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![]() Maximizing Profitability in Sign & Graphics Shops
By David King
Business is not that difficult; what is difficult is being consistent and applying a methodical approach to running your business.
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Do not try to complicate processes or plans - the best plans are always the easiest to implement. This article focuses on two rules in business that you must follow. The only way to make money in business is to cut your costs, or sell more. This assumes that you know how to make, deliver and install your products.
Controlling Costs
![]() Depending on the company, this list may be longer, but it's a good foundation to help you start fitting your employees into certain positions. What will hurt at this point is that you will have a few holes where you either have people that just do not fit anymore, or you have no one with the skills to fill the position. The basic rule for hiring people is that each person in your company should be worth $110,000 in sales, meaning if you have 10 people then you better be doing $1.1 million in sales. If you have 14 people for $1 million in sales, then you need to remove four people, possibly five.
This is your most difficult task to do, and you will hate it. If you fail at this task, just about anything else you do from this point forward will not return you the financial success you deserve. My father always said to me, "charity begins at home," so stop giving away your money to people that are not making you successful. The next biggest expense is cost of goods sold (COGS). This is where every one of my clients has failed, but it was not their fault. The problem within the specialty imaging industry is that virtually none of the distributors/dealers have people on staff that have done the work you need them to do. In most cases you are being sold what they have, not what you need.
This following statement is always true: "Customers buy what they are sold, salespeople sell what they know." So if you have salespeople calling on you or you are calling on them (this is the case most of the time these days) and they have never run a printer, laminated jobs, mounted graphics or wrapped walls and cars, then how can you expect them to sell you what you need? Let's break it down even further. Think about what you do every day in your business, and apply some very simple rules:
Today I find that I have to do business with more than seven sources to get what I need, and five of the seven sources are good for almost nothing when it comes to good information. The basic rule I follow is when all factors are the same, go for the lowest price. This means that my local distributors do not like me that much because I shop them.
What's important to remember is that there are two types of distributors, master and sub. Many distributors/dealers can be both depending on the product. For example: If you like to purchase a certain brand of PVC sheets but you call two sources and you get a price of $29 for a four feet by eight feet, three millimeter white sheet, and then you call another distributor and you get $24.50 a sheet, you just found out that the first call was to a sub-distributor for the specific company and the second call was to a master. Subs purchase their products from masters. Now you can make the same call again to these same two distributors for vehicle graphics vinyl and get better prices from the first distributor than the second. So what this all means is that you need a good purchasing (accounting) system so you can enter in the vendor to call for the different inventory products and keep track of your last purchase cost. In most cases, the difference between a master and sub is 30 percent. If you spend $50,000 a year in material costs, 30 percent could be $15,000. Wouldn't you like to have an extra $15,000 each year?
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Simplify The Process
Now for the jobs I cannot do in house, I have a number of great vendors that provide products like offset printing, labels, routing, special fabrication, unique printing jobs, etc.
Pricing Strategies
In your business, you should determine your own prices based on your materials and labor costs, and the prices that your local market can handle. Do not undervalue your services, and work to get the best price you can. In your pricing efforts, remember that price and profitability are widely variable based on your cost of materials, cost of labor and efficiency in getting the job done. Strong profits are not a given and downward pressure on prices is an ongoing concern.
Up Selling and Adding Value Most clients ask for what they know, or what is the lowest price - be assured if you sell them poor quality, even if they asked for it, you will be thrown under the bus when the graphics do not perform as needed. Sell the customers quality products, and unless the graphics are dated for next week, stay away from foam board, as it will fail faster than you can imagine. By selling a better product to the clients, you will give them a better-looking image, the graphics will not fail, and you will look good for the next sale.
Next, look at the goal, not the graphic. Ask them about the event. Where are they on the show floor, is there a competitor at the event and what are they saying as a message? Once you have a better understanding of the client's goal, you should be able to give them a better solution to the goal. Do not lose site of one major point - no one was ever fired for spending more on quality graphics, and no one gets a better raise at review time because they saved the company money on their show graphics, but many get a better review because they were more successful at the events. In all cases the customers want results; they want a return on investment (ROI). If the client believes you will make them more successful at their event because of your ideas, they will spend more money with you rather than your competition. My ROI statement is simple: If you sell a client 10 foam boards at $12 per square foot or 10 gator boards at $18 per square foot, at the end of the day your salesperson has more money, and you have more money on the bottom line. Do the math and you will see that you make a lot more money selling quality graphics. Clients today have much fewer opportunities to be successful due to the economy, so they need to do it right each and every time. You need to up-sell them on the fact that you understand their business and you will deliver more successful graphics for their event. Anyone can sell banners and posters, but not everyone can sell solutions that help the client achieve their goals. This is your road to success. Dave King is Commander of Results at MarketKING, a printing and graphics company offering the "Print Shop Makeover." This program is designed to teach business owners how to be successful with large-format digital graphics. david@themarketking.com This article appeared in the SGIA Journal, July/August 2011 Issue and is reprinted with permission. Copyright 2011 Specialty Graphic Imaging Association (www.sgia.org). All Rights Reserved.
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