stokesjoshuaproposal

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University of Florida *

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5212

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Management

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Feb 20, 2024

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Joshua Stokes ROAM Analysis Who is the audience and which CPP- communicator type are they? - The audience is the CFO of Applied Research Associates. He is action oriented as he is in finance and an executive leader. How will you change the reader, and which CPP-communicator type are you? - I am action/people oriented. I will change the readers perspective by providing not only problems but solutions to the problems. What do you want the reader to do? - Take action for the next FY to keep the company from missing budget marks. What will the reader think of you? - That I have done the leg work and I am presenting him with a set of solutions. He will respect that the Memorandum is not overly detailed, but very informative. Background: The purpose of the memo is to convince our executive leadership take action against our recent budget overage of 12%. If we do this, we can implement action to create future savings. Our budget was expanded by 5% for the next FY but we still have 7% to make up for the next FY. My changes will make up 6.2% plus the additional savings monthly. This is a best case scenario plan of action to reduce spending the following year.

Joshua Stokes Memorandum TO: Chief Financial Officer (CFO) – Applied Research Associates, Inc. FROM: Accounting DATE: September 11, 2022 SUBJECT: Reduce Spending on Non-Essential Items This past Fiscal Year (FY) close out has shown that we are spending 12% more this year over our budget of $ 126,987,347.98 . After much investigation into the matter, the accounting department was able to uncover $ 19,937,013.63, or 15.7% of non-essential expenses. If we don’t prioritize our spending then we will continue to over-extend ourselves into a place that will cause us to lose money. Below I identify the areas where price cuts would be recommended to reduce our budget overages: 1. Office Supplies 2. Business Relations 3. Overhead (power, water, phones, etc.) The budget will benefit greatly from the removal of this non-essential spending, and in turn will benefit the profit margin of the company. 1. Office Supplies Office supplies made up 6.3% of all spending within the budget this FY. This is $ 8,000,202.92 that was spent on office supplies such as staples, pens, ink, paper, notepads, etc. By cutting the spending into more economical categories like ball point vs. gel pens, black and white vs. color ink, and even smaller notepads, I estimate we can save the company an additional 4%, lowering our spending of office supplies to just 2.3%. This would save the company $ 5,079,493.92. Figure 1 Budget $ 126,987,347.98 Cost of office supplies $ 8,000,202.92 Recommended reduction $ 5,079,493.92 Savings $ 2,920,709.00

Joshua Stokes Figure 1: Illustrates the savings that could be incurred from the reduction of spending on office supplies. 2. Business Relations As a company, we spend 5.8% on business relations and building customer relations. We take out and dine with our prospective customers in an attempt to gain their business. This spending has the highest turnover of profit, but it could be reduced with a few minor corrections. For example, if we reduced the maximum gratuity at a dining establishment from 25% to 20%, we could save an additional 0.8%. the choice of restaurants that we take clients to is much more than a reasonable price point. Restaurants like NoBu and Lloyds Prime Rib of Los Angeles are ringing up tabs > $500.00 for one-on-one lunches. These expenditures dent our budget massively at 4.3% If we limited the restaurant to more economical establishments and put a maximum expenditure limit on the business relations team, then we could save an average of 2.1% or $2,793,721.66. Figure 2 Budget $ 126,987,347.98 Business relations actual cost $ 5,460,455.96 Recommended reduction $ 2,666,734.31 Savings $ 2,793,721.66 Figure 2: Break down of savings for business relations if they chose more economical restaurants and put a maximum expenditure per person of $40.00. 3. Overhead Costs In most terms, overhead costs are set variable costs that have little to no movement besides the changing of trends like changing the thermostat, turning lights off, etc. Through my daily movement within our company, I have noticed that the lights that are used are not LED but rather halogen and that we do not have automatic lighting sensors in places that do not need constant light such as restrooms, kitchen, and conference rooms. If we were to make an investment to change all lightbulbs within our company and swap out switches for automatic light switches with set timers, we could see an ROI of 36 months with a budget to change all bulbs and switches and other energy efficient swaps of $1,000,000.00. An ROI of 36 months creates return of $333,333.33 a year and after year 3, a monthly return of $27,777.78. This ROI would offset future budget expenditures each year. Recommendation I recommend that we cut costs in office supplies by choosing more economical options. The choice of more economical options do not hinder the abilities of the employees nor do they slow production. After, we need to implement a program that keeps employees in the business relations role in a set budget that is generous but not exponential. Finally, I recommend that we make a small investment for futures savings throughout the company. This investment should allow a savings of $27,777.78 per month. In total, this will bring the company back under budget next year. Next year our budget expands by 5%, and this new savings will allow us to

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Joshua Stokes come in under budget. To be successful, we need these changes implemented immediately with a course of action to correct budget overages and meet the budget rise next year of 5% while cutting our current budget for FY 22 by 7%. These two will make up with a savings of 12% and bring the budget back to zero.

stokesjoshuaproposal

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