The ability to access and manage cash will determine your fate
by Sandy Hubbard
As I make my rounds to the various printing events, I ask everyone, “How’s business?”
The answer varies.
For small shops, reality is staring them in the face. It’s difficult to find time or money to do marketing; it’s difficult to borrow from banks or investors; it’s difficult to stay current with suppliers; it’s difficult for customers to pay within any reasonable amount of time.
In medium-sized operations, the inability to get ahead with cash flow or to borrow money not only inhibits strategic equipment acquisitions, it limits the ability to hire personnel who can take the company in new directions. Even if a company is well-situated with core equipment, economic conditions make it more challenging to replace equipment with short life cycles, enter into lease agreements, or purchase equipment that expands products or services.
A large, well-capitalized printing operation probably has an ongoing program of capital investments along with maintenance and replacement schedules built into the purchase prices. But like the medium-sized company, precarious cash flow hinders growth and competitive stature. Without the ability to borrow or dip into reserves, large companies cannot acquire competitors, invest in innovative marketing, recruit or retain talented employees, or develop ancillary revenue streams.
In all cases, lack of cash affects the ability of a company of any size to move forward, take risks, innovate, and to stay in a market-leading position.
That may seem obvious, but, in fact, until the past decade, being nimble and staying ahead of your competition was only one of many ways for a company to thrive. Companies could do well with exemplary customer service, superior quality, a high-traffic location, or a long-standing reputation.
But recent statistics from Printing Industries of America (PIA) indicate that profit leaders and profit laggards are separated only by a few percentage points. Those in between with modest or break-even profits are advised that they cannot continue business as usual and expect to maintain their market position.
As the saying goes, “If you are not moving ahead, you are falling behind.”
The stress that goes with the new economy is such that risk taking is necessary, yet many I know in the printing industry are either risk-adverse or out of practice with
risk taking. Their years as mavericks or innovative entrepreneurs happened years ago. Many are heading into retirement or are in partial retirement and trying to protect their nest egg. Many took a hit with their investments and are carrying their businesses forward longer than they intended. Some are running their businesses without a spouse or partner because illness or death has taken its toll.
These are hard positions to be in, even for robust businesses, because they limit choices. And the businesses that are succeeding today are operating on the premise that any choice is possible and worth investigating, because that approach potentially will position them better in the marketplace.
For companies in cash flow crisis, innovation is too risky. And yet, without risk, companies will fall behind.
The only way out of this Catch 22 is to get cash somehow, manage cash flow, grow, eliminate underperforming sectors, and keep the highest possible profit ratio every single month.
You heard it here first: Your ability to manage cash flow is the singlemost important factor in the future success of your printing company.
