TOUGH Cuts by ProQuest


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									 12   PRO • Volume 21 Number 6 • Summer 2009

FINANCIAL MANAGEMENT                                                     By Jon Ewing

                                                                              If you’re facing pressures from
                                                                              decreased sales, now is the time
                                                                              to take a pragmatic approach to
                                                                              cost cutting.

                                                                              Start with direct costs              crew,” Ewing points out. “Over
                                                                                  While a handful of over-         the course of several months,
                                                                              head expenditures are typi-          that adds up to some serious
                                                                              cally first to get thrown on         money.”
                                                                              the chopping block, Ewing                Materials are another
                                                                              says it’s important to recognize     large expense. Ewing is a big
                                                                              that significant savings may         fan of having loyal vendors.
                                                                              also be realized by reducing         “You create loyalty by treat-
                                                                              your direct costs. “These are        ing suppliers fairly,” he says.
                                                                              costs that are directly applied      “Nonetheless, you may be able
                                                                              to each job,” Ewing reminds.         to improve your purchasing by
                                                                              “They are costs that can be          developing materials lists and
                                                                              assigned specifically to a           offering them to three or four
                                                                              project with a high degree of        of your most trusted vendors.”
                                                                                  Direct costs would include       “You may be able
                                                                              the following items on your
                                                                              income statement:
                                                                                                                   to improve your
                                                                                  • Direct labor                   purchasing by
                                                                                  • Materials
                                                                                  • Payroll taxes
                                                                                  • Labor benefits                 materials lists and
                                                                                  Labor is generally your single
                                                                              largest expense. Make sure that
                                                                                                                   offering them to
                                                                              everyone on your crews is pro-       three or four of
                                                                              ductive. For example, analyze
                                                                              your costs to spread fertilizer,
                                                                                                                   your most trusted
                                                                              mow lawns and weed groun
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