Real-World Cost-Cutting Practices

What began as a challenging economic cycle has spiraled into a recession. Most employers have laid off employees, put a hold on future projections and nixed large purchases for the sake of survival. It may leave you thinking there's nothing more to do but hope for the best. But many have refused to call it quits. The smartest have figured out ways to adapt their business practices. They are saving energy, discovering free advertising, entertaining clients on the cheap and, in general, saving money--from buying single-ply toilet paper to utilizing free website hosting, these entrepreneurs have savings on lock-down.Gotham Comedy ClubNew York CityChris Mazzilli, owner and founder of Gotham Comedy Club and the Metropolitan Room in New York City, knows cutting costs during the economic crisis is no joke.

"I've been making changes here at Gotham Comedy Club and my other business, the Metropolitan Room, for about a year," Mazilli says. "One of the big keys for me was not to have our customers feel or notice any cutbacks whatsoever."

He's switching to green products--napkins, paper towels and toilet paper--because there's a 10 percent to 15 percent savings. Though when Mazzilli first explored green products, he wasn't immediately impressed--his customers didn't like the rough paper products, and they were expensive. As the market for green products evolved, the quality improved and the cost decreased.

He also retrained managers to send staff home during slow stretches. "What has very little effect on an employee saves a lot of money and jobs at the end of the year," says Mazzilli, who hasn't lost a single employee during the economic crisis. "If an average employee makes $10 an hour, just one hour a day saves you $3,650 a year."

He's negotiated better rates at the hotels where he puts up performers. "We average $450 to $550 per room per night. Paying $50 less per night adds thousands to the bottom line."

Shifting to e-marketing has also cut costs, as has shopping for wholesale supplies. In addition, Mazzilli has reduced the number of comedians per show when he features big headliners, which he says the audience appreciates because they see more of the main attraction rather than a string of lesser-known comedians. He's invested in a copy machine to do more in-house printing, bypassing copy or print shops. Together, these changes have added approximately $10,000 to his business's bottom line.Spee-Dee Delivery Service Inc.St. Cloud, Minn.Craig Heurung, sales manager of Spee-Dee Delivery Service, knows delivery companies, especially smaller specialty services, felt the sting of fuel cost spikes almost instantly.

His first step was to focus on communication with his drivers. "Something as simple as educating drivers when it comes to fuel consumption can go a long way in cutting costs," Heurung says.

He instructed all drivers to shut engines off whenever possible. "We tell them no more jack-rabbit stops, constantly hitting the brakes, or going nowhere in a hurry." Heurung says fuel consumption is the one cost they have control over. Spee-Dee, a regional delivery service, has more than 1,000 trucks on the road.

For longer-distance travel, Spee-Dee, along with other delivery services, has made speed moderation mandatory by installing governors on its fleet. Governors are a part of a one-time-cost software program. One supplier is Auckland, New Zealand-based EFILive.

The cost varies depending on the software and the system, but the programs begin at about $250 and run as high as $2,000. Spee-Dee began implementing the software about two years ago and now all of its trucks are equipped with it. The program usually pays for itself in less than two months--gone are the days of the careening, speeding 18-wheeler.

The speed governor works like an airplane's black box, showing a detailed history of the driver's actions and behaviors behind the wheel, including braking and accelerating patterns. If the driver displays disturbing or dangerous patterns, management can educate him to avoid tickets, which results in decreased insurance rates. "You may have noticed [delivery trucks] going slower on the freeways," Heurung says. "Everybody's doing it."

Paying close attention to its delivery route schedule is another way the company has saved. Restructuring routes to avoid overlap has netted Spee-Dee tens of thousands of dollars a year. "We plan our routes better so we don't have wasted trips."