Lessons learned from enduring a difficult and complex business enviornment.
By Marty McGhie
Additionally, we frequently hire without calculating the full financial impact to our businesses. For example, a $20-per-hour employee will cost the business more than $40,000 in salary per year, and when you add benefits and payroll taxes this quickly exceeds $50,000 per year. So if that employee stays on for four years, that’s $200,000 out of your company’s pocket. What might initially seem like a small amount of money is actually a very significant cost over time. The lesson learned here: First, make sure that you actually need to add an employee to your workforce; second, make certain they become a productive and efficient employee, because they are costing you some real cash.
Lesson 4 –operating efficiently: When times are tough, the pressure to produce jobs accurately and efficiently is greater than ever. But we sometimes get caught up in the other aspects of the business and overlook the just how much we can save by simply avoiding efficiency killers such as waste and mistakes. Dig into your operations in detail and find out what processes are causing waste and rework in your shop. Here’s my suggestion: Avoid accepting waste and rework as “just part of business.” Figure out how to fix the problems that occur, whether they are employee-related or process-related. Once you have your management and your employees engaged in a constant effort to improve processes and workflow, you will continue to experience real cash savings on a regular basis.
Lesson 5 – taking care of your customers: Last but certainly not least is regarding your customers, and how you deal with them during financially challenging times. The most obvious recommendation is to do everything possible to keep your key customers – you just can’t afford to lose them. But beyond the struggle to provide great customer service is the challenge of dealing with customers that are themselves experiencing significant financial pressures.
As a result of the recession, customers are now asking for price concessions or are required to bid all of their jobs out and award them to the lowest bidder. The best way to avoid a knee-jerk reaction and immediately drop your prices is to figure out the best ways to add value to what you’re already providing your customer. This might entail extra customer service, superior fulfillment processes, Web support, or a number of other ideas that don’t involve decreasing your profit margin. The point is, get yourself out of a situation where you’re just providing a product for the lowest bargain price. During tough times, you have to fight to keep your margins up more so than ever, and the best way to do so is to provide value-added services to your customers so they simply can’t afford to lose you.
I think it’s safe to say that we all hope to never again have to endure a recession like the one we have just experienced. But by the same token, I think we’ll all agree that we can’t afford to drift back to old business practices and pretend that everything will be the same as it was before we hit these challenging times. Things won’t ever be the same. We must act in a constant state of defense, taking every precaution necessary to keep our businesses afloat. Every penny spent must have a justifiable purpose and every business decision made must be strategically weighed to ensure successful longevity. If we are to move forward in the coming years and maintain healthy and sustainable profits, we all need to make drastic changes.
Marty McGhie is VP finance/operations of Ferrari Color, a digital-imaging center with Salt Lake City, San Francisco, and Sacramento locations. The company offers high-quality large- and grand-format photo, inkjet, fabric, and UV printing. firstname.lastname@example.org