Benchmarking Your Way to Profit Master Status
One thing that is critical to successfully managing a printing firm in today’s environment is to understand what drives profitability (or the lack of it) and to have action plans to improve results. Many small businesses do a pretty good job of producing financial statements, but in my experience, few really use them to the fullest advantage. Often what’s missing are meaningful benchmarks by which to judge financial results.
Do you use financial benchmarking in your firm? If so, what benchmarks do you use? Do you have an action plan to put the information to good use? Fortunately, our trade associations provide benchmarking ratio studies that can give you the tools you need. That is, if you participate in the studies and then put what you can learn from them into practice.
Printing Industries of America conducts an annual ratio study that, for the most part, is for larger commercial printers. NAPL/NAQP has been sponsoring research for more than 20 years (now called the Financial Benchmarking Study) that is more applicable to quick/small commercial firms. The call has just gone out for participation in this year’s study. If you fall into the quick/small commercial segment of the industry, I strongly encourage you to click on this link and participate. http://www.surveyadvantage.com/2012naqpbenchmarklanding.
You’ll receive a free copy of the study when you participate, and it’s available for purchase if you do not. As I said, this benchmarking information is great to have, the following are some guidelines that might be helpful to make that information more useful and actionable:
• Select the study or section of the study that provides data most similar to your firm. Selecting the size category and company profile is crucial for getting data that is meaningful for benchmarking.
• Arrange your chart of accounts so you can use your monthly and quarterly data to compare to the benchmarks of similar firms. The studies I mentioned have tabulations for “profit leaders.” In addition to your size category, this is the group against which you want to compare your business.