Key Steps to Income Improvement
This blog originally published in Printing Impressions.
Sometimes, all the grit and tenacity just isn’t doing it and the results aren’t satisfactory for the shareholders. Now let’s be clear, “not satisfactory” could mean doing fairly well but not hitting your marks, or “not satisfactory” could mean breaking out in a sweat when the bank calls. I’ll focus on a few things that you should be looking at to get a company back on track to being a sustainable, profitable business.
This is a Team Sport
This is not for the meek and uninitiated. It’s hard and you’ll need to rally the troops at all levels. Starting with your leadership team, make sure that everyone understands the current status of the business. If you’ve embraced an annual planning process for the business and have regular leadership meetings to move the business forward, there shouldn’t be any surprises with this group. If you haven’t, don’t sugarcoat it with them. If you’re not sure you can be that direct with some of the members of this team, sorry but then maybe they shouldn’t be on this team. This should not turn into a blame game either, rather, it should be a “we’re all in this together, and together, we can fix this.”
Take it to the next level during your quarterly company wide meetings. Be clear that you’ll need everyone’s help to get the business back on the rails. Don’t hesitate to ask for ideas from all parts of the business – it’s amazing what you might find out.
This is the time where having good performance data on the business helps. Don’t be lulled by those who wave the “we just need more sales,” flag and everything else is just fine. While more of the right sales always helps, to a degree, that’s not something that’s corrected overnight. And one more thing, while having an increase in sales is a good thing, make sure that the increase isn’t masking the inefficiencies or caustic situations that may continue to exist. In the meantime, you should be strive to be profitable with the sales that you have.
That can mean many things. Are you staffed properly and how do you know? How are the chargeable hours, overtime, and productivity by employee, and by department, tracking over time? What ratios and trends are you seeing and what do they look like now vs. when times were more profitable? When was the last time you raised prices, aren’t your costs going up each year? What are the additional costs you’re incurring due to the additional non-value added touches you have with every job? Make sure that you have taken advantage of all the technology and software applications that you own and use them to their fullest to help drive unnecessary costs out of the equation.
I can’t overemphasize the important of good data on the company. From daily, weekly, and monthly key performance indicators to financial statements that give you a real chance to diagnose your issues. Remember, there are leading indicators and there are lagging indicators. Know the difference and use them accordingly.
Course correcting a business, unless in dire situations, is best accomplished with a scalpel vs. a sledge hammer. If you’re not sure, this is where your outside board of advisors can lend a helping hand – your accountant, banker, legal counsel, or consultants all want to see you do well. As you go forward it’s best to measure twice and cut once as you want each move to be effective and meaningful. Note, your staff will be watching every move.
Discipline-the Hard Part
One of the difficult parts of any business transition is that things don’t change as fast as you’d like them to. Deciding what to do, your action item list, is actually the easy part of this. Making the thoughtful decisions and actually taking action is next. And then the really hard part is minding the store while you’re looking for the results to improve. Don’t be afraid to course-correct, but don’t quit! Again, your situation didn’t get this way overnight and it probably won’t get better overnight. Stick with it and you’ll get it done. If you have questions, let me know. Also, if you have any thoughts on this post or would like to share what’s going on in your world, please get in touch with me. Good luck, let me know how you’re doing.
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.