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Volume 3 / Issue 7
Take Action – Front Office
The money spent every month on the salaries of the folks in the front office along with the cost of equipment used (computers, etc.), as well as the rent for space is easy to take for granted, but every one of those dollars makes for a hill which must be climbed before reaching targeted profitability.
This reality is further complicated by the difficulty of measuring performance and making
rational decisions about employment and compensation levels.
The best approach is to concentrate on meeting customer needs, for which knowledgeable
individuals are a must, while minimizing the effort spent on producing reports that no one reads or acts upon. The only reports that you really need are contribution dollars by job
and customer.
The Right Bank
With the recent financial news of SVB and Credit Suisse, one begins to start thinking about a variety of issues about our financial system. Now is not a time to react to the drumbeat of 24-hour news, or to stick our head in the sand. Here are some questions which need to be asked . . . if you haven’t already.
What is the relationship you have with your bank? Is it one of just transactions, or do they know you and your company? If they’re a regional bank, or smaller; do they have the necessary liquidity to ride out this current windstorm? Although you may feel comfortable that your money is FDIC guaranteed, could you live with those assets tied up for days, or weeks, if your bank ran into trouble?
Now is a good time to review your relationship with your bank – and an opportunity to strengthen it. As with any business relationship, you must feel comfortable with the individuals as well as the institution, but in today’s economic world, one needs to be aware of the ramifications of the global winds.
There’s A Problem With The Job
These are the last words that you want to hear, but you do hear them. Obviously, solving the problem is job one because you’d like to get paid, keep the relationship, and avoid the client badmouthing your firm to others.
First, the problem must be identified ASAP, normally by inspecting the job. If there is a real problem, you need to find a cost-effective way of dealing with it - whether it’s a rerun or a credit. Even if you believe that the client is exaggerating the problem, compromise will be necessary because it’s better to get a check for most of the work than get nothing and leave it up to the courts. If your impression is that the client is trying to rip you off, it usually doesn’t pay to prove that you’re in the right as the only one who will enjoy that is your lawyer.
If it happens the problem is the client’s, a willingness to mitigate their pain by giving a discount on the rerun or future jobs may well work to cement a continuing relationship.
Meeting Their Needs
The traditional goal of sales is to keep production busy. There’s no question that a busy plant is almost always a profitable one. However, the focus on selling only what we can produce tends to commoditize the work and makes it unlikely that the firm can become a partner rather than just a supplier.
On the other hand, a total focus on meeting the customer’s needs regardless of their source
of production has the potential of isolating your firm from the competition, not only increasing volume but also better pricing. The contribution margins on externally produced
work (buyouts) may be less, but they do produce a stream of contribution dollars. Remember, that it’s dollars and not percentages that pay for the overhead and generate profitability.
Sales Are Good!
One of the questions often asked by suppliers, friends, and bankers is “How’s business?”
We wish to answer it affirmatively – and many in the industry are doing so the past few months. Yet, it’s always important to know how the rest of the print world is performing. Thus, here’s a bit of economic data from a recent industry report. January’s commercial print sales (2023) were $6.67 billion compared to $6.21 billion in ’22 and $6.64 billion in ’21.
These are “real” dollars in that they’ve been adjusted for inflation. Historically, January is
one of the weakest months of the year. Hopefully this portends well for 2023.
Disaster Recovery
How well are you prepared for a disaster? It comes in terms of someone hacking your system; a fire in the pressroom; flooding from a frozen pipe; or as a very surprised printer experienced, a tornado in Southern California.
It all starts with a plan – in writing! These are just a few of the dozens of questions to consider: Where do employees report? Who’s responsible for power and gas shut offs? Who will contact customers and vendors with a game plan? Does our insurance cover this type of disaster (earthquake; windstorm, flooding, etc.) and more importantly, is there business continuation insurance? Who are the industry friends who will provide backup in terms of production? And last, but in no way least, have we created redundancy in our IT System?
Where do you start? As always, start with your Association who can provide networking
information and another source is FEMA which offers a variety of free publications.
quoins2pixels is written by Bob Lindgren and Joe Polanco.
Bob and Joe have spent decades in the printing industry, and throughout their careers,
they have counseled hundreds of company owners on a variety of management topics.
As a value-added service of Print Media Association, they are available to expand
on these articles or aid with projects.
Bob can be reached at (818) 219-3855 and Joe at jspolanco49@gmail.com.
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