Running Your Business By the Numbers

I am constantly amazed at how many print owners don’t keep score of their business. Sure, they usually know what sales were last year and last month, but they don’t have other numbers at hand which are the key to managing a profitable business.

We are past the days when sales will just grow by osmosis—not only is the general economy weak, but more importantly, the printing industry has changed dramatically. Our clients can still buy from us or they can do work in-house or order printing on the Internet.

If your sales or profits are down or flat, do you really know where to find out why? It’s easy to blame the economy or our competitors, but how does that help improve the situation? By continuing to operate your business as you have, you will continue to trend in the same direction. Without keeping a scorecard, it is very difficult to figure out how to grow your sales or increase your profitability.

What numbers should you track? I have grouped them by the different aspects of your business.

Sales

Sales per month, sales year to date, plus comparisons by percent to the previous year. Most print owners know these numbers. Do you share them with your staff? Your employees like (and need) to know how you’re doing, plus they can have a direct influence on improving these numbers.

Orders. Track incoming orders vs. your sales goals. In my company, we used to have a daily sales report that showed total orders for the day by salesperson, location, and CSR. We showed how the orders compared to both the company and personal sales goals per day, and if we were on target meet our sales goals. I am constantly amazed by how few printers establish solid sales goals and that even fewer share them with their staff.

Sales by sales center. Track your total sales by the sales type. Typical sales types are process color printing, one- and two-color offset printing, high speed black-and-white copying, color copying, bindery, mailing, graphics, signs and buyouts (you may even want to separate these into certain categories like four-color buyouts, business cards, invitations, rubber stamps, foil stamping, etc.). All of the major printing management programs make keeping track of these sales easy, although they do take some setup or modification on your part. Monitoring the sales in each category helps you see the trends, helps in pricing, and in deciding on future equipment and personnel needs.

Marketing

New customers and their sales year to date. Without new customers being continually added, your business is doomed. A large majority of your marketing dollars should be spent in pursuit of bringing new customers into your business. This calculation is usually easy to do using your print management software. Growing printers bring in 15% or more in new customer sales. Good customers are not around forever, so you must always be prospecting for new ones.

How you got the new customers year to date by marketing category. Using the new customer list and their sales, list how you obtained the new customers. Use logical categories like Yellow Pages, direct mail, referrals, networking, outside sales, trade show, etc. Group the new customers by category and add up the sales per category. In another column, estimate what you spent on that category, year to date. The knowledge you get from this exercise will show you where you need to continue spending and where you should be cutting back.

Profitability

Earnings per month, year to date, plus comparisons by percent to the previous year. These numbers will help you keep track of seasonal changes and trends and, most importantly, show you approximately where your breakeven is and how profitability goes up or down based on sales volume. I believe that a print owner should target at least a 10% return on the total sales, based on the risks of owning and operating a small business.