses, in no particular order:

1. Double what’s working – instead of spending resources on implementing a new service or tactic (like a shiny object that gets your attention), instead just do more of what is already working.
2. Production Tracking – production payroll is our largest expense as a drycleaner. You must control it by making sure you are receiving consistent productivity from your team. You can use a production monitoring system from your computer system, or you can use an external system like WesVic, or you can count rings / bread chips that are put around the hanger.
3. Staff Your Production Team Based on Low Season – most drycleaners staff their production team based on high seasons, so they struggle to control payroll during the slower seasons when they have too many people. I recommend staffing your season based on slow seasons, and then push them during the busy season.
4. Eliminate Accounts Receivable – if you are still running accounts for your clients, you are acting like a bank for them. You are not a bank. Unless it is a school or civic organization that absolutely requires an invoice, get the credit card on file for as many clients as possible, and don’t allow accounts.
5. Daily / Weekly / Monthly reporting – your monthly P&L statements should not be a surprise to you. If they are, you need to track key metrics on a daily and weekly basis so things like payroll, supplies, and repairs don’t get out of control and surprise you.
6. Managerial P+L – create a version of your P&L that is very simple to read. A version that clearly outlines revenue, both fixed and variable expenses, and the profit you are making. I can share the simplified managerial P&L I use that might make your bookkeeper or account cringe, but it will help you manage your business better. Just email me at [email protected] and request the Managerial P&L.
7. Outsource Services – consider pressing the “easy button” and outsource certain services so you don’t have to take on the “payroll liability” for getting the work done. You can just get your 25-30% margin without any hassle. This includes things like shoe and boot repair, leather cleaning, and wedding gown preservation.
8. Learn Direct Response Marketing – 70% of drycleaners don’t think they need to market. That includes your competitors. You can really take local market share if you learn basic direct response marketing, which elicits a response from your prospects or clients. Email me at [email protected] and I will send you my 10 rules of direct response marketing.
9. Barter Group – check to see if there is a local group that allows you to trade services instead of paying money for services you need. At In The Bag, we receive thousands of dollars per month in trade dollars that we use for washing retail windows, bookkeeping, vehicle repairs, etc. We use a company called IMS (International Monetary Systems).
10. Focus on your top 20% of activities – you will save a lot of money and wasted time if you can identify the top 20% of activities you do that produce 80% of your results and only do those things. Give the other 80% of your activities to someone else on your team or question if they need to be done at all.

I hope you enjoyed these tactics and can find a couple of them to implement in your business so you can enjoy higher levels of sales by decreasing expenses. I hope you have a great week – and don’t forget to email me if you would like some of our additional resources!

Dave