Consultant Focuses On Hiking Profits

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 an employee what their responsibilities are, the word ‘profit’ rarely comes out of their mouth,” said Schimel, co-founder of The Profit Advisers 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 last 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 last spring to turn 20 of her 60 employees into “profit champions.” Everyone from packers to sales people were taught how to dig up new profits.

One money-making suggestion: East End employees pledged to carefully complete all the move-related paperwork because when packers and movers didn’t keep track of all the packing materials used or hours spent on a job, the customer couldn’t be billed and profits were lost. Hastings said the properly completed paperwork adds about $1,000 more a week to the company’s bottom line.

After receiving Hastings’ permission to 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 sales person was basically giving out-of-state business away by referring them to other movers.”

This was a problem because East End could have referred that business to fellow United Van Lines affiliates instead of their competitors. Some profit-boosting suggestions were small, such as putting supervisors in charge of distributing office supplies to cut costs.

“It’s been very 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 client was able to keep $300,000 it was about to spend buying new gas cylinders. Schimel said his client, which rents tanks to hospitals, was about to order 2,100 new cylinders because it had run out. But Schimel said he knew there had to be a better solution. It turned out that the company’s delivery drivers were paid a 60-cent bonus for delivering cylinders, but they weren’t rewarded for picking up empty tanks.

“We suggested they pay drivers $1.20 for every cylinder they picked up in excess of what they dropped off,” said Schimel. “Within 60 days, they increased the numbers of cylinders collected and didn’t have to buy any new ones.”

Just reviewing the terms of every customer’s account reaped a windfall for Washington Express Services Inc., based in Beltsville, Md. The company, with annual revenues of $7.5 million, serves mostly white-collar clients, like law and accounting firms.

“We found a lot of customers with special deals that no one had looked at for years,” said Gil Carpel, president and CEO. He 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.

Based on Schimel’s brainstorming sessions, they also installed a toll-free 800 number for drivers who had been calling the dispatcher collect, reduced the number of vendors they were dealing with, 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.

The following fields overflowed: CREDIT = Jane Applegate Los Angeles Times