Know Your Numbers
A common denominator with leading companies is that they have good information — meaningful, relevant, and timely information. They know their numbers and they know what to do with them. What if you receive your financials or operational metrics and you aren’t pleased with the results? While there are many areas to review, here are three that should be looked at first for signs of leakage.
Your payroll costs are typically the single largest line item on the financial report, and an area that should always be reviewed. When we look at this line item, we should look at both the hard dollars being spent, as well as the costs of not being as productive as you can be, and the costs of non-compliance. Do you have the same amount of people, or more, than you had when you had better results? Look at your payroll dollars as a percentage of your sales and of value added, especially if your work mix has shifted. Make sure that you have the right complement of folks, that they are running equipment to the standards you have set (i.e. at the level that your clients are paying you for), and again, if your business mix has changed, that you still have the right folks with the right skills, in the right jobs.
A second area to look at is what are the materials you are buying as well as any outsourced work. This is an opportunity to make sure that your suppliers are providing you with the best value in materials and consumables. Note that the best value doesn’t necessarily mean the lowest price. Once you find great suppliers, embrace them and work together to create a good working relationship, but also continue to verify that the value you are receiving is the best you can get for your company. No different than what your customers do with you.
As companies continue to add additional services, confirm that you are keeping as much of the work that you can produce in-house as possible. Don’t fall prey to, “well, it’s just easier to send it to an outside supplier.” It’s a shame to see work get outsourced and have capable equipment and people, standing idle.
The third area to review is your final pricing. This is another area that can easily fall into a comfort zone. It’s easy to spend more time rushing to get a quote out the door than to make sure you’ve set yourself up for success, and pricing the work appropriately. When was the last time that you raised prices? Have your costs increased? I thought so.
Make sure that your pricing policy includes strategies for new business or new markets, repeat work, and work that you’ve done such a great job with, that the clients only need a price to enter onto the purchase order. Be creative with your pricing, particularly if you are adding value through consultative services or direction to the project.
It’s easy to overlook these areas when you’re busy running the operation, putting out fires, and trying to achieve the goals you’ve set for you and the business. Know your numbers, know where to look for leaks, and take the appropriate action to course correct should you stray away from your intended path. Where do you look for leakage and how do you determine what action to take? To discuss further or perhaps gain more clarity — send me a note or leave a comment.
Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to owners and CEOs in the Graphic Communications Industry by providing direct and realistic assessments, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at firstname.lastname@example.org.
Mike Philie leverages his 28 years of direct industry experience in sales, sales management and executive leadership to share what’s working for companies today and how to safely transform your business. Since 2007, he has been providing consulting services to privately held printing and mailing companies across North America.
Mike provides strategy and insight to owners and CEOs in the graphic communications industry by providing direct and realistic assessments, not being afraid to voice the unpopular opinion, and helping leaders navigate change through a common sense and practical approach.