Great Ideas for your Small Business: Become a Profit Enhancement Officer
We’re all familiar with ceos, but ever hear of a “PEO”? A PEO is a “profit enhancement officer,” and that’s what every business owner should be, according to Barry Schimel, a Maryland CPA who quit doing tax returns to devote his life to boosting business owners’ profits.
“If you ask employees what their responsibilities are, the word ‘profit’ rarely comes out of their mouths,” said Schimel, cofounder of The Profit Advisors in Rockville, Maryland. “People do work, but there’s no relationship between what they do and how it affects the bottom line.”
Beefing up the bottom line is the goal of Schimel’s rigorous analysis and intense brainstorming sessions. Although he charges clients five-figure consulting fees, Schimel claims he’s helped them reap more than $200 million in additional profits over the past few years.
“Because he was a complete outsider, he gave us new ways of looking at things,” said Debbie Hastings, vice president of East End Moving and Storage Inc. in Rochester, New York. After hearing him speak at a moving-industry conference, Hastings hired Schimel to turn twenty of her sixty employees into “profit champions.” Everyone from packers to salespeople was taught how to dig for profits.
Schimel was quick to implement money-making strategies. His first focus was clerical. East End employees pledged to vigilantly complete all the move-related paperwork, because when packers and movers didn’t keep track of all the materials used or hours spent on a job, the customer couldn’t be billed—and profits were lost. Hastings said that simple tactic added about $1,000 a week to the company’s bottom line.
After receiving Hastings’s permission to tape-record his calls to East End’s sales department, Schimel played the tapes at the brainstorming session. “That was a real eye- opener,” said Hastings. “One salesperson was essentially giving away out-of-state business by referring customers to other movers.” The employee was counseled and sales policies were changed.
Some profit-boosting suggestions were small, such as putting supervisors in charge of distributing office supplies to cut costs. “It’s hard to keep track of specific savings, but based on our financial statement, we’re doing better,” said Hastings.
With Schimel’s help, Washington Express Service Inc., based in Beltsville, Maryland, found that it could reap a windfall just by reviewing customer accounts. The company, with annual revenues of $7.5 million, serves mostly white-collar clients such as law and accounting firms.
“We found a lot of customers with special discounts that no one had reviewed for years,” said Gil Carpel, president and CEO. He immediately updated the old rates. Then they began charging extra for mileage, round-trips, and waiting time. Very few customers complained about these minor adjustments, which brought in an extra $100,000 a year.
“It was really manna from heaven,” said Carpel. He also “fired” some customers to eliminate the expense of servicing companies that rarely called with business. Based on Schimel’s brainstorming sessions, they also installed a toll-free 800 number for drivers who had been calling dispatchers collect, consolidated vendors, and installed an e-mail system to improve internal communications.
After working with Schimel for a while, Carpel also fired his chief financial officer, “because he never came up with any profit-making ideas.” Now, Carpel said, he has a company full of PEOs who search for ways to boost his profits every day.