Case of the $250,000 Blahs, Part I

Tom Crouser May 22, 2012 Comments Off on Case of the $250,000 Blahs, Part I

By Tom Crouser
Part one of a two-part update of a 1999 article examining print shops in the $250-$300,000 sales range. What’s changed? Not much except techology …

I have spent a lot of time with printing companies in the $250-$350,000 sales range since I first started full-time consulting in 1985. And in 1999, I wrote a piece about common issues among this size company. I was wondering what had changed since, so I took a look and found that besides our technology, well, not much else has. Here’s an update.

Just as in 1999, this size company usually doesn’t have much cash or much of a current ratio (cur-rent assets / current liabilities). Of course there are exceptions and this condition isn’t just limited to this size shop, but it seems to me that it’s quite common at this size.

What’s the reason? Why don’t we have money? Well, we don’t make money. Why don’t we make money? Well, we usually don’t have the information to know because real financial information is largely non-existent, flat out wrong or, at best, very poor.

Why don’t we have the information? Usually the financials are prepared internally and just hitting the “profit and loss statement” report on QuickBooks doesn’t make them right.

What could go wrong? Commonly adjustments to the Balance Sheet aren’t made. Perhaps ac-counts receivable says we have $200k owed to us but there’s really only $100k or that inventory shows up at $50k and we have only $1k. And what about those “cash advances to employees” who left years ago? They quite frequently are still on the books as an asset. Left untrained, these adjustments never get made and thus the amount of money we show we make is, well, wrong.

Further, the printer reading the financials most often doesn’t know how to interpret them for that matter so we don’t know what’s wrong. It’s like some people while driving the car hear the funny sound but don’t get it looked at because, well, it’s still going. The noises we hear in our businesses are usually come from our head or gut. Something is not right, but we don’t know what.

There are sources to learn financial literacy or you may get local professional assistance (i.e. a pro-fessional accountant). I have even publish training material that will help ( -> Products/Shop -> Educational Programs -> Understanding Financials (Windows) -> $99 automat-ed training program … Or my book, Prospering, found at the same place for $19.95, with many chapters dedicated to the subject).

But the point remains. Most in the $250,000 – $350,000 sales range don’t know what’s wrong be-cause their financials are non-existent, flat out wrong or very poor. And, if we don’t know what’s wrong, we don’t know how to fix it.

More importantly, we often make dumb decisions because we don’t have good financials. With a good set of financials, it’s easy to set up a cash-flow budget. Once that’s done, you can see where you are going to be; not where you are.

So, instead of buying equipment on rumors, hopes and dreams – thinking we’re just this one piece of equipment away from having a prosperous business without having to sell anything to anyone – we can base decisions on what is projected to happen. Of course, not all plans work out but planned things do happen best.

An additional problem crops up in industries whose costs are closely allied with price (like offset printing); we need good financials to know what our costs of business are in order to pass them along to customers in hourly rates.

So, I find that just like in 1999, the first big issue companies in the $250-$350,000 sales range have in common is that we still don’t have good financials. Because of that, it affects the amount of money we have and the money we make. Remember, it’s not businesses that have money that need accurate and timely financials; it’s those of us who don’t have money and need to make every penny count. Next artilce we will pick up on other commonalities between 1999 and today.

Tom Crouser
Tom is Senior Contributing Editor of Quick Printing magazine in which this article also appeared

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