Inflation Drives Down Small Business Satisfaction with Merchant Services
Bank of America Ranks Highest in Merchant Services Customer Satisfaction for Second Consecutive Year. Read the full article below:
Cut Costs or Cut Staff?
In the summer of 2022, economists debated whether the U.S. economy was officially in recession, and the argument boiled down to semantics. Regardless of the literal definition, the US Federal Reserve and the Bank of Canada, along with other central banks from around the world, have been increasing interest rates with the goal of controlling inflation. Consequentially, many businesses in North America are preparing themselves for the worst.
For many of them, that means cutting jobs. In fact, reducing full-time equivalent (FTE) is often the first step a business takes to reduce operating costs. But FTE reductions also reduce operational capacity, among other unintended consequences. So how can you minimize costs and optimize your bottom line while keeping all your employees on the payroll and your profit opportunities on track?
An analysis of a businesses third-party expenses represents an opportunity for significant savings. Simply put, most businesses are overpaying for their vital business services. These are services such as their telecommunications, credit card processing, waste removal and more – services their business needs to function.
One of the major underlying issues contributing to cutting personnel in the event of economic struggle is that most companies don’t understand the full breadth of their business expenses. By conducting a targeted optimization of these costs, a business can directly improve profits and avoid the consequences of layoffs.
These savings can come from several different methods – direct negotiations with incumbent providers, consolidation of services, recovery of billing errors, vendor switches and more. Importantly, these cost reductions apply directly to the bottom line, making a dollar saved even more impactful than a dollar earned through sales.
Opportunities to cut costs exist across all businesses, but one of the main difficulties is in knowing where to look and what expenses can be reduced without sacrificing level of service. Most of their expenses are much more complicated than they appear.
Most companies simply do not have the time nor specific tools to pursue significant savings in these areas. Optimizing business expenses can cost hundreds of hours spent analyzing, negotiating and waiting on hold, and even then can fall short. In these cases, where a business lacks the resources to create a team specifically to reduce costs, they can turn to Schooley Mitchell. Schooley Mitchell utilizes networks of cost reduction specialists leveraging software, pricing databases and long-standing influence with service providers to find savings for their clients.
While layoffs often seem like a simple solution to immediate economic concern, they can cause morale issues with current employees, reduce operational capacity, and cause damage in the long term when it’s time to ramp up for recovery. By making cost-cutting a priority, your business can create a more sustainable bottom line, build resiliency to economic downturn, and avoid headcount-based speedbumps on the road to recovery.
Inflation isn’t going anywhere – what should business owners do?
Many of us have crossed our fingers in hopes that inflation wouldn’t be a long-term consequence of the tumultuous global economy. However, it seems the verdict is in on inflation; it’s here to stay, and we will be feeling its effects for several years.
So, as a business owner, what do you do? How do you adjust your plans – which have already likely faced a lot of changes in the past three years – to account for climbing, potentially unpredictable, inflation rates?
There are wrong answers.
You can make decisions that might pad your bottom line initially but, at the end of the day, aren’t in your business’ best interest. You can upset your customers by raising prices, upsetting your investors – or your own bank account – by cutting margins, or upset practically everyone by cutting corners to cut costs. The latter option potentially includes layoffs, which lead to understaffing, an issue that can be fatal for many businesses.
Most owners will ultimately resort to raising prices, then look for clever ways to mitigate the fallout. And, while this might be the decision that keeps your business afloat, it’s not your best option.
Focus on your indirect operational expenses instead.
Indirect expenses are costs not associated with your cost of goods sold or labor; this includes cost categories like telephone and internet, credit card processing, waste disposal, facility supplies, uniforms, and more. Altogether, indirect costs can represent around 15% of your business’ operating budget.
Indirect cost procurement is the process of finding sustainable reductions to these costs; meaning the reductions increase your bottom line without impacting your business’ operations.
If my experience as a cost reduction expert has taught me anything, it’s that far too many business owners take their indirect expenses at face value, because they simply don’t have the time or resources to do the necessary investigation and negotiation to reduce them. But freeing up any of your funds is critical as inflation persists and could be the difference between your business operating profitably.
Schooley Mitchell reduces these expenses by an average of 28%.
Schooley Mitchell ensures businesses and organizations are getting the best services at the best price – all while identifying billing errors, eliminating redundancies, and improving efficiency. We leverage proprietary software, best-in-class pricing databases and long-standing relationships with service providers to find savings, and monitor your accounts on an ongoing basis so they remain optimized.
Schooley Mitchell’s work is based on a symbiotic, mutually beneficial model – we are driven by producing results for our clients and have no ties to vendors or service providers. Our fees are self-funded by a portion of the savings we find – no savings, no charge to you.
As a Schooley Mitchell consultant, my job is to spend the time and resources reducing your indirect operational expenses, so you don’t have to.
Instead of cutting staff or services in the face of rising inflation, give me a call, and let’s talk about a risk-free way of protecting your business’ bottom line.
Community Involvement: Tim Hortons Smile Cookies
Michael recently had the pleasure of decorating Smile Cookies at the 2525 Hyde Park Gate Tim Hortons in Oakville. Proceeds of sales from all Tim Hortons Oakville locations goes to support Food4Kids Halton (www.food4kidshalton.ca) – an amazing non-profit that ensures no child goes hungry in the Halton region.
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