My 9-0-9 Plan for a Surefire 2012 Budget

Here is a surefire way to develop a budget for 2012 that will keep your ship on course. It would be a bit catchier to call it 9-9-9, but I can’t make that work in today’s economic environment. Given the uncertainty facing graphic arts firms, I suggest you develop three budget scenarios:

Scenario 1: Assume a 9 percent sales increase. This will allow room for growth—planning to add personnel, marketing programs, new production capabilities or simply put more on the bottom line.

Scenario 2: Assume a 0 percent sales increase. This scenario obviously gets tougher. You will have some increased costs simply because of inflation. To avoid erosion to the bottom line, you will need a plan to reduce expenses somewhere just to maintain profitability.

Scenario 3: Assume a 9 percent sales decrease. This gets really tough. Now you are faced with the need for substantial expense cutting just to keep the business healthy. In most cases, this would cause a reduction in payroll since that is usually the most controllable variable expense. It is also the one most of us lack the courage to cut.

Why go through the exercise of three scenarios? I have found it is very helpful because it forces you to address how to manage the situation in each scenario. You either have more resources to spend to grow the company, or you must plan how to reduce expenses to avoid a cash drain.

If you compare your company’s most recent quarter to the same quarter last year, it should give a good read on what you can expect for sales in the upcoming quarter. You can then factor in what you know about gained or lost customers to predict going forward. This approach allows you to be proactive, rather than reactive, in managing expenses and spending for growth.

Carl Gerhardt is the chairman of Alliance Franchise Brands LLC, the parent company of Allegra Network LLC and Sign & Graphics Operations LCC, and a world leader in marketing, visual and graphics communications, linking more than 600 locations in the United States, Canada and United Kingdom. The company’s Marketing & Print Division, headquartered in Plymouth, MI, is comprised of Allegra, American Speedy Printing, Insty-Prints, Speedy Printing and Zippy Print brands of marketing, printing, mailing and Web services providers. Its Sign & Graphics Division, headquartered in Columbia, MD, is comprised of Image360, Signs By Tomorrow and Signs Now brands of sign and graphics communications providers.

Carl and his wife, Judy, owned and operated their own successful Allegra franchise for nearly 20 years before selling the $2.3 million operation in 2003. He is a PrintImage International/NAQP Honorary Lifetime Member and was inducted into NAPL’s prestigious Soderstrom Society in 2010 in recognition of his contribution to the industry.

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