Professional Engraving Systems

5 Ways for Your Engraving Business to Beat the Economic Downturn

- Submitted by Guy Barone, President

Unless you’ve been living under a rock over the past month, you know that our financial system has experienced what many consider a melt down. Certainly the fear is that this credit crisis on Wall Street will flow to Main Street and in fact, you may have already experienced a slowing of activity in your community. While this may be a record setting event on Wall Street, those that have been in business for a while have seen the ebb and flow of business cycles. With all of the economic bail out and stimulus underway from the federal government, our hope is that worst case this will turn out to be just a typical down business cycle for small business.

While you can’t solve Wall Street’s problems, there are specific actions engraving companies can take to lessen the impact of a downturn on their business:

 

Increase Productivity. Your cost per unit and your profitability are driven by the amount of time you and your employees invest in producing a product. Understand the time it takes to produce the product, especially your best sellers, and look for ways to reduce the time it takes for each process –sell, layout, engrave, assemble, and package the product. For example, if your old engraver produces 5 pieces per hour and a new one can produce 12, how long would it take to pay for a new one and how much additional profit would you have at year’s end with the increased productivity? If you don’t currently use all of your production capacity, could you use the time saved in production doing marketing and creating additional revenue for your business? If you’re not in a position to make major changes or purchases, consider smaller software or hardware investments that increment your ability to achieve greater productivity.




Increase Your Marketing Efforts. There is a tendency to reduce the amount of advertising and marketing when the economy slows. Smart managers understand this is a time to gain clients and market share and not take a vacation from marketing because business is slow. We’re not advocating that you spend your way through new, large ads into bankruptcy, but instead understand what marketing tactics work for your business and be even more aggressive about implementing them.

 

 

 

 

Maintain Your Equipment. Another tendency is for managers to push equipment a little harder and a little longer without maintenance in order to “save” money. Failing to perform the proper maintenance will only speed the demise of the machinery and in fact cost more. Lack of maintenance will lead to poor letter quality, reduced productivity, and ultimately equipment failure. Xenetech and our distributors offer many different maintenance resources from reminder posters, to factory repairs, to on site service. Start with Xenetech’s Knowledgebase for more information by clicking here.

 

 

 

Manage your Balance Sheet and Income Statement. There are a number of ways that a business can get into financial trouble during economic downturns. It is important that business managers control their spending to insure profitability and cash flow. Ballooning inventory or slow collections may eat away at valuable cash balances. Increasing raw material costs will erode gross margins and may eliminate profits. Understand your breakeven point and control your costs. If this is not a strong suit for you, you may want to schedule an hour with your accounting professional and develop a financial plan and indicators to look for when running your business.

* Here is a link to a couple of simple manufacturing overhead and breakeven spreadsheets you can use to manage your business. Feel free to plug in your customized numbers for a complete analysis. The adoption of Lean Manufacturing Principles to reduce waste, increase inventory turns, and increase efficiency would also contribute significantly to your businesses’ financial health.

 

Invest in Yourself and Your Employees. The greatest resources in your business are its human resources.Given the right tools, knowledge, and motivation there is nothing you and your group cannot achieve.

Fully communicate with all employees and make sure that everyone understands the goals and objectives of the organization (believe it or not surveys reveal this is one of the greatest failures of most companies). Look for seminars in engraving hardware/software applications (Xenetech and our distributors hold user clinics on a regular basis) that you and your employees can attend and implement the relevant actions. Take the time to train in proper methods of operation and ensure quality of all products and services offered by your company.

 

 

We may not have control over the global or domestic business environment, but we do have control over how our businesses respond. Though planning and effective implementation, your business will beat any downturn and emerge to take full advantage of the good economic growth around the corner.

* You must have an application to run .xls spreadsheets. If you do not have Microsoft Excel, you can download a free open-source office suite from OpenOffice.org