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1. Improve cash flow. If your business is seasonal, ask your biggest vendors to let you stock up now but pay when customers buy. Also, check into renegotiating your leases to pay only those nine or 10 months out of the year when you experience the greatest number of sales.
2. Investigate new products. For the next few weeks, have your customer service personnel keep a list of products that customers would have bought from your company if you stocked them. Then, calculate how much revenue you would have earned by stocking the three most requested items.
3. Reduce waste. Ask your production foreman to estimate how much you spent in the last six months on lost production, manufacturing errors, injuries and re-works. Then, calculate how much extra you would have made by paying your crew a small percentage of the materials waste reduction and hourly pay required to fix mistakes.
4. Do some spring cleaning. Ask your plant foreman to give you a list of equipment that's idle most of the time. Calculate how much you would save in insurance, carrying charges, property taxes, income taxes, maintenance and storage space by getting rid of it.
5. Solicit money-making ideas. Ask everyone who performs day-to-day work in your business - such as delivery people, administrative assistants, customer service personnel, janitors, production employees -- to write down five ways your company can become more profitable. You may be surprised by the great ideas you receive
6. Renew old acquaintances. Send letters or e-mail messages to customers who discontinued doing business with your company. Thank them for their past patronage and ask them to come back. See how many call to reinstate their accounts.
7. Reassess priorities. Ask your billing department to rank your customers by the dollars they spend. Then figure out how much more money you'd make by transferring your time and money from servicing the lowest-producing 80 percent to "wowing" the top 20 percent.
8. Evaluate billing practices. If you currently bill customers a fixed amount every month, calculate how much you'd save in monthly mailing costs and increased cash flow by billing in advance every two months instead.
9. Stop expenses from falling through the cracks. Figure out how much you spent last year for products and services that were shipped to customers but not authorized by them. Set up a system to get customers' approval in advance and avoid this wasted expense. Then check and see how much you spent last year in overnight priority packages and shipping. Calculate how much you could have saved if just 75 percent of those packages weren't sent so they'd get to the recipients the following day.
10. Cut back on overtime. Ask your payroll manager to give you a list of employees who were paid overtime last year. Initiate a bonus to departments who get their work done on time without incurring any expensive overtime.
Think of what you can do with the savings from just these 10 ideas. It will motivate you to do even more to enhance your company's bottom line.
In a well-known Aesop's Fable, ants stockpile food during the summer bounty, while the grasshopper sings and plays. When winter sets in, the grasshopper starves. The moral of the story is to work hard and plan ahead. In modern times, this lesson can be applied to retirement planning.
What Else Does the Fed Survey Reveal About Household Finances?
The Federal Reserve's Report on the Economic Well-Being of U.S. Households in 2013 provides a "snapshot" of how U.S. households are faring financially. It monitors their recovery from the Great Recession and concerns, including:
Financial well being. The recession took its toll on many households, with 34 percent saying they're worse off financially than they were five years ago. Although more than 60 percent of households are "doing okay" or "living comfortably," a quarter are "just getting by" and more than 10 percent continue to struggle.
Home values. Among people who had owned their homes for at least five years, 45 percent reported that their home values were lower than in 2008. However, homeowners were generally upbeat about the 12-month outlook for their local housing markets.
Savings. The recession depleted savings for many people. About half of households currently maintain a savings account, but only 39 percent believe their rainy-day funds could cover three months of expenses. One-fifth of households routinely spend more than they earn each month. And only 48 percent could pay a $400 hypothetical emergency expense without selling something or borrowing money.
Financing. More than 40 percent of respondents delayed a major purchase and nearly 20 percent postponed a major life decision during the recession. This was at least partially due to limited financing opportunities. The availability of credit remains a concern for most people. One-third of credit applicants were turned down or given less than they applied for. Many people (19 percent) didn't bother applying for credit for fear of rejection.
Student loans. Nearly a quarter of households are carrying education debt incurred by themselves or their spouses, partners, or children. The average student loan debt is $27,840. Some households struggle to pay this debt, especially if they failed to complete the educational programs. In fact, 18 percent of student loan holders are behind on payments.
Are You an Ant or a Grasshopper?
Unfortunately, many Americans behave more like grasshoppers than ants when it comes to stockpiling money to pay their living expenses during retirement. About one-third of non-retired Americans have no retirement savings or pensions, according to the Report on the Economic Well-Being of U.S. Households in 2013, which was recently published by the Federal Reserve. Almost half of the survey's respondents aren't actively thinking about financial planning for retirement. A quarter of those adults with retirement savings are uncertain exactly how they'll make ends meet during retirement.
Note: The responses varied with age, education and income-levels, however. Not surprisingly, higher-income individuals are the most likely to plan for retirement.
Retirement accounts were hard-hit when the markets collapsed beginning in 2007 -- and many haven't fully recovered. For example, the Standard & Poor's index lost 55 percent of its value between October 2007 and March 2009.
During the recession, many Americans put retirement saving on the backburner -- or took early withdrawals from retirement accounts to pay current bills. In the aftermath, two-fifths of those ages 45 or older have postponed their planned retirement dates due to insufficient savings. Of those between the ages of 55 to 64 who haven't yet retired, 24 percent plan to work as long as possible.
On the other hand, 19 percent retired earlier than expected during the recession, due to involuntary layoffs or company-sponsored early retirement plans. This means their retirement funds will need to last longer than they originally anticipated.
Traditional Sources of Retirement Income Fall Short
Many people expect Social Security to be a major source of retirement income. But Social Security checks are often lower than recipients expect -- and may be hit with taxes, especially if you have other employment or investment income. Check out the online benefits calculator on the Social Security Administration website for details on your projected payments post-retirement.
In addition, fewer Americans are members of defined-benefit pension plans these days. From 1980 through 2008, the proportion of private wage and salary workers participating in defined-benefit pension plans fell from 38 percent to 20 percent, according to the Social Security Administration's Office of Retirement and Disability Policy.
So it's more important than ever to be proactive about stockpiling money for retirement. You also need to be realistic about cost of living increases and build in a cushion for emergencies and unexpected costs when projecting the income you'll need in retirement.
For example, many retired Americans were unprepared for recent increases in the costs of utilities and gasoline. Other expenses -- such as Internet and cell phone accounts -- didn't exist when some of today's retirees made their initial plans. Americans are also healthier than past generations, living longer and incurring higher-than-expected medical expenses.
Advance Planning Can Avert Shortfalls
A financial adviser can help you plan far in advance to build up a nest egg that will provide sufficient income to maintain financial security for potentially many years. In addition to Social Security and pension benefits, here are other common sources of retirement income:
Self-directed accounts, such as company-sponsored 401K plans and individual retirement arrangements (IRAs);
Home equity; and
Part time or self employment.
A part-time job in the early years of retirement can make a big difference to your financial picture. Earning even $4,000 a year replaces the income you could reasonably expect to generate from a $100,000 portfolio. It also provides a buffer against unexpected inflation. The flip side of this coin is that it might be difficult to find a job as you grow older and, of course, work doesn't appeal to all retirees. Poor health can also render some people physically unable to work into retirement, so it's always smart to have a Plan B.
Retirement saving strategies need to be designed with your age, relationship status, lifestyle, minor children, and other heirs in mind. Whether you're starting your first job or hitting middle age, savings patterns are likely to change. By the time you near or hit retirement age, investments and savings should be set and established, with your funds in low-risk, high-liquidity accounts.
It's Never Too Late to Save
Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions to certain accounts, if their retirement savings seem too lean. Here are some of the contribution limits in 2014:
Traditional and Roth IRAs, $5,500 ($6,500 for those over age 50),
401(k) accounts, $17,500 ($23,000 for age 50 and up),
SIMPLE accounts, $12,000 ($14,500 for age 50 and up), and
Simplified Employee Pension Plan (SEP) accounts, $52,000 (there is no SEP catch-up amount).
Whenever possible, it's a good idea to contribute the maximum allowable to your retirement account to secure your future and get the full tax advantage.
What's Your Retirement Plan?
If you haven't saved much for retirement or stopped contributing during the recession, it's time to get your plan in motion. If you already have a plan in place, consider revisiting it occasionally. A retirement plan isn't something you can put on a shelf and ignore until you reach age 65. You may need to revise your initial plan as market conditions, tax laws, financial needs or health factors change. Contact your financial adviser for more information.