Confession: I Tell Others To Do This Every Month, But I Had Put It Off For Two Years
In March we spent the entire month working with our business owners on the topic of profit.
And for those of you who have ever gone through this experience, everyone knows that the fastest way (but not necessarily the most strategic, just fastest,) way to increase profit is by cutting cost.
It’s kind of a no brainer. We talked about that in March, but more importantly, we talked about all the other components that go into profit – how to calculate it, what the suggested ranges should be, how to leverage it to grow or to take on debt with a bank.
And so, you can begin to imagine my horror when last week, purely out of curiosity, I asked our assistant to pull all of our American Express statements since October, and to categorize all of our spending on a monthly basis. I hadn’t done this in a while, but honestly, we teach this stuff, so I’d been assuming we were pretty on top of our spending and our monthly profit margins.
Not only was I horrified at how much I found that we paid for each month and never used, I could not believe that it had been so long since I’d done this exercise.
If you want to know how much I was able to save in that 1 exercise, and how to go about doing this yourself, read more…
First, let’s talk about how to do this exercise.
- While I only pulled the last six months, ideally you want to pull the last twelve months. Because annual fees are where you have the most opportunity for negotiation. And, if you don’t already have all your business expenses on one credit card, then please, for the love of Pete, start doing that right now!
- Once you have all the statements printed out, bring them over into excel, look for any that have variable costs (and ask yourself why,) and then organize them by category. For example, we had a number of past employees whose emails we had left open – each one costing us about $10 a month. Turning them off took 30 seconds.
- Ask yourself whether you’re still using these services or whether you’ve been accidentally paying for them month over month, for no particularly good reason. Highlight the ones you want to cancel, then add up what you just saved.
When I looked at our list, I was shocked that some of the expenses (monthly expenses!!) were for things we hadn’t used in nearly 2 years!
And some expenses (for example, Boomerang, which I have loved to use in the past,) were no longer necessary because Gmail now offers the same feature for free.
Kimby and I quickly went through the list, highlighted all the ones we didn’t need anymore and came up with a savings of a little over $1,000 in just 10 minutes.
[GROAN GROAN GROAN]
Then we looked at the annual fees that we pay for larger IT systems, and we quickly identified at least $500 more that was negotiable! (Anytime you have a system that costs over $1000 a year to use, there’s always an opportunity to renegotiate.)
Now, I’ll make you a deal:
- If you go do this yourself, and tell me what you find in unnecessary costs,
- I’ll go tackle the very scary idea of doing this for my personal credit card too!
Can’t wait to hear what you find out!