Creating a Cost Saving Culture

There is one question that haunts the entrepreneur in every moment of the day…

How do I increase my company’s net income?

There are only two answers:

1. More sales or
2. Less expenses

Most entrepreneurs lean into the “more sales” answer intuitively. However, answer number two must be considered with equal merit.

Let me share a story about how I learned respect for reducing expenses.

I met Hector on a non-profit board and he and I quickly became friends. He is one of the wittiest persons you’ll ever meet. He’s never met a microphone he didn’t like.

In his previous occupation, as legal counsel for a large international automotive company he was an integral part of bringing hundreds of good-paying jobs to San Antonio. Over a cup of coffee, he shared a story with me.

He told me every week someone at his company was responsible for contributing a cost savings idea to management. Apparently, this particular corporate culture is meticulous about costs. His week to submit an idea crept upon him and he was scrambling. Without an idea, his sweaty palms picked up the phone and dialed a coworker friend in another department. “Dude, I need an idea, I present tomorrow! Do you have anything?” Hector frantically requested. “No, I’m sorry I don’t know any way to save more money. We’re already running a tight ship,” his friend replied. “Ok,” Manual said, “I’m screwed.”

Then, his friend’s light bulb started to flicker above his head. “I have an idea! Tell them about Blackle.” “What the heck is Blackle?” asked Manual. “Blackle is the same thing as Google. The difference is the screen on Blackle is black and not white. Google uses about 75 watts of energy. Blackle uses about 59 watts of energy,” his coworker explained.

Manual pitched the cost savings idea. The company loved the idea! The company saved thousands of dollars by getting more mileage out of monitors, along with energy savings, and just good PR. Because of this one “silly” idea, what happened to income? Energy was saved, expenses went down and, therefore, net income went up.

I decided to implement a similar cultural standard in our office as well. Today, in our company, once a month I ask everyone in our crammed conference room one important question. The question is consistent so it’s always expected. It’s expected at the end of the hour long meeting. The question is: “Does anyone have an idea to reduce costs?”

Silence.
Then…maybe an idea.
Usually not.

But throughout the week, the question is top of mind. Cost saving ideas are traded frequently because it has been woven into the fabric of the culture. Just last week, as I write this, an email went out “everyone, if you want coffee, before you brew a new pot in the kitchen, please check up front to see if any more coffee is available in the pot we serve to clients. Thank you.” This is evidence of a cost saving culture.

Through a cost saving culture, income go up and our business marches into the next year.