VERNON KINGMAN Measure Twice, Cut Once (and other business basics that gain efficiency and increase profit) by Vernon Kingman Photo Credit: Diana Polekhina (Unsplash) This article focuses on the ever elusive “breaking through the glass ceiling.” The glass ceiling was that level of expectation that I was always striving to achieve. It often felt like an impossible target, sometimes it felt permanently out of arm’s reach. I knew we needed to achieve a certain level of turnover to meet our monthly “open the door” costs. Every business owner should calculate and know the minimum “open the door” cost for their business. Once you’ve identified that monthly operating cost, your turnover obviously must achieve a rate that exceeds that number, to generate your profit. I know, basic business sense, right? But not always easy to achieve. And if we aren’t achieving it, why not? Again, business basics but fluctuating business cycles, like the months of January and February, generally cause a certain amount of challenge for most businesses that aren’t “contract” reliant. More recently, Covid played a big hand in affecting a business’s ability to meet targets. A significant percentage of staff may be off ill, or some staff leaving due to not being willing to comply with mandates. It doesn’t matter the reason. Businesses always need to face challenges and prepare to deal with and resolve those challenges. The most obvious way to meet turnover targets is to improve efficiencies. The sign and print industries are notorious for a high amount of re-work. Why so? Because the vast majority of our work is bespoke, one-off designs. Even if you do every store of “Billy 36 AUG/SEP 2022 Blogs Inc.” around Australia, the vast majority will be of a different size to suit stores. Therefore, we need to ensure we meet those criteria. I always insisted on having working drawings signed off by the client. We all need to do a drawing of the planned work anyway, so why not reduce our risk and get the client to sign their approval? Always have your Lawyer prepare a “get out of jail” clause along the base of the drawing. Something along the lines of “By signing this approval, I give full approval for ABC signs to proceed with manufacture.” I’m not a lawyer, but ASGA has access to one you can seek advice from. I used to do the same for digital print jobs over two square metres. We would run a proof, and get the client to sign off the print proof as accurate before doing the actual print job. Sound painful? I can assure you it’s far less painful than reprinting the job, then driving to the site and re-installing. We’ve all heard the “measure twice, cut once” analogy, and this is much the same. Basic and good business sense. I can put my hand on my heart and tell you that whenever we had a problem, there was a high chance someone forgot to follow the procedure. That was always a fun conversation to be held afterwards. Often, we struggle to meet our individual turnover aspirations. One place to make instant improvements is to look at how you quote and what markup you put on your purchases. If you are charging less than 65% markup on your purchases, then you are going in too low. Yes, if you need to buy $50,000 worth of ACM, you can discount back but for most of your purchases, you will also need to cover off the admin in placing the order, handling, time spent in stock, profit expectations etc. If you think 65% markup is too high, ask yourself how much you think Bunnings makes on every sale? 65% is a conservative number I’ve used in this article; a bare minimum if you like, it should be higher. Do you analyse your profit-loss ratio at the completion of every job? If not, why not and how can you measure your business performance if you don’t? It’s like reading a map. If you don’t know the destination, every road will get you there. Knowledge in business is power. You must know how your business is performing. If you lose track of that, then you risk everything you’ve worked for. If you do everything I’ve outlined already and are still struggling to meet your goals, then you need to either increase turnover or reduce costs.
