Three Key Steps to Stop the Leaks and Improve Your Financial Results
This blog originally published in Printing Impressions.
When I recently wrote about having a good dashboard, I mentioned that one of the common denominators we see with leading companies is that they have good information — meaningful, relevant, and timely. Well, what if you receive that information and you aren’t pleased with the results? While there are many areas to look at and review, here are the three areas that you should look at first for signs of leakage.
Your personnel and staff costs are typically the single largest line item on the financial report, and an area that is often overlooked. When we look at costs, we should not only look at the hard dollars being spent, but also 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 when you had higher sales results? Make sure that you have the right complement of folks, that they are running machines to the standards you have set (i.e. at the level that your clients are paying you), and that as your business mix changes, you have the right folks with the right skills, in the right jobs.
A second important area to look at is what materials you are buying, as well as the work you may be outsourcing. 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 may not 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 are adding additional services in-house, do an audit to confirm you are keeping the work that you can and should produce internally in-house. Don’t fall prey to, “well, it’s just easier to send it to supplier xyz.” It’s a shame to see work get outsourced, when you have capable equipment, and people, standing idle.
The third area I suggest you review is your pricing. Again, this is an area that often falls into a comfort zone. We spend more time rushing to get a quote out the door than we do making sure we have set ourselves up for success, and pricing the work accordingly. Many companies I meet with do not have a pricing policy that 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 any consultative services or direction to the project.
Whether you are a new CEO, or an seasoned professional, reviewing these areas should be an ongoing exercise. Leakage can occur over time and not be overtly apparent. Make sure that your KPI’s and financial reports are providing you with the best information so that you can make the best decisions for you, the company, and overall shareholder value.
What’s on your dashboard, and how are you using that information to make good decisions? 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 email@example.com.