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Archive for August, 2008

One of the most profound lessons I have learned in business goes all the way back to high school when I was working as a fry cook at a local fast food restaurant. This particular restaurant was one with no inside seating. You drove up to a ‘stall’, pressed a button to place your order through an intercom system and a carhop would bring you your meal.

On this particular day, an order came that included milk. As the carhop was preparing the food on the tray, she dutifully put the small carton of milk along with a ‘small drink’ paper cup.

Suddenly…the franchisee, and our boss, in a near shriek exclaimed, “No, no, no, no, no!”

Confused the carhop asked what she did wrong. The franchisee removed and returned the cup to the holder and in its place, set down a simple, paper-wrapped dinking straw and offered this quick, but profound, lesson.

“That cup costs me three and a half cents, that straw costs me one tenth of a penny…” He quickly extrapolated the number of milk orders per day, multiplied by the savings and showed us how that one simple action put a close to three hundred extra dollars in his pocket at the end of the year.

I was fascinated. Remember, at the time I was a teenage fry cook so my initial reaction when from, “What a cheapskate.” to, “Brilliant!”

Next my boss walked us through a half dozen similar actions that put additional hundreds of dollars in his pocket each year and then multiplied it by the number of franchises he owned and the number was impressive…especially when one considers this was in 1978 dollars.

In today’s economy, we are not only working with our clients on ways to generate revenue but also way to cut costs.

A few years ago, we were working with a new general contractor client and in our initial planning meeting asked what his goals are for the upcoming fiscal year. Without hesitation, he replied, “To increase revenue by 20%.”

“Anything else?” I asked.

“No, I think that is a good goal.” was his answer.

I quoted him his revenue projection and complimented him on his goal as that would indeed be a very nice number to show at the end of the year. My next question is one too many business owners fail to ask. “How much do you want to keep?”

Huge revenues are wonderful. However, in the past few years, when discussing this topic with clients and prospects, I pointed to Delta Airlines and reminded them that they had revenues in the hundreds of millions…yet were losing hundreds of millions more.

Take a look around for ways you can cut costs and keep more of what you make. What cups can you replace with straws?

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Bobby Darnell is the founder and Principal of Construction Market Consultants, Inc. An Atlanta based management consulting group specializing in business development, sales, marketing and profitability as well as executive placement for the Architectural, Engineering and Construction industry.

http://www.cmconl.com

Bobby can be reached at bobbydarnell@cmconl.com

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