Whether buying a company car or handling office expenses, negotiation is a key component to growing your business. Why? Because the easiest way to increase your bottom line is to decrease your overhead by negotiating everyday business expenses. Even though they’re small … they all add up.

Businesswomen do face an obstacle, though. According to a recent study — conducted by a professor of economics at the H. John Heinz III School of Public Policy and Management at Carnegie Mellon University — men initiate negotiations about four times as often as women.

And while men described negotiating as “winning a ballgame,” women chose the comparison of “going to the dentist.” But negotiation doesn’t have to be intimidating. You can increase your purchasing power and your bottom line, if you know the secrets of negotiation and cutting costs. What are my secrets? Know the jargon, and know what’s negotiable.

Cost Management 101:

Office Supplies
Use generic versus brand names whenever possible. Many brand name suppliers also make a generic version of their product, so you won’t sacrifice quality. For example, if you substitute 3M’s Highland Self-Stick Notes for brand name Post-It® notes, you save more than 50 percent per unit. Regardless of your relationship with a vendor, always ask for a price reduction. Most vendors will not quote you the best price without a little prompting. After all, they’re in business to make money, too.

Note: If you decide to hire a cost- management consultant, most will negotiate value for value and will not substitute generic products if you are using brand names. However, consultants will typically price generic supplies as a bonus to show the added savings you can pursue, if you feel comfortable with generic products.

Equipment Leasing vs. Purchasing.
Evaluate your business’s needs when you are deciding whether to lease or buy equipment. A general rule of thumb? Buy anything small enough to set on your desk; otherwise, lease it. Leasing gives you the option to upgrade or downgrade. However, always keep leases under 36 months. In that period of time, your needs are likely to change. Not to mention the rapid advance in technology that can occur over a three-year period. For smaller equipment, such as fax machines and printers (Brothers and Epson are great), purchasing is advisable because the cost constantly decreases, and the technology does not change significantly.

Messenger Services.
Most companies in big cities use messenger services, which add up to be a major annual expense. To soften the blow, determine where the packages are being delivered. Then, negotiate a broader delivery range and pay a fixed price.

Equipment Insurance.
Little known fact: All leasing equipment companies automatically charge for insurance, even though it may be covered under your current policy. For example, Pitney Bowes lists its insurance coverage as ValueMax, which is usually not identified by the client as an insurance charge. If you decide to lease, remember to register your equipment with your insurance broker so it can be added to your current policy. Request a Certificate of Insurance (COI) for your broker, and then submit it to the equipment leasing company. If you don’t, you may end up paying double insurance charges.

Shipping.
Shipping costs should be handled on a case-by-case basis. Learn the ins and outs of each vendor. For instance, if the weight is not included on a DHL (formerly Airborne Express) package, the company charges customers for a five-pound parcel. To avoid this, preprint air bills with one pound, and DHL will adjust the poundage if the package weighs more or less.

Printing.
If you know your letterhead text will stay the same for a six-month period, print in bulk. It saves both money and time. And, don’t worry about storage — most printers will store the inventory and ship at no additional cost. If your printer won’t, negotiate storage and shipping into the overall price of the print job.

Telecommunication.
If bundling your telecom services (voice and data) gives you a total monthly bill of $3,000 or more, you should consider a T-1 connection. Though you will be charged a reoccurring monthly fee, your per-minute rate will be significantly lower. Also, check to make sure your phone company is charging you in six-second increments. If not, you are paying a full minute for each fax you send, even though it transmits in seconds.

Note: For a telecommunication jargon glossary, visit www.fcc.gov/glossary.html.

Service Contracts.
Many companies pay anywhere from $3,000 to $40,000 per year for service contracts when it might be more cost-efficient to simply pay for time and materials — even as much as $175 per hour if repairs are necessary. Some service contracts are advisable, but be cautious. For example, most telecommunication contracts include the PBX (console), as well as each individual telephone. Though it is advisable to insure the console, there is little need for insurance coverage on the phones.

Note: Signing a service contract that is incorporated with the equipment lease agreement technically waives your 90-day warranty.

The Bottom Line

By making these minor purchasing changes, women in business prove their worth through facts and figures, in black and white. Cutting costs will increase your bottom line and enable you to grow your business.

Arleen Kahn is founder and president of AMK Associates (www.amkassociates.com), a Manhattan-based cost-management consulting firm. For more information on how you can impact your bottom line through cost control, contact Arleen at 1-888-345-8008 or amk@amkassociates.com.
 

< back to top

< back to news index