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The Intersection of Volume and Profit

Posted by David M. Fellman on 2/18/19 3:31 PM

Let’s think about the two most important measures of success for a printing company: sales volume and profitability. I’d like you to consider that those two factors yield four possibilities. There are high volume and highly profitable printing companies. There are low volume and non-profitable printing companies. In between, there are low volume companies with high profits and high volume companies with low profits.

Don’t worry too much about the boundaries between high and low. Instead, ask yourself how you feel about your company’s volume and profitability. Do you want or need more volume? If so, you’ve just put yourself in the low volume category. If you’re not happy with your profit picture, you’ve just put yourself in the low profit category. Fellman_IntersectionVolumeProfit_janfeb19

Obviously, if you’re happy with volume and/or profit, there’s less to do, but you still have some important challenges in maintaining “happy customer” relationships. Simply put, you can’t let your customers down in terms of quality or service.

Regardless of profits or sales volume, printing companies should continually prospect for new business. Another important consideration is the type of customers you have, and how you define what makes a bad customer.

The biggest reason high volume printing companies fail is because they have bad customers and don’t work hard enough to find better ones. These customers tend to be price buyers rather than value buyers, obstruct production schedules with unreasonable expectations and can seriously impact your cashflow with slow pay. They’re simply more trouble than they’re worth. For those in the low volume, high profit situation, it’s important not to take on these customers just to inflate your top line.

If you’re in the low volume, low profit category, my best advice is simply to do something. This could mean prospecting for new customers or addressing the bad customers you already have. It probably means doing both of those things and starting immediately.

Albert Einstein is credited with defining insanity as “doing the same thing over and over again and expecting different results.” Every printer who has failed probably passed by a point where changes could have been made, and a different result gained.

The bottom line is to look at where you stand in relation to the intersection of volume and profit and take the necessary actions to put yourself on the right side of the road. To learn more about the challenges and to-dos associated with each possibility, check out the full article in the SGIA Journal Graphic January/February issue.

Topics: Business Solutions, Sales, Customer Service, Finance