December 5, 2023

You’re the Boss: Are We Cutting Fat or Bone?

Thinking Entrepreneur

I have spent many years focusing on how to increase revenue in my custom picture-framing business. Much of what we’ve done has worked, and the business is now roughly 20 times the size of the average framing shop in America. Lately, however, because of the economy, the housing crisis, and other factors, the framing industry has shrunk, and I now spend quite a bit of time looking for cost reductions.

It is a new economy, and many businesses are going through the same drill. All of my managers understand that we should leave no stone unturned as we look for cost savings. The problem, as always, lies in knowing the difference between cutting fat and cutting bone. The holiday card we used to send to all customers at the cost of $20,000? That’s fat. I think. The big, expensive holiday party? Half fat. We do it in-house now instead of in a restaurant. And our overtime expenses? Now, that can get complicated.

From the day I started the business, I have always promised customers a one-week turnaround for their framing. I’ve been able to do it because I have always kept a large inventory of framing material. This helped distinguish us from others in the market. The typical shop would take three, four, even six weeks to finish a job. My business grew quickly for many years. Why? I believe it was because we have a big selection, we have knowledgeable and competent people, we stand behind everything we do, and we have a one-week turnaround. These have been the sacred cows of Artists’ Frame Service.

But the one-week turn around has never been easy. When a customer drops off art on Monday, it goes into the production cycle on Tuesday. It has to be done by Friday in order to go through quality inspection and be ready to be returned on Monday. That means we really only have Tuesday to Thursday — three days — to get the order done. No problem. We’ve been getting orders done for 33 years with very few exceptions. But this does require some overtime expense because of the uneven work flow. And that’s why, during the no-stone-unturned process, my production manager had the nerve to broach the subject with me. “I know the seven-day turnaround has always been important,” he said, “but it does create overtime.” Good for him. Honest dialogue is another sacred cow. And whenever money is spent, you have to ask yourself, Is this going to lower costs or provide value to the customer?

Thinking it over, it occurred to me that many things have changed since I started the business in 1978. We are now open seven days a week, instead of six, making it easier for customers to pick up orders. We now have a harder time — even during a recession — finding competent people to work, especially to work overtime. We are now doing larger orders for businesses and hospitals, and those orders make the work flow deviations even more dramatic. Large chains have gotten into framing and their turnaround times are typically more than four weeks. Lastly, we now have e-mail. Perhaps we should go to a 10-day turnaround and e-mail customers when the order is ready. It was the first time in a long time that I had really thought about the way things have changed, all of which had me thinking that maybe a 10-day turnaround would make sense. I decided to raise the issue at my next managers meeting.

I presented the case, and we discussed it with minds open: the cost-savings potential, how things have changed, the proposal to go to 10 days. There were about 10 people in the room, most of whom are not directly involved in the framing business (I have several related businesses). Whether or not we went to 10 days would have no impact on them, so they were objective. One person commented that, these days, people want things faster, not slower. I proposed that we could promise that the order would be done in seven to 10 days. The framing sales manager hated that idea. “We sound wishy washy,” she said. “We should just say 10 days.”

She also told us that, in anticipation of the meeting, she had done a trial run. On the preceding Saturday, the staff had told all customers that their orders would be ready in 10 days. And no one had complained. Interesting. But the fact that no one complained doesn’t necessarily mean that none of them were disappointed. Still, the general consensus was that the time had come to alter one of our sacred cows.

Then came a comment from a different perspective. “You know,” said one of the managers, “we advertise great selection, talented staff, and one-week turnaround. The one-week turn around is the only tangible thing we say that other shops can’t say.” Boom. Knock out punch. I hadn’t thought of that. And neither had anyone else. Between the weaker advertising message and the few customers that might be disappointed enough to go somewhere else, it was easy to imagine how the cost savings of eliminating overtime could be undermined.

The one-week turnaround stands. I feel good that we thought about it, and I feel good that the process of including many different points of view continues to give us valuable input. We will save some money somewhere else. Light bulbs. Next week I will tell you how I am going to save more than $20,000 a year in electricity.

Jay Goltz owns five small businesses in Chicago.

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