From Sweat to Profit: What Phase Is Your Company in?

In more than 20 years in the industry, I have found that printing companies go through two general phases, and if they are managed wisely they will get to a third phase—the promised land of businesses.

I. Sweat Equity—It's a New Day

The Sweat Equity phase is characterized by long hours, daunting challenges, and not a lot of cash. The energy, however, is nearly boundless. It emerges from the newness and excitement of the capitalistic creation, the euphoria associated with building your own printing business, and feeling no ceiling to the company's potential.

The workforce consists almost exclusively of people with whom you have fairly close relationships—members of the immediate family, other relatives, friends, and friends of that inner circle.

It is a phase often devoid of policies because the company is evolving, and no one is quite certain how it will look at the end of the metamorphosis. Directions are word-of-mouth, because within the close circle of workers who have intimate knowledge of one another, communication is rarely a huge problem.

There is usually a strong unity of purpose within the operation, such that, despite disagreements, daily stress, and long hours, a sense of team runs through the business. This is due mainly to the people—webbed together by close bonds—realizing not only that much of their economic survival is tied to the success of the business venture, but that they are a part of an exciting new experiment, one that could make their economic dreams a reality.

Cash is usually tight, and fear of disaster is always nearby given the vulnerability of a business in its infancy. Sweat Equity businesses rarely require a turnaround, because—with the business not fully formed—there is nothing to turn around. The linchpin of such a company's survival lies in making good decisions in the context of usually limited cash. The mathematical realities cannot be denied or even toyed with. It is what it is. The owners who emerge from the Sweat Equity phase with their shirts on are those who could engage the brutal facts unemotionally, and make determinations based on those facts.

II. Organization—The Problem Phase

It is right here where most printing companies get in trouble. Some never get out of this phase, and others literally die here. A common scenario is one in which a company emerges rather profitably from the Sweat Equity phase, begins expanding rapidly, and then hits a financial wall. Costs rise, quality begins to suffer, inefficiency abounds, and sales are adversely affected.

Here, the very elements that enabled the company to survive during the Sweat Equity phase—close relationships, common purpose, smooth communication—are all now in peril. The labor force has been expanded to include people not personally known by any in the inner circle. And these new hires have no personal allegiance to the company beyond keeping their jobs and getting raises while they are at it.

There is also so much more information flowing that verbal communication—foundational to the early success of the enterprise—now works directly against the company. Messages have to be in writing so there is some record of what must happen, what is happening, and even what has happened.

Indeed, things have to be reduced to writing. Reduced is the key word, because writing rarely carries the luxury of explanation, and never of discussion. A written message is just a collection of words. Nonetheless, a lack of written policies and guidelines will destroy your fragile business, one that is no longer bound together by tight personal relationships, but has evolved into a network of roles held by people you not only do not know personally, but people on whose work you depend. You now hire people on the basis of what they allegedly can do in your company, not on who they are.