Artemis Sportswear Cutting Operational Expenses University Of Phoenix Artemis Sportswear Cutting Operational Expenses
Artemis Sportswear Company is a company that sells every type of sportswear you can think of; from sweat bands to tennis shoes. Artemis carries all the name brand apparel Nike, Reebok, Under Armor, etc. Not only do they sell sportswear they are also well known for the sales of their sports equipment, specializing in NHL equipment. Artemis has been in business since 2008 and has since experienced yearly increases in there profit margin. When the recession hit the profit margins began to decrease, they have since came to a standstill. The company’s goal is to find ways in which to bring profit margins up by cutting operational expenses.
Background
Artemis Sportswear has grown to be very financially fit since they opened their doors six years ago. However, with a market plagued with increased competition, tight budgets, and strict regulations if they intend to stay in the game and rise above the competition come up with some new moves. By making comparisons of past sales invoices as well as looking at previous, current, and projected business plans and budgets one can obtain some sense of what is happening and what changes need to be made. After reviewing all of the company’s financials, Artemis now realizes that in order to bring profit margins back in the green they will have to cut operational expenses. “Operational expenses have a direct effect on your business’ profit margin.” (2014, Chris Mikesen) Operational expenses are any expenses related to running a business such as, labor cost, advertising expenses, and inventory cost. The team at Artemis Sportswear is now working on a proposal to cut expenses that they will present to the CEO of the company.
Proposal1
“Cost reduction is not simply attempting to slash any and all expenses unmethodically. The owner-manager must understand the nature of expenses and how expenses inter-relate with sales, inventories, cost of goods sold, gross profit, and net profit (Meir Liraz, 2012).”
“The most ideal profit margin is a wide profit margin,” (2011, Lisa Hofmeister) After reviewing the company’s spending habits for the past few years we have pin pointed areas of inflation and we are considering ways to cut expenses.

As you all may have predicted our biggest expense is labor cost. During times like these when a business feels like they’re backed against a wall, most are quick to lay off employees. If they would just take time to stop and weigh their options they would realize that their getting rid of their most valuable asset. “Layoffs & other cuts affect workers morale, productivity, turnover, & overall performance.” (1999-2014, Christian Basu) Our employees here at Artemis Sportswear are the heart of the company, truth is it would be a mistake to get rid of them. Studies show that there is no long term financial gain from layoffs and they usually result in low morale and inability to retain employees in the future. However, we definitely intend to cut labor cost. We propose that we try something better than layoffs; research shows that if we emphasize high employee performance, consistency, and introduce motivational rewards our employee performance will increase, thus increasing our profit margin.
Inventory
According to the inventory history for the past two years we have over stocked sportswear and equipment worth $6,000-$7,000. When the profit margins are up ordering a little more than necessary is acceptable, but ordering an access of merchandise worth $7,000 is by no means ever acceptable. We propose that from today forward ALL orders will be reviewed and finalized by management.
“When times are tough & suppliers are hungry for business, you’ll be surprised how many will lower their prices if you ask and don’t take no for an answer.” (2014, Lauren Baldwin) We have negotiated with our venders and our utility companies to try and lower costs. Our vendors have agreed to a 2% discount as long as our invoice is paid before the 1st of every month. Shenandoah Electric and Comcast have both agreed to a 10% discount if we are willing to set up automatic bill pay. This simply means that the payment will come out of the account automatically when it is due. I realize 10% may not seem like a lot but I promise you it all adds up it the end. Along with the 10% discount we can save even more if we turn off the computers and the lights and all other electrical devices at lock up; we can also save by switching our current light bulbs to CFL bulbs and using energy star TV’s and equipment.

Marketing Setting a marketing budget and paying close attention to advertising costs will help to cut operational expenses tremendously. Social media is one of the best advertising techniques available and the best part is that it’s free! We all know that the best advertising is word of mouth so let’s ensure that everyone who walks through our doors on line or in house get excellent customer service. It is extremely important that we monitor our website 24/7 to ensure prompt and diligent customer service.

Increasing Revenue
While decreasing operational expenses will no doubt increase our revenue and bring our profit margins up we have also come up with some suggestions to bring in more clients and increase revenue.
Equipment Rental
We should offer equipment rentals. We discussed the pros and cons of this idea and the money it would bring in could be worth every minute. Not only could clients rent equipment from us but we can also offer to service the equipment for a small insurance fee. That being said an equipment service department wouldn’t be a bad idea either. Gyms have equipment failures all the time why shouldn’t we be the one they call to come fix them? This brings us to our next suggestion; why not negotiate with the local gyms and schools to see if we can make a deal to supply and service all their equipment.
Last but not least we need ensure that we offer the absolute best prices around. This requires us to research our competitors’ prices and inventory. We need to ensure that when the newest, hottest apparel hits the market we already have it in stock for our clients long before any of our competitors.
In the past Artemis Sportswear Company has been profitable and very well known. Today we are faced with some tough decisions, but we WILL rise again tomorrow! This company is not just a business, we are a family and together we will become stronger than we ever were!

References
How To Cut Cost and Spend Less in A Cash Strapped Business Mher Asatryan & Lauren Baldwin, (2014) www.nolo.com, “When times are tough & suppliers are hungry for business, you’ll be surprised how many will lower their prices if you ask and don’t take no for an answer.”

Chris Mikesen, (2014) How to Cut Operational Expenses to Increase Profit Margins, Hearst Newspaper, LLC , www.smallbusiness.chron.com, “Operational expenses have a direct effect on your business’ profit margin.”

www.yourbusiness.azcentrel.com, (2011) How To Cut Operational Expenses To Increase Profit Margins, By Lisa Hofmeister, Demand Media, “The most ideal profit margin is a wide profit margin,”
Christian Basu, (1999-2014), How does Cutting Operational Expense Affect Workers? www.ehow.com, “Layoffs & other cuts affect workers morale, productivity, turnover, & overall performance.”

How to Cut Business Expenses, By, Meir Liraz, (2012) www.lirazcom, “Cost reduction is not simply attempting to slash any and all expenses unmethodically. The owner-manager must understand the nature of expenses and how expenses inter-relate with sales, inventories, cost of goods sold, gross profit, and net profit.