Minimising Risk

In view of the risks that businessmen, especially printers, routinely face, it's increasingly important to minimise them.  It must be at the back of every printer's mind.  Let's face it - they say that 80% of all businesses fail in the first year.

So are printers good at avoiding risk?  On the whole, possibly not.  In general many think that any added value left after paying the external costs must be all bunce.  What they never remember is that any job can go wrong, and (increasingly) any customer can go bankrupt.  So if you have to lay out 40% of a job to buy the stock and artwork, you are risking that 40% on the chance of gaining the remaining 60%.   It's tempting to say that in horseracing terms thats odds of 3 to 2 on, for a horse thats, say, 99% sure to win.  But its more complicated than that.

When you include the internal costs, if 10% of the total is net profit, that gives you 10% return for 90% layout, which is precious little.  Yet some printers will even disciount jobs 'just to keep the presses rolling'... and then other printers try to compete with them (instead of waiting for them to go bankrupt).

But the really nasty part is that if you accept a job at a 10% discount you have to do another job of similar size at 10% profit just to break even.

One of the great advantages in costing a job properly, with all the costs taken into account, is that you really can identify which jobs to walk away from.  And some printers have found to their surprise that simply by avoiding those worthless jobs they get a higher net return while doing less work!

So the first thing to do is to cost your jobs accurately.  Not 'what the market will bear' or 'I suppose we could run the press faster which would reduce the price', but 'really how much would it cost to produce'.  And use that as the starting position.

Even in these uncertain times we keep finding printers, and indeed many other tradesmen, don't really know what any individual job really costs them.  And that's sad.

Its a mad world.