Celinda Hawkins: And we want to welcome Marc Freedman, to the program. He is a Certified Expense Reduction Consultant, and he is going to tell us how to cut costs and save money in the new year. Good morning, Marc.
Marc Freedman: Good morning Celinda, how are you?
Celinda: Doing well. Well, due to the pandemic, I guess that word is never going to go away. Out of our vocabulary. Businesses are looking for the quickest opportunities to save on expenses, without having to cut jobs. And so, what are some of the things that you’re advising folks to do?
Marc: Depending on the client and where you’re located, of course in Texas, you have the opportunity to be able to buy your own utilities from who you prefer. So a lot of times you can save quick money easily just by procuring your utilities from a supplier rather than the local utility. Another area that we find a lot of savings real quick, is with merchant fees. And we’re able to in most cases 89% of the time, make those changes in those savings without having to change your existing processor that you’re currently using. But the problem with merchant fees is there’s 824 different fees that can be charged. And most people don’t know, don’t understand, can’t comprehend because it’s because statements are not legible unless that’s where you spend a lot of time to be able to understand exactly what all these different fees are what the right fees are based on the contract you have.
Celinda: Well, what exactly are merchant fees like when your cable companies and you bill for the air you’re breathing?
Marc: Well, I mean, it’s credit card fees. It really is what it is what it is that you know whether you’re using a debit card or a credit card and that is the processor in between the business, and the actual institution, whether it’s Visa, American Express, MasterCard or Discover. There are fees that are charged and there’s different layers of fees. But there’s only a few fees that are actually mandated which are charged by Visa, MasterCard, American Express. Everything else is added on by the person in between you and them.
Celinda: I see, Okay. And you also say that healthcare is one of the biggest line items, where costs can be reviewed, as far as businesses go. Explain?
Marc: Oh yeah 100% because you know a lot of people, you know that they get the annual increases most agents insurance agents, really are not consultants, and they don’t look at exactly how a plan is designed. So a perfect example and this is something that that I put into our book is we looked at how a plan was designed and they had three different types of options for employees. In the typical HMO, you have a middle tier and then you have a higher tier, and typically who uses the higher tier? Ownership, because they want the best possible option. But when you have only ownership using that in for instance, you know, maybe you’re paying over a million dollars a year in premiums for your employees and yourself. You can cut 10% of that away if you eliminate that highest tier level. So we’ll call it a platinum program and maybe make your silver program a gold program, and then you find a new middle tier. And what you’ll find is the employees now are more satisfied because they’re in the higher tier. So it’s a benefit to them, it’s a real build-up for them, “Hey, we got the best insurance now, look we’re in the highest tier.” And then some may even choose a middle tier, which again will save a lot of money but you can save that just by eliminating that real high-end program.
Bob James: Bob James here and as a former business owner. I wonder if because of the pandemic if you’ve not seen more service providers, whether it be postal service providers, not the Post Office certainly, but the machines and other service providers are more apt to be negotiable in those fees?
Marc: Yeah, and this goes with rent too right? There’s a lot of office space coming in the marketplace for businesses that are unfortunately no longer able to do business. But there are abilities for you to go back and renegotiate the agreements and the reason being is, that people are saying well 50% of something’s better than 100% nothing right. And so where possible, we’re seeing a lot of activity, and then able to renegotiate existing contracts, and then extend the contract further with new pricing. So it does two things; number one, reduces your immediate costs, and number two it locks in those costs for a longer period of time. Then the vendor also knows or the landlord knows that they’re going to get paid for a longer period of time and think about it this way, with real estate if you defer some rent today and you don’t pay today and the landlord thinks, and says okay we’ll add six months on the end of the lease. Where are you paying the highest rent? You’re paying at the end of the lease so benefits of landlord as well. So while they may be getting less cash flow today. They’re going to get better cash flow at the end of your lease that has been extended.
Celinda: And, you know, Marc, there’s a huge now, remote workforce. A lot of businesses are utilizing them, we are not, we are in the studio today but a lot of folks are utilizing that. How does that change things?
Marc: That’s really an interesting concept because it was already happening, the pandemic made it happen a lot faster than really anybody anticipated. And so my business for instance has been virtual since day one. So we’ve been doing this for almost 10 years and we’ve been doing it virtually. But now you’ve got major businesses like law firms, accounting firms, the major professional service firms that have had their employees or partners, remotely done. My son-in-law is a partner for a law firm and he hasn’t been to the office in a year. I mean basically, they shut down their office in February last year, he hasn’t been in the offices since and he’s working remotely from home. So what you’re going to see is, and this is something that’s been in the space for a while it’s called Hoteling, where you actually have space available in an office but it’s not assigned to anybody. So nobody has a specific office. You need to come to the office for a meeting or for whatever you come in you use an office that’s not dedicated to you. You just use a desk and a phone and the computer hooked up and everything else is in the office. Again, that’s the real pressure on the commercial real estate business. And as businesses grow they can now grow faster because they’re not restricted for having to move and find new space and all the other pieces that go along with it as well.
Celinda: Well, and the commercial real estate is probably suffering because a lot of companies have opted to move away from brick and mortar. However, other expenses have been associated with working remotely for their business owners. Correct?
Marc: Yeah, well, yes and no, because they already were paying for it. Think about it this way, right? So most people today are using voice-over-internet protocol (VOIP) for telecom right? So you have a physical phone, you can actually pick that physical phone up from the office and you can move it to your home or your other rented other smaller rented office or wherever it is that you’re doing your business outside the main office, and just plug it into an internet port right so if you have a router you can plug it in. That’s how I that’s how I did mine. I took my phone from an office and I physically put it on my desk in my home office. And so I still have a shared suite office space, but I have my phone in both locations. The other thing that you do now with the phones today, the newer model at least, you could have a eSIM and a regular SIM in the phone meaning there’s two lines that can come into each phone. So my business phone rings on my mobile phone, therefore not having to have a desk phone, as well as my personal mobile number rings on my mobile phone, but they are different rings. And so there’s a lot of solutions that are out there. The one thing that you do need to keep in mind is because you have all these people working remotely is your systems has access to cyber attacks right, to hacking. So you need to make sure you have the proper VPN, which are a virtual private network set up so that there’s a tunnel between you and your server that they can be secured.
Celinda: Well we have been speaking this morning to Marc Freedman, he is a Certified Expense Reduction Consultant and Founder and CEO of Expense To Profit. He currently serves as the Chief Cost Evaluator of that organization, and he has been advising folks for more than 40 years. He has a book out Expense To Profit: Eliminate The Costs That Sabotage Your Growth. Where can our listeners get your book?
Celinda: Alright, Marc Freedman, thank you so much, and Happy New Year!
Marc: Thank you, Celinda, and Happy New Year to you all!