Boosting profits and performance in a downturn is an opportunity no printer can pass up because it puts the business in a strong position to take full advantage of the economy when it recovers. Which it will, economic cycles are like that.
It is an opportunity to take advantage of weaker competitor or plan for a changed marketplace that will emerge. Doing this will help ensure your business is best placed to come through the bad times re-energised and fit for the future.
Printers can use various methods like identifying unprofitable products and customers, cost reductions, effective working capital management and forecasting, having an experienced and well-resourced finance team, using appropriate financing arrangements, strategic M&A activity, careful tax planning, communicating with stakeholders and managing talent effectively.
Two suggestions: reduce giveaways and provide discounts for early payments.
Another good idea is to look at pricing. It’s important to remember that any profits from a price increase flows straight through to the bottom line. Alternatively, the company can reward its best customers by offering volume discounts which take effect at certain thresholds. It is important to ensure these discounts apply to a specific time period and to sales above a certain threshold. For example, one could give a discount on sales over $100,000 in the 12 months to the end of the financial year. Doing that ensures you maintain your standard prices while encouraging customers to spend more money on what you are offering.
Controlling costs also becomes critical because every dollar saved from cost, goes directly to the bottom line. There are various ways to do it. Buy better with preferred suppliers. And importantly, cut back on waste. Turn off lights when they’re not needed. There are many ways to reduce wastage, and at the same time, help the environment.
What about your stationery stocks. Some office stationery and supplies can go missing mysteriously. Better control or accountability might be all that is needed. Another good idea is to charge employees using company vehicles for private purposes.
Another good way is to use zero based budgeting. How to do it? Start with a blank piece of paper to assemble the budget. Focus on the outputs of the business unit – the deliverables – and then work out what is absolutely necessary to deliver these outcomes. That is instead of using the traditional budgeting method of starting with last year’s actuals and focusing on the incremental change rather than challenging the base.
And finally, to increase sales volumes, start drawing up a profile of your best customers. These are the ones that earn you most of your profits. Identify the common characteristics and ensure you know why they buy from you. Then prepare a strategy to attract customers of a similar profile.
The businesses that can grow and increase profits during a downturn are those that have full alignment in the areas of strategy, leadership, team, customers and systems. And they will be in a good position when things pick up again.
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