This blog originally published in Printing Impressions
The financials looked OK at year end, but if you examined how you got there, it wasn’t pretty. It’s amazing that some companies enjoy monthly sales volumes that might not deviate more than five percent up or down, while others ride a sales roller coaster that might include up to six cycles of losing or making money. Those variations can create staffing nightmares and a load of anxiety for the stakeholders.
That’s the Way it’s Always Been
You could say that as long as you’ve made money at the end of the year, what’s the difference? That would depend if you had intentionally wanted this to happen, or it just happened. And even then, some say that’s just how this business is and no matter what we’ve tried to do differently, that’s the way it’s always been. Often when I inquire about the strategy the company took to try to even out their monthly dips, the details are lacking. Doesn’t mean they didn’t try, just means it might not have been as thoroughly planned out as it could have been.
Diagnose and Create an Action Plan for Change
In drilling down and trying to diagnose why, or how this is happening, here are a few things to consider for your review.
- You may have a few select accounts that are the main culprits that contribute to the roller coaster sales. These clients are usually large in revenue, but seasonal in their print spend. You should first determine whether or not they are profitable. Not just profitable from the mark-up, or lack of discount from your estimated cost, but rather from your data collection and job costing review. If they aren’t profitable, are you doing the work just to cover costs? While it may have made sense when you first took the work, does it still make sense now, and what would be the impact if you didn’t have that work? Not saying to get rid of the work, just recommending that you answer the questions and come to your own conclusions.
- If it is profitable, what other services do they buy, but not from you? Could changing this be a strategy to help fill in the slower months? This is also a good exercise to do with all of your clients – work to earn a bigger slice of their spend.
- If it is profitable, but they don’t have any other work, what other suspects, prospects, or clients do you have that could potentially fill in those cavities? Those sales gaps could be draining the profit away from your good accounts. Assuming all your other work is profitable, and you’ve determined that you want to keep that work, then you might introduce some incentives to win that work as long as the client is able to meet your schedule requirements. This means that you would be filling in the slower times that currently go unsold. Note: this is harder than it seems and you don’t want to end up with only a steeper roller coaster!
Taking a line from my friend Bob Rosen, “your worst month should be at break-even.” If that’s your goal, here are two other areas to look at to even out the slow months?
- Make sure that your BHR’s and production standards are current and properly reflect the changes to technology that you’ve invested in. Make sure that you’re not pricing yourself out of work without even knowing it.
- Do a review of the work that you lost during the last slow period. Did those projects actually happen? What else could you have done in the sales process – did you effectively identify the problem the client was trying to solve to win the business? Note – there are probably 15 sales related questions that you could be asking at this stage. Also, how was it priced, and if you had priced it to win, what impact would that additional work have had, even at a discount, to your overall margins? I’m not advocating a race to the bottom, I’m advocating not losing money.
In running any business, there are never any clear-cut answers to sales volume related problems. There are though, many areas that you can study and learn from so that you don’t repeat the same type of actions the next time. Do this review this week, learn from it and grow with it. Continued success.
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.