Your Financial Results – No Surprises

You put the work in, gauge the results, and adjust accordingly. Sounds simple, doesn’t it? First of all, there’s nothing simple about it. It’s just plain hard work and paying attention to the details. There’s no question that you’re putting the work in. The challenge for many, though, is monitoring the dashboard and making the appropriate timely adjustments as needed.

No one will argue that you should never be surprised by your financial results at the end of the month. In order to ensure that, what are some of the things that you should be looking at? Obviously, the top line sales are important. Your mix of the business, which will determine individual job profitability and contribution, is also very important. Labor costs (straight time and overtime) should be in line with the amount of work that you have in hand. Your fixed costs are not easily adjusted on a month-to-month basis so let’s just focus on the variable cost at this time.

Not to oversimplify this, but if a customer pays you a dollar to do something, how much is it actually costing you to do it? That’s a question that may be best answered by looking at daily productivity reports and making sure that the right people are working on the right projects for the right amount of time, and that your equipment is operating in order.

Jumping back to the top line of your financials, what is your monthly breakeven amount in sales revenue, and more importantly, in value added revenue? If you understand how much work you currently have in your plant, and are monitoring the sales pipeline, you’ll have a better grasp of the work to come for that future period of time. Compare that number to your breakeven numbers, and to your projections. If it’s where it needs to be, congratulations. If it’s not where it needs to be, what adjustments will you make? If you’re not looking at this until the end of the month, you’ve forgone any opportunity to make adjustments in time to make a difference. Monitor your numbers, and know what they mean.

While you can make some adjustments to your labor cost, those often cannot be made in time, or to the amount necessary, to really make a difference in a particular month. A key opportunity you do have, though, is to selectively target key accounts and new business opportunities to make sure that you are winning and earning the projects that you want. That begins with how sales have positioned your organization in front of that customer, and continues on to how you look at and price individual projects, campaigns, and opportunities for business.

There are no silver bullets here. There is no “just do these three things,” and everything will be OK. Leading a profitable business is a combination of many skills, and it is never-ending. Have a clear picture of where you want to go, a map of how to get there and engage your team to make it happen. If you have any comments or thoughts as to how you’ve approached these issues, please send me a note or include them below.

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.