Proposal For Cutting Operational Expense
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INTRODUCTION
Artemis Sportswear Company is a company that sells every type of sports wear from the head bands to the shoes on your feet. The company has experienced a steady yearly increase; however, the company is still looking for ways in which they can improve their profit line. Their goal is to find ways in which to accomplish this with minimal effect on the workers and productivity.
BACKGROUND
Artemis Sportswear Company has been in existence for six years. During this time the company has been fortunate enough to experience a profitable gain. However, in a market plagued with increased competition, tight budgets and strict regulations, that may not be the case this year if changes are not made. With the economy being in the state that it is, there have been rumors of a pending recession.
Trying to be a proactive company, Artemis Sportswear in now trying to find ways in which it can cut back on some of its’ expenses yet still maintain a yearly profit. In looking for ways to cut back the company decided to enlist the help of outsiders to show ways in which it could meet its; goals. After all Artemis is in the business to make money.
By making a comparison of past sales history, looking at previous, current and projected business plans and budgets one can obtain some since of what is happening.
The company now realizes that the majority of its money is being used in its day to day function, also known as “operational costs”. Knowing this information, the company can now find and make the adjustment that need to be made to its’ operational expenses and possibly allocate these excess funds to other area of the business that will be more profitable.
OPERATIONAL EXPENSES
Operational expenses are expenses in the form of salaries paid to employees, money spent on developing the company, and research activities. In order to formulate a proposal for a sportswear company, these expenses have to be considered. In other words, the company’s budget has to be clear, cost effective, and the goal specific.
CUTTING OERATIONAL EXPENSES
When it comes down to Management, a company’s daily expenses are more
often overlooked by small businesses. They are more focused on getting the product out
by its deadline and forget that the companies expenses are sky-rocketing on a daily basis.
The first suggestion would be to think frugal. Being frugal allows you to use
generic brand office supplies, where you would still get the same great quality as a name
brand supplies, but at a cheaper price. Leasing equipment gives us the option to upgrade
or download technology based on the company’s need of it at that given time. The
company could also purchase furniture from a retail supply store that receives furniture
from small businesses that no longer exist.
The second suggestion would be to negotiate with the phone service to include
phone, long distance, fax and internet into one set payment per month. The same could
be done for the light and water companies. Try to negotiate a better deal so that all parties
involved are satisfied with the outcome. This is a way to insure the company is not
pouring out unnecessary money every month. Another way to negotiate is with the
shipping company is by asking about shipping only on a case-by-case basis or by the
number of products the customer is ordering. Then the company could request a
certificate of insurance to provide to the shipping company this way they are not charged
for insurance. It would already be covered.
RECCOMENDATIONS
To help improve the company I came up with some recommendations that we
could utilize to help build the blocks to our company. In-house hiring, reconstruct
management and include rewards for employees that really show good job
performance on a daily basis or quarterly reviews.
In house hiring will allow current employees to apply for upcoming positions.
The ideal would be mainly rotating positions among employees to apply for
advancements within the company. This would be a great opportunity all the way around.
For example, everyone knows what the company’s expectations are and understands all
the ground rules clearly. This will be the chance for Rebecca who works with vendors to
now get the position she worked so hard for. That includes going back to school to
receive her masters’ degree in business management. Rebecca had a plan and she stuck to
it and never once let it interfere with her job performance. That is why this idea came into
play. Instead of hiring an outsider, why not use the employees you have, they work so
long and hard to keep the company a success.
Another recommendation is to take log of employees’ performance each week.
With this performance review in place now the employer can