Stress Test Your Printing Business

When the economy hums along and all the presses are busy, it’s easy to think everything is fine. But most printing companies never find out how good they really are until they’re already in the middle of a crisis, and by then, you’re not stress testing … you’re stress living.

If you follow that line of thinking, why not run an intentional, structured financial and operational stress test. Think of it like a fire drill for your business. It can be uncomfortable, a bit messy, but really helpful if and when the alarm sounds. Another way is to view this is like an intersquad scrimmage, or a pre-season game. You’re looking for those hidden gems and gaps that you need to fill before it’s game time. You get the message.

A stress test isn’t just about the balance sheet either. Sure, you should model what happens if revenue drops 20%, if your top three customers disappear or your most productive press goes up in flames–yes, that happened. But you also have to ask about:

• People: What happens if you lose two key team members at the same time?
• Culture: When things get tight, do your managers collaborate to solve issues or retreat into their own corners?
• Customers: How many missed delivery dates can you recover from before your best clients start placing their work elsewhere?
• Management Style: When priorities collide (and they will), do decisions get made fast or does everyone wait for consensus while the clock ticks?

The shop is usually running flat out. Press schedules are tight, and margins are thinner than you’d like. And don’t forget that customer expectations are higher than ever and service level agreements are unforgiving and missed SLAs can be costly. That’s exactly why stress testing is so important as it forces you to uncover where your single points of failure are before they affect the business.

As an aside, it wasn’t that long ago that the trade association NAPL offered their Management Plus Assessment to its members. This self-assessment focused on leadership and governance, human resources, strategic planning, marketing and sales, operations, community and industry relations and financial performance. It served as the entry card to the awards program that celebrated some of the best-run businesses in the industry. And while it wasn’t billed as a stress test, it often served a similar purpose, a report card on how well the business was being managed.

Back to the stress test. When you run this, use a matrix that looks across five categories: financial resilience, operational continuity, people & culture, customer relationships, and management style. You may want to substitute something unique about your business or simply add another category. Each category gets scored from 1 (critical weakness) to 5 (highly resilient). Based on the nature of your business, you may also place a different weight to the categories. The result provides a clear snapshot of your readiness, and a priority list of where to shore up your defenses.

What you’ll usually find?

• The numbers might look fine, but key-person risk and equipment redundancy are bigger issues than you thought.
• Communication and decision-making delays inside the company often slow down recovery more than the actual problem itself.
• Your customer goodwill is a hidden asset and it’s worth protecting as much as your cash flow.

The point isn’t to beat yourself up with this. The point is to be ready. Because the best time to build resilience is before you need it. Based on your scores, create actionable steps to work on improving the gap areas. You may even want to tie a performance bonus to how well the improvements get made.

If you’re running a printing business today, you already know that challenges don’t announce themselves in advance, they just show up. The companies that survive and thrive are the ones who’ve already rehearsed the tough days so when they come, it’s just another job on the schedule.

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 advice, 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 mphilie@philiegroup.com.

The preceding content was provided by a contributor unaffiliated with Printing Impressions. The views expressed within may not directly reflect the thoughts or opinions of the staff of Printing Impressions. Artificial Intelligence may have been used in part to create or edit this content.