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36
ACCOUNTING

Cost-Control Diet
 

Trim financial fat from your business's expenses.
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CEO's Notebook

Selling is tough and collecting is even tougher for small companies these days. Mark W. Troy, CEO of $3-million Flywire, a Web-design company in Portsmouth, N.H., has gotten by with less cash thanks to a few informed reductions in Flywire's expenses.

To get an objective analysis of Flywire's cost structure, Troy retained a freelance financial expert (a former chief financial officer) whom he'd met through a friend. The CFO put Flywire on a cost-control diet: he found areas where the company could either trim financial fat or gain monetary muscle. Following the CFO's suggestions has enabled Flywire to stay solvent and maintain its margins at a time when many Web-design companies are struggling to do one or the other. The specific results of the regime -- complete with before-and-after snapshots and monthly "weight-loss" results -- are charted below.

Cost and Tactic Before and after Monthly savings
Legal costs for drawing up contracts
Used different firm
Before: $225 to $300 an hour
After: $125 to $200 an hour
$5,000 to $7,500
Rent
Eliminated excess space
Before: 11,000 square feet
After: 8,000 square feet
$5,000
Traveling
Reduced long-distance travel to sales prospects
Before: National travel
After: Mostly local travel
$3,000 to $4,000
Energy
Alerted employees about conserving power
Before: Machines and heat were left on
After: Everything shuts down at night
$150 to $400
Banking
Transferred funds
Before: Excess cash idling in checking account
After: Excess cash moved into a money market
$300
Total monthly savings: $13,450 TO $17,200

CEO's Notebook

Licensing Wizardry
Hot Tip: Team Up with Competition
Hot Tip: Partner with Your Banker
Cost-Control Diet
Taking the Bite out of a Price Increase
Thomas G. Stemberg: My Biggest Mistake
Do What You Love. No, Really
In a Former Life: Greg MacGillivray


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Last updated: Aug 1, 2001




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