May 1997

You can probably cut the basic operating expenses of your business, including office supplies, delivery services, printing and long distance telephone service, by 20 percent, 30 percent, 40 percent or more. All you have to do is shop around, carefully compare prices and services and then do some hard bargaining with vendors and suppliers.

There's just one problem.

As a company owner or executive, you're probably spending 10, 12, 14 hours a day or more running your business. You're looking for new clients, keeping current ones happy, and trying to come up with new products or ideas to grow the business. You don't have the time to spend shopping around for lower prices on office supplies or equipment service contracts.

And your "office manager" probably wears several different hats. He or she is continually being bombarded by salespeople and isn't likely to have the time or experience to sift through all the conflicting claims to get the best deals.

Cost Management Consultants Can Help
That's why many small and midsize companies have turned to so-called cost management consulting firms. Arleen Kahn, president of Manhattan-based AMK Associates, a firm that provides such services, says she does the things company executive would do if they had the time and expertise; that is, minimize office costs without sacrificing quality.

The savings that can be generated by having these consultants shop, compare, and negotiate costs is substantial:

Lewis Sidorsky, controller of Automated Concepts, Inc., says Kahn saved him more than $80,000 a year by changing long distance carriers and delivery services, and negotiating new deals with printing and office supply vendors.

Winmill & Company cut its costs for office supplies, stationery, overnight delivery, and photocopying by over 20 percent annually, says Tom Winmill, executive vice president.

Steve Sonet, a partner with the New York-based law firm Levy Sonet & Siegel, estimates savings of more than $6,000 a year simply by changing the service contracts on office equipment.

Lessons Learned
The concept of a cost management consultant "sounded a little fishy initially," admits Sidorsky, "but we figured we really had nothing to lose." He says Kahn bases her fee on the amount she saves a client. For example, if a company saves between $20,000 and $30,000, she gets $12,750; if it saves between $201,000 and $300,000, she collects $95,000.

Sidorsky says Kahn did all the research and negotiating with the vendors. "I only got involved in the final decision-making stage," he says. "I didn't have to sit around and deal with vendors five or six hours a day."

"There's always a chance to get a better price from vendors," Sidorsky says. "You may think you're getting the lowest prices, but you're probably not."

He says his company wasn't getting as good a deal from many long-time suppliers as he thought he had been getting. "It was a rude awakening," he added.

"A company's current vendors will match the prices I get nine times out of 10," says Kahn. "They don't want to lose the business. But that's only because I confront them with valid offers by legitimate, alternative vendors."

Breaking Up Is Hard To Do
Sidorsky warns that it can be personally difficult for you and your managers when you're trying to negotiate a much lower price with vendors with whom you've had a long-standing relationship. He let many of his vendors know ahead of time that Kahn was going to try to negotiate the best deal for his company.

"I basically let them know that if they can beat the price, they'll keep our business," he says. "Some vendors did, others didn't and we switched, and we made one or two enemies along the way." But Sidorsky adds, "I told them it's nothing personal; it's just business."

< back to top

< back to news index