This is the first in a series of three articles focusing on specific cost savings and cost recovery strategies. This first article will focus on Energy expenses.
For five years, Michael Lefkowitz owned and operated four Dunkin’ Donuts stores in Miami-Dade County. Before selling his stores in August of this year, he established ECS Business Services (ECS), a cost reduction and cost recovery consultancy. As ECS President, Lefkowitz is dedicated to helping franchise owners and other clients save money and recover costs related to fixed expenses.
As a former Dunkin’ Donuts franchisee, Lefkowitz brings a unique and valuable perspective–he’s been in your shoes–together with more than 30 years of experience managing hotels, including overseeing all purchasing and facility management.
His team of experts at ECS can perform thorough and meticulous analysis of your fixed expenses to identify opportunities for cost reduction as well as instances of incorrect billing that may entitle you to cost recovery. This analysis can typically be accomplished in a few weeks.
ECS is so confident that it can identify cost savings for you that its services are guaranteed: If ECS can’t save your business money, there is no fee. ECS is paid only via a percentage of the funds you save and recover. There are no up-front costs to you, so it is genuinely risk-free.
Before initiating the process, ECS requires clients to sign off on two items:
1. A service agreement that details the specific tasks ECS will perform, the length of the contract and how ECS will be compensated.
2. A letter of authorization giving ECS permission to request additional information from your vendors as needed. This allows ECS to make the inquiries necessary for its research and analysis without having to bother you.
“We are very aware of and very concerned about how stretched for time franchisees and their managers are already,” said Lefkowitz. “That’s why we do everything we can to minimize the time investment on your part. You can stay focused on running your shops and let us do the nitty-gritty work behind the scenes.”
In order to conduct Energy (i.e., electricity and natural gas) audits on your behalf, ECS requires at least three to six months of historical billings from your shop or network of shops. ECS will also need your current service agreements or contracts. The first step ECS takes is to input the data from your bills into its proprietary software. ECS also secures comprehensive documentation from your service providers, including worksheets that fully detail your charges. Based on all of this data and such factors as peaks and valleys, weather, size of facility and hours of operation, ECS performs an analysis to determine a baseline monthly average of your costs.
The firm builds a “virtual meter” which it uses to reconcile your billing. If ECS finds a significant discrepancy between its reconciliation and your bill amounts, then it can pursue cost recovery for you. If ECS’s calculations match or closely approximate your actual charges, then the chance of cost recovery is unlikely. There may still be cost savings possibilities, however, that relate to your vendor agreements or contracts.
It’s important to note that the natural gas market is much more volatile than the electricity market because of geo-political factors as well as weather factors, like hurricane season. “You really have to be on your game in monitoring natural gas pricing,” Lefkowitz said. “That’s another advantage ECS provides. We have the experience necessary to account for the market’s volatility and stay on top of fluctuations in pricing.”
ECS’s reconciliation process and service agreement analysis can identify ways for you to save money on future bills as well as recoup overpayments you have made due to erroneous billings. When it comes to recovering costs, if a private vendor provides the service, the time frame from which you can recoup expenses is unlimited. If a municipality provides the service, that time frame is limited to a maximum of 36 to 48 months. In terms of identifying future savings, ECS investigates whether or not you might qualify for a better plan or tier that the provider offers or if a different service provider altogether offers more advantageous rates or plans. ECS also ensures that you are being billed according to the accurate rate category or tariff for your type of operation.
“ECS has been very successful in reducing electricity and natural gas expenses for our clients,” Lefkowitz said. “In 60 to 75 percent of all cases, we’ve been able to save clients 15 to 25 percent on these costs, which is a huge relief and benefit that instantly and continually impacts a company’s profitability.
Stay tuned for part two in this series of articles, which will focus on cost savings and cost recovery related to Water and Sewer and Trash expenses.