How to Minimize Operations Payroll Expense
What pays for your sales team? I hope you know the obvious answer to this question: sales revenue. Sales representatives are hired to drive revenues and profits. If you take a deeper look into your profit and loss statement, there are several areas you can develop income and minimize the cost of your operations team. Here are some suggestions.
Operations employees: Operations employees are the backbone of all promises your sales team makes. A great operations team is a pricey but valuable asset.
Discounts: The goal each year is to drive enough discounts to pay for your highest priced operations employee, such as your controller. If you can negotiate enough percentage discounts to pay for your highest-priced operations employee, you now have an employee that doesn’t show up as an expense.
Rebates: If you are not in a buying group, consider joining one. The objective is to use rebates earned to pay for your second-highest-paid operations employee, such as your operations manager. Even if you are not in a buying group, suppliers will work with you and set up programs that reward loyalty. Simply ask. So many companies fail to ask for programs. Much like sales, if they are not saying no enough, you are not asking enough.
Recycling: If you don’t bale your carpet cushion, why not? Every day we make $75 to $150 by recycling. Guess who recycling pays for? The warehouse manager. A $24,000 annual salary greatly offsets payroll expense. Purchasing a baler is a wise decision, but it’s also an expensive investment. We invested $11,000 in June of one year and the bales created enough revenue by March of the following year to be 100% paid back on our investment. Since then, we have made $120,000 in recycling income. This program is our “Trash Into Cash” program, which was brought on by the recession. Not only does the recycling program earn income, it also saves expenses. We bale plastic, paper, and cardboard and send it back to the recycling center. This saves dumpster space for trash that we cannot recycle.
Cash-n-Carry: Your warehouse manager knows your in-stock inventory better than anyone in the company. You would be surprised how productive he or she could be if you empowered them to make commission from sales of remnants and in-stock products. Our warehouse manager sells $10,000 in cash-n-carry orders per month at a 30% margin. This pays for our part-time accounts payable employee.
These are just a few creative ideas to create income even out of your operations payroll team. I would love to hear your success stories. Email me at email@example.com to share.