(Editor’s Note: Walter Haney, Sr., founder of American Risk Managers, first addresses our troubling times, then provides hope and some considerations to help companies lower costs and find savings in our current economic situation.)
TIMES… ‘They are troubling’
This has never been a more true or more appropriate phrase for the days in which we live.
The Bible tells us to expect troubling times 365 times and it is supported by philosophers throughout the ages.
The recent pandemic has been the assuring truth of this fact — and it’s true in all levels of the world’s economy.
Days are dark and none of the mass media offers any magic moment in which it will all go away.
The politicians are locked into conflicts, which point to continuing warfare.
This atmosphere of strife leaves us with an extended scene of unproductive un-cooperation, with no sense of change from outside help.
You are left to gather your assets to fight this self-survival struggle.
And you can do this. Because you are resilient.
Not A Hopeless Situation
We all know things are going to change. But there is no reason why they can’t change for the good.
Regarding the previous Bible references; the Bible does speak about troubling times, but it also says there will always be a solution… a deliverance from difficulties.
We are not hopeless or helpless, it’s up to us all — you and me — to help make things better.
We have more resources, skills and technology than we’ve ever had before.
And let’s not forget our strong foundation — the great economic driver of this world is its industrial production base.
The American business community has always proven itself very adept at identifying its strengths.
And it’s equally able to sort out its careless, wasteful activities.
We can begin there.
Less Is Sometimes More
Let’s discuss a few overall considerations that could help your company during these troubling times.
- Eliminate Waste Activities: These waste activities can be as simple as the failure to remove disabled or discarded vehicles from your company’s insurance coverage list.
- Reduction Of Over-Stocking Of Inventory: Review your inventory; both raw materials and finished goods to reduce overall costs and insurance coverage costs.
- Trim Payroll Overages: Schedule work hours and production lines to reduce overtime and other excess labor costs.
- Scale Down To Basics: Make efforts to return your business to its core operations, thus reducing (and shedding) any unproductive activities.
You should also establish a specific goal for your reduction of cost and then work toward that goal.
Review your goal bi-weekly or monthly to gauge how your cost-cutting programs are responding.
Get Management Involved
There are also a few specific ways you can get your management team involved in rolling back expenses.
In times of reduced income, your businesses team should:
- Recheck your entire budget; including overhead expenses.
- Examine all operating costs; with an emphasis on locating hidden savings opportunities.
- Reduce your vehicle fleet to just what you need; sell or declare as surplus all others (and also take these off your insurance policy).
- Review your personnel schedule; checking work flows and making sure there is no excess labor force on the floor.
Take A Close Look At Major Costs
There are three main costs for most companies.
- Raw Materials;
- Payroll; and
- Commercial Insurance.
Raw materials may be controlled by supply and location.
Payroll may be tied to various labor contracts and the available supply of qualified personnel.
The commercial insurance area may contain the most fertile ground for cost reduction.
A good starting point is eliminating excess coverages in your insurance policies.
For example, you may have more coverage than you need on a particular location or multiple locations.
Chances are low that a fire or a disaster would destroy your buildings in widely-spaced or different geographic locations.
Each situation is unique and you definitely need expert advice — but there may be a possibility of lowering the coverages on specific buildings and then increasing umbrella-type coverage limits.
Risk Management: Best Cost Compared To Best Coverages
With insurance being your company’s third-highest expense, it makes sense to seek professional advice.
Besides determining the lowest net insurance cost that you can operate with, all your different types of policies will be reviewed for the best coverages and values.
If you’re not using a Risk Manager in the structuring and purchasing of your commercial insurance, you are probably adding 25-35% to your cost.
While Fortune 500 companies and larger industries employ Risk Management Departments to perform this vital task, the cost is too great for many medium-sized companies.
The need is there, but the resources are not.
Mid-sized companies should approach the Consulting Risk Management market.
But take note and keep this in mind when researching the market: All Consulting Risk Managers are not created equal.
Ask to see a list of current and former clients. And ensure that your Risk Management Firm is truly independent.
Independent Risk Managers:
- Are NOT tied to any insurance carrier;
- Are ONLY compensated by the client; and
- Have an agreement ONLY with the client.
Besides finding savings, and eliminating gaps and overlaps, these firms can assist with information that helps reduce client management workload.
Your time and your top managers’ time can then be better spent in other areas of your business.
At this point, you’re probably wondering what type of costs will be involved.
Normally, Risk Management Consulting fees will amount to 10 to 15% of the client’s premium reduction savings. (So, your savings should cover your costs.)
But, the biggest savings comes from quality of coverage.
- You’re adequately insured, but not over-insured;
- All your limits are set appropriately; and
- Your properties, equipment, fleet, personnel, and officers and directors are all covered — and not at risk.
If you would like to learn more about Risk Management, we would like to offer our assistance.
You can speak to me personally — Walter Haney, Sr. — about more ways Risk Management can help boost your business in the aftermath of this pandemic.
Resiliency Is Key
We hope this posting has given you some good ideas on how you can lower costs for your company.
Remember, resiliency is a key factor in the recovery and future success of your business.
Numerous articles about “resiliency for businesses after Covid-19” can be found easily with a Google search. In fact, there are thousands of them.
We wish you all the best. Stay Safe. Stay Well. And STAY in Business!
Let Resiliency Be Your Oil On Troubled Waters!
(Photo Credit: Pexels/Matt Hardy)