Sun, Apr

Chasing profit, not just turnover

It’s scary how quickly a business can go from profit to loss if you’re not careful and are reminded we all need to chase profitable business and not turnover at all times.

This month’s reminder has come in the form of my graphic application teams, all of whom I use on a regular (almost daily!) sub-contractor arrangement. I’m sure a lot of the Mole’s readers do too. One by one, over a five-day period, they all informedme that their daily rate had to rise due to increases in their own costs. Through some quick negotiation we settled on £20 extra per day.

Ah, but when we get busy I can have ten of them working for me each day. A quick calculation means I am suddenly paying an additional £1,000 per week. Incredible! That £20 per day has suddenly cost me over £40,000 from my company’s bottom line.

Now things get tricky! How do I get that money back? Only one way - I have to increase my own prices. But, I’m already dearer than my competition so will probably end up discounting my rates back down to win business. I could ask the installers towork faster, but quality drops and customer complaints increase. I could cancel the summer holiday to Mexico and tell the wife her new car is going back but only if I want to be like a lot of my friends; living in a flat, drinking too much and seeing the kids every other weekend!

In the wake of Bob Crow’s untimely demise, I have been held to ransom by an ‘unofficial fitters’ union’ maneuver where if I didn’t comply they’d all disappear off to my competition. Now I know how Boris Johnson feels.

It’s not just graphic installation costs that are on the increase. Materials, insurance, fuel, packaging, inks. It all keep going up. But for some weird reason, the cost of large-format print keeps dropping. What’s the answer to that one?

I’m going to keep chasing the profitable business and leave the stack it high, sell it cheap methodology to the likes of Amazon this year.

Comments please to industrymole@imagereportsmag.co.uk

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