Cut Costs, Boost Profits: Top Tips for Entrepreneurs

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[00:00] SPEAKER_01: Welcome to Canada's Entrepreneur. Where we talk to the entrepreneurs who are making it happen
[00:05] SPEAKER_01: across Canada and deliver the news, trends, knowledge and opinions from entrepreneurs and business
[00:13] SPEAKER_01: influences across the country. Everyone, I'm Phil Bliss, Founder and CEO of Canada's Entrepreneur.
[00:22] SPEAKER_01: Great to have you. You know, today's newscast for entrepreneurs is all about savings.
[00:31] SPEAKER_01: And you know, with all the talk about tariffs and the like, it seems that margins will take a hit.
[00:38] SPEAKER_01: So for entrepreneurs, the news is how can we increase savings to offset lower margins?
[00:46] SPEAKER_01: Today, we're going to meet Mike DeBur, who is franchise development advisor for
[00:52] SPEAKER_01: School of Mitchell, a partner of Canada's Entrepreneur and the leading cost reduction experts
[00:57] SPEAKER_01: for entrepreneurs to use in Canada. Mike, before we get into specifics,
[01:06] SPEAKER_01: maybe you can let the audience know a bit more about you and their old School of Mitchell
[01:13] SPEAKER_01: for entrepreneurs in Canada. Then we can go into the top 10 say reasons to manage your overheads
[01:21] SPEAKER_01: and the proven benefits of doing this. So all the team, Mike, what do you give us, you know,
[01:28] SPEAKER_01: sort of your role at School of Mitchell and you know, and their old School of Mitchell plays
[01:35] SPEAKER_01: for entrepreneurs in Canada, who are audience makes it clear.
[01:40] SPEAKER_00: Sure, absolutely. Well, first of all, thanks for having me. I really appreciate being able to
[01:45] SPEAKER_00: speak with you and all of our listeners and really thankful for what Canada's Entrepreneur does
[01:50] SPEAKER_00: in our partnership together. So yeah, I'm like you said, a franchise development specialist here
[01:56] SPEAKER_00: at School of Mitchell. So I primarily work with people that are interested in becoming franchisees
[02:02] SPEAKER_00: with our model across Canada and helping them get started with our model. Now, like you alluded to,
[02:10] SPEAKER_00: we're the largest cost reduction consulting firm in North America. So helping really
[02:15] SPEAKER_00: organizations of all sizes reduce their expenses, can be mom and pops that can be, you know,
[02:21] SPEAKER_00: mid-sized companies, a lot of nonprofits as well. And we've worked with, you know, large fortune,
[02:27] SPEAKER_00: you know, 5,000 companies too. So our goal is we know that business people, entrepreneurs,
[02:33] SPEAKER_00: people running organizations are busy, are often time poor, and they don't necessarily have the
[02:39] SPEAKER_00: resources to manage their vendor relationships and effectively go over their expenses themselves.
[02:47] SPEAKER_00: We become a really great resource to them, you know, handle their vendor relationships, hold
[02:57] SPEAKER_00: it up. Which are, they tend to be a lot of those things below the gross margin line, you know,
[03:02] SPEAKER_00: things like telecom, shipping, waste removal, merchant services. Those tend to be the types of
[03:08] SPEAKER_01: expenses we help our combined management. So just let's put some quantification on it.
[03:16] SPEAKER_01: What would you say is the average, you know, when when you're deployed by,
[03:22] SPEAKER_01: by someone, what's the average savings that you guys bring to those organizations?
[03:30] SPEAKER_00: Yeah, great, great question Phil. Right now our average is about 27 to 30% savings that we're
[03:37] SPEAKER_00: finding our clients. Now that's going to be different results in different categories. Actually,
[03:42] SPEAKER_00: our waste, our management category, we find savings of about 35%. You know, and in something like,
[03:49] SPEAKER_00: you know, merchant services, it's closer to 18 to 20%. But in all the things we look at,
[03:55] SPEAKER_00: we're on average saving our clients about 27 to 30%, which is a great result because as I think
[04:01] SPEAKER_00: a lot of listeners that are running businesses, understand if I can reinvest that those financial
[04:08] SPEAKER_00: resources back into my company, I'm going to come out with a competitive edge and benefit from
[04:14] SPEAKER_00: that reinvestment back into my business. So that's what we're excited about as we work with
[04:19] SPEAKER_01: our clients is helping them do that. So let's get on to the sort of the news side of it,
[04:25] SPEAKER_01: which was those top 10 reasons why, you know, managing overhead is not just smart.
[04:33] SPEAKER_01: Right. And especially in today's market, it's an absolute need. So why don't you kind of work
[04:40] SPEAKER_01: through those 10 items? I'll button when I feel like it. Sure, Phil. No, that sounds great in my,
[04:47] SPEAKER_00: it's really important. And I think, you know, the not so much the elephant in the room anymore is
[04:54] SPEAKER_00: the fact that we're dealing with this kind of period of economic volatility. I know, you know,
[05:00] SPEAKER_00: tariffs are the topic of the day, but also just tariffs result in a lot of consumer uncertainty
[05:07] SPEAKER_00: and that directly impacts the bottom lines of the businesses that we are working with. So you're
[05:12] SPEAKER_00: completely right, Phil. It becomes even more important in this environment that we're in to
[05:17] SPEAKER_00: reduce our expenses. So yeah, I, you know, talking about kind of the top 10 reasons why that is
[05:23] SPEAKER_00: important. I'll start with it just, you know, Phil is really important to protect your bottom line.
[05:29] SPEAKER_00: You know, what ends up happening is high overhead, which we see a lot of high overhead in the things
[05:35] SPEAKER_00: that we look at for our clients, directly impacts their profits. And so it becomes really important to
[05:42] SPEAKER_00: manage cost strategically because that ends up ensuring, you know, revenue that translates into
[05:48] SPEAKER_00: actual earnings. It also just gives your business more flexibility. If you can reduce your overhead as
[05:54] SPEAKER_00: much as possible. And by doing that, you create more stability in a time of economic uncertainty.
[06:00] SPEAKER_00: And then you can grow, you build out that growth potential while you're protecting your bottom line.
[06:06] SPEAKER_00: So that's sort of a macro reason, but that becomes really, really important. And again,
[06:11] SPEAKER_00: something we help our clients with as well. Second thing is improve cash flow. I think every
[06:17] SPEAKER_00: business understands that unnecessary overhead drains cash. And I think in most of our companies,
[06:24] SPEAKER_00: cash flow is really, really important. And it's really the lifeblood of any business. And so
[06:29] SPEAKER_00: I can optimize my overhead and by reducing expenses, by managing a lot of my vendor relation.
[06:35] SPEAKER_00: Effectively, I free up working capital that can result in reinvestment, payroll,
[06:43] SPEAKER_00: innovation. And I think he's in mind as well. I think what we're seeing with a lot of our clients now
[06:50] SPEAKER_00: is that uncertainty breeds nervousness. It can breathe fear. How am I going to get through this?
[06:56] SPEAKER_00: If I'm impacted by the things that are happening in the market, how will my business survive?
[07:01] SPEAKER_00: And so I think ultimately, having a good cash flow position by doing the things that we talk about,
[07:10] SPEAKER_00: it just gives you peace of mind as a business owner or a business decision maker. And you're in the
[07:15] SPEAKER_00: best position possible to overcome uncertainty and get out ahead. I think the third thing,
[07:21] SPEAKER_00: Phil, is competition and increasing our competitive edge. A lot of our listeners will be in markets that
[07:29] SPEAKER_00: are competitive. And they're always looking for those slight advantages that can build against the
[07:34] SPEAKER_00: competitors that they are going head to head with before their customers and their clients. So
[07:40] SPEAKER_00: if I can lower overhead, that allows me to price more competitively. It allows me to invest in
[07:45] SPEAKER_00: their customer service. It allows me to invest in their infrastructure. It allows me to hire more
[07:52] SPEAKER_00: people and better people because I can pay those people more. And I can boost my marketing effort.
[07:59] SPEAKER_00: As well. So I think that's what we often find, Phil, is you had asked me earlier, what is the
[08:04] SPEAKER_00: average savings? I hate that. Renee, our clients to think about how I can use that money to put back
[08:12] SPEAKER_00: into hiring better people, improving my systems, improving my product line. That gives me a competitive
[08:18] SPEAKER_00: edge in the marketplace. And so that's what we want to help our clients do. And it comes with a
[08:23] SPEAKER_00: really powerful lever that can help you stand out in your market and beat out the competition that
[08:30] SPEAKER_00: you're going head to head with. Poor thing. Air for economic uncertainty. Like we talked about
[08:38] SPEAKER_00: volatile economic climate, we're in. I think we saw that as well in that pandemic period. I know
[08:45] SPEAKER_00: a lot of people, if they were in business during the 2008 economic recession dealt with as well.
[08:51] SPEAKER_00: So it's important to always be prepared. Even if you're in a good economic time, you know that
[08:58] SPEAKER_00: things may change in the future. I want my business to stay as lean as possible and well managed overhead
[09:05] SPEAKER_00: helps businesses stay better equipped to, you know, whether downturns, to whether inflation,
[09:11] SPEAKER_00: to deal with unpredictable costs spikes, to deal with, you know, tariffs and trade wars and
[09:16] SPEAKER_00: regulatory and legislative changes that impact their success. And so I think really important
[09:25] SPEAKER_00: hill is I want to reduce overhead. I want to reduce my expenses because that puts me in the best
[09:30] SPEAKER_00: position possible to deal with current economic uncertainty, but also whether any storm that may
[09:36] SPEAKER_00: come in the future that will affect me as well. The thing is just maximize operational efficiency.
[09:45] SPEAKER_00: I know that's really paramount for a lot of the business of people that we deal with is we want to
[09:52] SPEAKER_00: be successful and we want to run as efficient in organization operationally speaking as we possibly
[09:58] SPEAKER_00: can. And so, you know, one of the things that we help our our clients deal with is, okay, how can we,
[10:04] SPEAKER_00: you know, be lean? How can we be as efficient as possible? Because ultimately managing expenses isn't
[10:10] SPEAKER_00: just about kind of cost cutting. It's also about eliminating waste. It's about aligning our spending,
[10:17] SPEAKER_00: you know, with strategy. And so that's what's really important for I think businesses of all sizes.
[10:23] SPEAKER_00: As we want our expenses to be at the right place so that we can be as lean and as efficient as
[10:29] SPEAKER_00: possible so that we're not overspending in any area of our business so that our services are at the
[10:35] SPEAKER_00: place they need to be, that our vendor relationships aren't the place they need to be. And ultimately,
[10:40] SPEAKER_00: you know, that boost overall efficiency and ensures again, every dollar is working for you and
[10:47] SPEAKER_00: your business and that becomes really important for I think every business in across Canada and across
[10:53] SPEAKER_01: industry. Just a little break. Yeah. This is good stuff but I mean, I'm sure that people are listening
[11:01] SPEAKER_01: and saying, oh yeah, so they save me 30% and then probably charge me 35% to do it. Maybe you can
[11:10] SPEAKER_01: explain the process that you guys go through to get the savings. Sure Phil, no absolutely. So,
[11:20] SPEAKER_00: what we're doing is we're going in and we're analyzing how our clients operate in the areas that
[11:27] SPEAKER_00: we look at. We're also negotiating the rates with their vendors and also going to the vendor marketplace
[11:33] SPEAKER_00: to see what's out there, you know, competitively speaking. We built a lot of great vendor relationships
[11:41] SPEAKER_00: across all of our cost categories and high level relationships at those vendor companies. So,
[11:47] SPEAKER_00: while our our clients tend to just deal with, you know, sales rep or customer service rep at those
[11:53] SPEAKER_00: vendor companies, what we've been able to do is build higher level relationships. People that can
[11:58] SPEAKER_00: actually make a meaningful decision on the pricing that our clients get. We leverage those
[12:03] SPEAKER_00: relationships. We also just leverage the knowledge we have about the pricing marketplace so that,
[12:09] SPEAKER_00: you know, the vendors know that we know, although they can go on pricing and we have a precedent that
[12:15] SPEAKER_00: we're using as leverage in these negotiations as well Phil. So, what we're doing is we're, you know,
[12:21] SPEAKER_00: reducing our clients rates and so the goal there is that as, you know, for three year period is
[12:28] SPEAKER_00: when we end up sharing in the savings with our clients, we share half of the savings with them for
[12:34] SPEAKER_00: a three year period. But then after that that 36 months ends, they keep 100% of the savings in their
[12:41] SPEAKER_00: pocket moving forward. So, we're generating long-term value for them. Really, the goal is that those
[12:47] SPEAKER_00: savings name place for the foreseeable future. But in our case, we're going to be compensated 50%
[12:54] SPEAKER_00: of the savings for that initial three year period. So, what about, you know, let's move back to those
[13:03] SPEAKER_01: 10 items. You were at number five, I think. Yeah, yeah, so the next thing I didn't want to talk
[13:08] SPEAKER_00: about Phil is just I think it's really important to create budget flexibility for a lot of our clients.
[13:16] SPEAKER_00: What they're finding is they're pushing themselves up against budgets. And so, they often don't have
[13:21] SPEAKER_00: wriggle room to do the reinvestments and the kind of infrastructure and operational improvements
[13:27] SPEAKER_00: that they want to because they know that those things will again help them succeed and grow
[13:32] SPEAKER_00: effectively. So, I think another really important part of reducing overhead and reducing expenses
[13:39] SPEAKER_00: is that with lower fixed costs, you're able to gain a lot of flexibility to adapt quickly.
[13:46] SPEAKER_00: You know, again, whether that's investing in new technology or systems, whether that is hiring
[13:51] SPEAKER_00: that top talent that maybe you didn't have the budget for, you know, a couple months ago. But now,
[13:57] SPEAKER_00: because of what you've saved, you're able to go and hire a better talent. Or just again,
[14:02] SPEAKER_00: responding to sudden market opportunities that come up, I think if I can always be in a position
[14:07] SPEAKER_00: to have some budget flexibility, either overall or for each of the departments in my organization as
[14:14] SPEAKER_00: well, that just puts my business in the best position to succeed. So, that budget flexibility is
[14:21] SPEAKER_00: really important. I think the next thing Phil is we call this the trap of sort of set and free
[14:29] SPEAKER_00: expenses. What we tend to find is that business owners and the decision makers that work under
[14:36] SPEAKER_00: them, when they've started their businesses, they've set themselves up with a lot of providers,
[14:42] SPEAKER_00: a lot of services that they need to operate. But that tend to take the back burner in their kind of
[14:48] SPEAKER_00: mind as they're running their business and growing it day to day. And so, set and forget expenses,
[14:54] SPEAKER_00: tend to be things that are set up. And then they're forgotten. Again, like phone systems, like
[14:59] SPEAKER_00: your credit card processing, like the waste removal at your facility or like the shipping
[15:06] SPEAKER_00: that you're doing, just to get your products to your customer base. And so, many of our clients
[15:12] SPEAKER_00: and really all the businesses that we work with, they continue to pay for services and vendors
[15:17] SPEAKER_00: just out of habit. It's just what they've done. And so, they stick with it. And they never adjust
[15:23] SPEAKER_00: things. They never we negotiate. They never consider, is there a better option out there for me in
[15:29] SPEAKER_00: terms of service quality and economic options for me? So, what we know is that regular expense
[15:38] SPEAKER_00: reviews end up uncovering, you know, recurring charges and billing errors that no longer serve the
[15:45] SPEAKER_00: goal of our clients. And we're never cost effective often in the first place. So, it's one of those
[15:51] SPEAKER_00: things, Phil, where we find a lot of our clients are missing opportunities because they're not
[15:56] SPEAKER_00: meaningfully, we, you know, re-addressing these things and analyzing them on a consistent basis.
[16:03] SPEAKER_00: And that's not their fault. They are just busy and their teams are busy, growing and improving.
[16:10] SPEAKER_00: This stuff, it shouldn't take up their time. But by not, you know, focusing on it, it ends up in
[16:17] SPEAKER_00: missed opportunities. So, again, that's what school image will help. We take that time off our
[16:23] SPEAKER_00: clients' plates and also help them reduce these expenses and deal with these things effectively as well.
[16:32] SPEAKER_00: Number eight, what I have here, Phil, is just, I think it's really important to drive accountability
[16:38] SPEAKER_00: across the organization as well. I think when you can effectively manage and stay on top of your
[16:44] SPEAKER_00: expenses, it really encourages all of your departments to justify their expenses and find smarter
[16:52] SPEAKER_00: solutions as well. I think it's no one's fault, but often time, your people become comfortable doing
[16:59] SPEAKER_00: things a certain way, just like the point we talked about earlier. But we want to make sure that
[17:04] SPEAKER_00: all of our company's dollars are working for us and that we're strategically spending every
[17:10] SPEAKER_00: single resource in our company as effectively as possible. And so, I think if I can do regular
[17:17] SPEAKER_00: reviews of my expenses or bring in a third party to help us do it, it just makes sure that it really
[17:24] SPEAKER_00: cultivates, I think, a culture of ownership and cost awareness across my organization. So,
[17:30] SPEAKER_00: everyone that has a vested interest in my company being successful, that includes managers and
[17:35] SPEAKER_00: directors and employees, has that accountability and that culture gets built up as a result.
[17:43] SPEAKER_01: It's a good point. Can I just curious? In terms of the trends when you do this,
[17:54] SPEAKER_01: is there a glaring one where cost that you find, my God, is there a kind of,
[18:07] SPEAKER_01: don't you like to use winter because it's obviously for the entrepreneurs to lose it?
[18:13] SPEAKER_00: Sure. Is there a priority one? Yeah, Phil. I mean, there's so many things I could talk about.
[18:23] SPEAKER_00: There's the obvious thing, like, we just had a client that we worked with that we found a million
[18:30] SPEAKER_00: dollars a year in savings on unused wireless devices. It was a matter of they were staying on top
[18:37] SPEAKER_00: of things. And when people left the organization, the wireless devices weren't taking off the company
[18:43] SPEAKER_00: plan and then they would add new people. And sure, on a one off basis, it's not the end of the world,
[18:48] SPEAKER_00: but time, you know, year over year over year of that. It adds up, which is a great result.
[18:54] SPEAKER_00: And it's nice that we were able to help our clients. I think the other thing I think of Phyllis
[19:00] SPEAKER_00: shipping, you know, maybe, you know, it's a great category for us to look at because in a lot of
[19:05] SPEAKER_00: cases, our clients, they have to ship things. And often what we see now is, you know, they have
[19:12] SPEAKER_00: different product lines and they're competing with Amazon. So they have to ship things faster.
[19:17] SPEAKER_00: And maybe they used to just ship across Canada, but they've expanded their customer base.
[19:21] SPEAKER_00: And now they're shipping globally. And they've never revisited the pricing agreement they have
[19:27] SPEAKER_00: with their shipping provider in spite of all those changes that they faced. And so what you need to
[19:33] SPEAKER_00: do is anytime your shipping needs change, you really need to go back and renegotiate a better
[19:40] SPEAKER_00: pricing agreement so that you're on the best rate possible for the way that you have to ship. And
[19:45] SPEAKER_00: again, that's what we help our clients do. So I'd say telecom shipping are a great fill. But
[19:51] SPEAKER_00: there's also things like waste removal where how how many business owners that are listening actually
[19:57] SPEAKER_00: know how what they're paying for their waste bins behind their facility and how often it's picked
[20:02] SPEAKER_00: picked up and are they putting contaminated waste into that that waste container, which they're
[20:08] SPEAKER_00: paying extra for. Again, that's one of the categories. Our clients know very little about it. And
[20:14] SPEAKER_00: that's very much a set in and and forget expense that hey, we need to get rid of garbage. So we'll
[20:19] SPEAKER_00: set it up and we'll never revisit it again. But we find savings of well over 30% in that category
[20:26] SPEAKER_00: as well. So all these things, Phil, but those are some obvious examples. So let's move to the last two
[20:32] SPEAKER_01: that you have the top 10, if you want. Yeah. Yeah. Sounds good. So I think the ninth thing, Phil,
[20:39] SPEAKER_00: since this is directed for entrepreneurs, I think everyone is thinking about increasing their
[20:45] SPEAKER_00: business valuation. Even if I'm not at the point where I am ready to sell my business, I still
[20:51] SPEAKER_00: want to make sure that my asset can you continue to build and build and grow so that if I'm at a
[20:57] SPEAKER_00: point where I want to move on and potentially sell and exit, I want to increase my valuation as
[21:04] SPEAKER_00: much as possible. So if anyone is listening to this, if you're planning for growth, if you're
[21:11] SPEAKER_00: planning for acquisition, if you're planning for sale, clean and well managed expenses end up
[21:17] SPEAKER_00: translating into stronger financials, and that ends up being a key factor in investor or buyer
[21:24] SPEAKER_00: confidence. So I think that becomes really important. I think most businesses want to build the
[21:29] SPEAKER_00: strongest asset they can by having well managed expenses, you're increasing the confidence of
[21:36] SPEAKER_00: anyone that wants to invest down the road or anyone that might want to buy the company from you
[21:41] SPEAKER_00: in the future. So that that becomes really important as well. And then I think the last thing, Phil,
[21:48] SPEAKER_00: is just redirect resources to what really matters. Ultimately, every dollar saved on unproductive
[21:55] SPEAKER_00: you know, expenses is a dollar that can be reinvested. It's like we've talked about what what really
[22:01] SPEAKER_00: drives your business and your mission forward. That is people, that's innovation and that's growth.
[22:08] SPEAKER_00: And so can I save money on my telecom expenses or my shipping expenses or you know how much I'm
[22:15] SPEAKER_00: paying to have my my customer credit cards process. If I can save money there and then reinvest it
[22:22] SPEAKER_00: to hire better people to innovate more effectively, to ultimately grow what my company is doing,
[22:29] SPEAKER_00: that is that's why we're in business, right? It's it's to grow and to be successful and to make an
[22:34] SPEAKER_00: impact. And so if I can reinvest resources to do that, I've won as a business owner and decision
[22:41] SPEAKER_00: maker. So those are those are my top reasons, Phil, why it's really important to reduce expenses.
[22:48] SPEAKER_01: I think you know, it's not sort of news news, but it's certainly business news to a lot of people
[22:55] SPEAKER_01: because they don't know this stuff and you're highlighting it. This little segment is highlighting it.
[23:03] SPEAKER_01: So yeah, you know, thanks coming on. I think it's a really really interesting
[23:10] SPEAKER_00: piece for people to listen to. No, absolutely. I thank you for having me on and I appreciate
[23:16] SPEAKER_00: everyone for listening and thanks for what you do, Phil. It's been a great great conversation.
[23:20] SPEAKER_00: Yep, thanks, Phil. Thank you.