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.

Philip Beyer, founder/president of Beyer Printing and Ebiz Products LLC in Nashville, TN, is a chronic entrepreneur, business systems analyst and consultant, author of "System Busters: How to Stop Them in Your Business," and an InterTech Award recipient for the design and development of System100™ business process management software. Philip speaks to business owners across the country on how to bring lean, sustainable order to their businesses.
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Comments
  • Jim Olsen

    Phillip: This is a timely post. In the early days, I was VP Mgt Services for PIA and had the responsibility of the Ratio Studies. It was then and still is one of PIA’s flagship programs – because they are so valuable. Without them, many a printer simply works in a vacum. Subsequently I ran PPI for 14 years which serviced Hawaii. On Oahu, I met Tadashi Hiroshima the President of Edward Enterprises. Tadashi was the biggest proponent of the Ratio Studies I ever met. He would not only use them as a benchmark, but as THE management tool to run his company. Perhaps this was one of the reasons that he ran the most profitable printing business I have ever encountered.

  • Linda

    We do need a bench mark to line up against to see how we’re doing or we can end up way off base. The quality of what we’re aligning ourselves to or measuring against is also important. This reminds me of a story my dad told about the farmer who went out to plow his field – In order to have nice straight rows to continue through the field (and be efficient) you need to line yourself up to something solid and immovable like a fence post – then there was the farmer who happened to mistake a cow for the fence post (fields can be very long in ND) he thought he was lining himself up to – his row may have been straight but it was headed towards the barn not the other end of the field! Thank-you, Philip – you’re right, great systems do work!