A list of  topics to consider about running a Graphics Business.

Answering these Questions is an on going process, Check back often

 

What is our company Goal?

For a business to succeed it  must define and set goals. Let's say you have the business because you always wanted to work for yourself. That's great, but that goal has been achieved. What is your Goal now? After giving it a little more thought you may say, "Well, I want to be self employed in a business and make more than I did working for someone else and have enough to retire at the end of my career, or maybe leave it to my children."   What seemed like a simple goal to be self employed just mushroomed in to a three pronged goal that needs much planning. That is why we must clearly define what we want from the company so we can go about planning a strategy to attain those Goals.

Venture Capitol investors are good examples of people setting goals for a business. After investing in a business they want a return on their investment of 20 or 30 or even 50% by a particular date or the goal is considered not meet. 

The value of having a Goal becomes very clear when watching a Football or Hockey game. The team that plays best doesn't always win, but the team that scores the most goals always wins. Without a Goal your company will have nothing to shoot for and can not score enough goals to win.

 

How do others see our company?

How others see your Company has a direct effect on how you function in the market place. It is important to step back every so often and get a look form a different perspective. As you go about the everyday running of the business you firmly believe that you have the best people in the world. That customer service person that handles your biggest account always talks to you in such a delightful and positive manner? Are you so sure she talks to the customer in the same manner? Have you ever ask the customer? Case closed. As the owner or manager it would be wise for you to step back from time to time and ask for feedback from your customers, suppliers and anyone doing business with your company about what is going on in their relationship with your company. Make them feel comfortable about making honest comments.

This example comes to mind. Being a long term resident of Colorado and woodworker I became a regular customer of Hugh M. Woods many years ago. Over the years they were my store of choice. As we speak they are closing all of their stores in the area. I have read in the paper reasons for their demise from competition from the big box stores to price competition to employee and financial problems. My point is management never shopped in their own stores or they would have seen why business was dropping off. Their own business practices drove customers to other sources. The bad attitude started about eight years ago in a few of their stores and spread throughout the rest bringing a good company to it's knees. 

We have all heard "Business goes where it's welcome." If you are losing business it's probably being welcomed somewhere else.

 

Building relationships with suppliers.

You are in business to derive a profit from selling a product or service. To manufacture this product you need material and supplies and a method of adding value to this material. If you do not maintain a good supply line your ability to offer a superior finished product will suffer. Building and maintaining a good relationship with your suppliers should be at the top of your list. You need to be working on this all the time and be sure you maintain a company policy about the subject. A good relationship occurs when you are able to get the materials you need in a timely manner at a reasonable price while allowing the supplier to make a reasonable profit. Any bending of the terms of this relationship to favor one side more than the other will put the relationship at risk. 

If you are not getting the service you need from a supplier find out what the problem is and see if you can fix it. If you like the company but have a problem with the rep call the main office and see about a change. If all attempts fail, get a new supplier. When you do get a good relationship working make sure to always pay within terms of the sale. Remember, a good relationship must work both ways. If you don't pay on time don't expect good service. If you are always beating down the supplier so he has to operate on small margins don't expect good service. If you always do your best to pay on time, expect good service. If you allow the supplier to make a reasonable mark-up, you can expect good service.

 

Keeping customers as long term assets.

This is the wish or misconception of every business owner. A company must do all it can to maintain a good relationship with its customers for the simple reason that customers give the company the opportunity to make money. The hard part to understand is that your customers will move on. There is always someone trying to get their business the same way you did. With this in mind you must maintain a balance of low volume customers and high volume customers for the simple reason that if you lose a low volume customer your business will go on and with a little effort that customer can be replaced. On the other hand, if you allow a single customer to give you a large percentage of your volume you now have a silent partner that can jeopardize the stability of your company without having anything invested. Take the time to look around and you see where many companies have failed "cause they fell into this trap.  A good rule of thumb is not allow any single customer to give you more than 20% of you yearly sales. Period! To do this you have to have a constant effort working to bring in new business for growth and to replace lost business. By keeping a larger base of smaller volume customers you will develop a  sales base that will not put your company in harms way if you were to lose a few of them.  Most all customers eventually out grow their suppliers. You will be no exception. By controlling your sales base there will be far less impact when customers do move on.   

Does growth bring bigger profits?

Growth does not always bring bigger profits. Always is the key here. We operate in a capitalistic society so it is natural for a business to strive to grow  in spite of the fact that under certain circumstances it might be in the best interest of the owners to limit growth and concentrate on becoming more profitable at their current level of sales. This is particularly true in what is referred to as Mom and Pop shops or smaller family businesses. Rapid growth has hurt more companies than it has helped. If your company is making "x" profit now and you figure if we double our sales we will make "2X" you are doing simple math to figure a complicated question. It gets back to planning growth to occur within the resources of the company. Set targets and work toward them a step at a time without disrupting you companies gross margins.

 

Can a Salesman help our business grow?

Every time I've seen a printing company want to grow it seems to look toward hiring a sales person thinking they will bring in additional work and make the company rich and famous. I will be very blunt here because I do not believe that is the way to build a business for the long haul. I have seen it fail over and over. When you hire a salesperson and put them on commission you have just hired an independent contractor to use your resources to make money for themselves. No "Ifs, ands or buts". They will sell what makes them the most money and try to force the company to change so it can produce what they want to sell. It may take a while, but it will happen. I have found better success having a well trained customer service team and/or a non-commission sales representative handle sales.

What are some other ways to build sales?

There are as many different ways of building sales as there are ideas you can come up with. Think about what you have seen work for someone else and try it for yourself. Networking is always near the top of the list. Advertising works for most of the biggest companies but seldom, if ever, do you see Printers advertise. Mailings, trinkets, whatever it takes to get the word out. The best way is still to do the best job for your customer and let them tell other people.

How big should we get?

How big do want to get? If you still don't have an answer revisit you goals. They are different for each company. If you want to be the leader in your chosen field then single out the top dog and go after him. If you wish to simply have a nice little family business then pursue that. What ever you do don't let your company grow beyond your goal. I have seen it over and over when a hot shot salesperson or a customer brings in a lot of work and the owner get visions of grandeur and grows the company bigger and bigger. Then the bottom falls out because the growth has outrun the resources available, or the salesperson takes the work elsewhere, or you don't get paid. Ouch!  

Where do profits come from?

Simply stated, profits are the difference between the value you have invested in the product or service you offer for sale, and what you receive for it. Buy paper, ink, chemicals, equipment, pay labor and overhead. Total these up and subtract this cost from what you sold the item to the customer for and, that is you profit.... or your loss. The graphics industry is sort of custom manufacturing. Most every job is different in some way from the one just before it. The more things you can do to a job the more value added you have and the potential for profit increases.

Are we pricing our work to our best advantage?

Your main objective in pricing should be to keep all profit centers in production busy and to be meeting your company goals. If this is happening then you are pricing your product to best advantage. If you are busy and not meeting your goals, or you are not as busy as you would like to be you may need to rethink your pricing. Also keep in mind that if you are not even getting the opportunity to bid or quote work your problem is beyond pricing.  

I here the buzz phrase "Just In Time." What does it mean"?

Back in the 70's and 80's this was the big thing in industry brought on by some people thinking out side the box by seeing how costly it was for manufacturing companies to warehouse materials and parts, and also the idea of starting to build items as orders came in. The concept is very simple. All parts are made and sent to the assembly floor "as they are needed" to put together the finished product is made available to consumers when they want it. As a Printer you are probably saying "We've always done that". Well, to some degree you probably have, but most American industries have a hard time understanding the JIT concept. Except of coarse when they are buying something.

How can we eliminate errors?

There is only one way. Set up a company wide plan that will get everyone on the same page in getting the job done as the paying customer wants it! Do your people all talk the same language? Are the customers wishes relayed through production? Are your employees skilled at the level anticipated? Has the job been scrubbed?  And most important, are you in your quality bell?

Should we do our accounting in-house?

Do Bankers do their own printing? Do Accountants do their own printing? Then why do so many Printers think they are capable of doing their own accounting! Maybe it's because they got this great free software. Or they took accounting lessons from a friend. Or a relative told them how easy in was.  Or they just think they know all about it. Most people don't think they need their books professionally done until they find out that profit they thought they could spend wasn't there and now the Tax guys want a piece of their butt "cause,.... well, what can I say? Don't mess around, hire a professional. Keep in mind a CPA may spend time trying to tell you how to run your business then just doing the accounting job like an Account.

 

Where can we find dedicated employees?

It is very difficult to find dedicated employees because America itself is built on a free sprite attitude and we all can change our minds in a heart beat and go do something else. That's what makes this country great. It is also difficult for employees to find dedicated employers. So the trade off some how seems fair. You get the best dedicated employees by buying production equipment that can do the most with the least employees. Turn the switch on and it starts. It's there on Monday morning and if you need overtime it,s there.

The attitude in the shop seems poor. How can we fix it ?

There are a few common sense thing one can do to help attitude. Visit with every employee, every day. Keep people in positions the like. Make them feel wanted. Give them some say in company matters. If you are not into this train of thought, see above.

How important is a relationship with a Bank?

Having a good relationship with a Bank is a critical to a business as having a good relationship with a major supplier. Other then the simple fact that you will be running most all of your sales income through your Bank and paying most of your bills out of the same Bank having a "friend" in your Bank can come back to help you when you need help with one of your accounts. Don't expect your Bank to be at the ready when you need capitol to grow your business or purchase equipment, but they can be of help when you need a small line of credit to use through leaner times. By going into the Bank so you can get to know the people at the windows when you need a little help with a bookkeeping problem they are more likely to help. 

How do we find financing for future growth?

The key here is financing. As in obtaining additional manufacturing equipment. The first place to look is in profits. If you are profitable and growing you may need the profits to cushion your increased operating costs that will come with growth. Your local Bank is usually out of the question. The word "Growth" alone throws most bankers into a tail spin. Use them for what they do well. Cash checks you deposit, pay for checks you write and hold your money. When looking at equipment consider leases. With the interest rates today and the fact they don't tie up your operating capital and the possible tax advantage, leases are a strong option.

Can the SBA help me?

Probably not. Everyone young in business goes through a time when they consider the SBA as a source of financing a new business. The SBA knows less about building a business then your local Banker and they work together. That's a scary thought. I actually got involved with two SBA start up loans before I learned. Shame on me. The first did fair. The company grew at a phenomenal rate in spite of  all efforts to squelch it by the loan administrators. The second loan funded late and incomplete. We missed our window of opportunity and had to refinance and start over. Later when things smoothed out I sold the business and stayed on the SBA note which was a small part of the deal as a cosigner thinking that if the new owners got behind I would be notified. Wrong. The note never got paid. I was never contacted. The note was sold to a slimy collection bunch back east for pennies  on the dollar. And, Yes, I got nailed.

Is it wiser to buy new equipment verses used?

There are a few questions that need to be asked. If you buy used: Are parts available? Can you live with down time needed for repairs? Does the used machine do the job we need? Is it fast enough? Can you find workers with the skills to operate the older stuff?

And if you are buying new you need to ask: Do we have the work to keep it busy? Is the dealers have my best interest at heart? Do they carry repair parts? Is training offered? Most important, Can we make the payments?

What is my business worth?

Here we go with the big one. Your business is worth exactly what it is doing for you and you overall plan for the future. If it is not meeting you needs then it isn't worth anything to you, but it may be of value to someone else. There are as many formulas for figuring a businesses value as there are people tell you how to figure it. A few of the most common that are based on absolutely nothing are; Selling price is equal to one years gross sales. Another is, Ten years profits. You can use ether of these if you wish. Ether is as good as a dart board.  The bottom line is, You business is worth as much as it is doing for you.

How would I go about selling my business?

Network to find someone interested and make it easy for them. If that don't work hire an agent and hope for the best.  Seriously; Current employees interested? Your biggest customer? Your competitor?  Advertise. Advertise. And make it easy 

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