Ratio Reports – Just Another ‘Pesky’ System?
For the past few days, I have been working with my son Paul on our annual Ratio Reports/Studies for the printing industry. It’s a very tedious process, to say the least. However, I believe it’s a very important exercise for print shop owners and managers—and for Paul and his brother Barton, who are currently taking on more management responsibilities in our company.
With these reports, they can know and see where all the company’s cash is going. This is an especially great system for new owners—and those in training—to help them understand the numbers side of the business.
For those who are unfamiliar with Ratio Reports, they are simply a measurement or benchmarking system, usually set up in Microsoft Excel for gauging how much a company is spending in a particular area, compared to sales (i.e., how much a company spends on paper compared to its total sales). Sometimes the ratios make sense, while other times you may wonder, “What does this have to do with the price of beans in Texas?”
Many times, as owners and managers, we get bored with certain reporting systems and end up paying little attention to them, or just gloss over them without realizing their importance.
But, CAUTION—if we don’t take the time for closer review of our company’s ratios, we may find it’s taking on water (losing money) in a particular area, if not sinking altogether.
It’s a great puzzle to me whenever business owners say they don’t have time for Ratio Studies or other benchmarking systems that would help eliminate the threat of failure in most areas of their company; yet, they will spend valuable time calling all hands on deck to start bailing when a job turns out to be a Titanic-size mess.
We’ve all heard it a thousand times—we never seem to have time to do the job right, yet we always have the time to REWORK the job when something goes wrong.