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Profit brainstorming pays
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April 21, 2000: 9:58 a.m. ET
Hire a PEO -- profit enhancement officer -- to boost your bottom line
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NEW YORK (CNNfn) - 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, co-founder of The Profit Advisors in Rockville, Md. "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, N.Y. After hearing him speak at a moving-industry conference, Hastings hired Schimel to turn 20 of her 60 employees into "profit champions." Everyone from packers to salespeople was taught how to dig up new profits.
Schimel was quick to implement moneymaking 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' 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.
Schimel, who hands out $2 bills to reward good ideas during his brainstorming sessions, said another company was able to save the $300,000 it was about to spend on gas cylinders. The client, which rents tanks to hospitals, was ready to order 2,100 new cylinders until Schimel found a much better solution. It turned out that the company's delivery drivers were paid a 60-cent bonus for delivering cylinders, but weren't rewarded for picking up empties.
"We suggested they pay $1.20 to drivers for every cylinder they picked up in excess of what they dropped off," Schimel said. "Within 60 days, they increased the number of cylinders collected and didn't have to buy new ones."
With Schimel's help, Washington Express Service Inc., based in Beltsville, Md., found that it could reap a windfall just by reviewing customer accounts. The company, with annual revenue 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 their 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. For more information, contact The Profit Advisors at (301) 921-4755. 
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