Living in Low-Budget Land

Every print shop goes through cash-flow problems and extended periods of dropping sales. In my experience, next to wages and materials, overhead is probably one of the biggest costs to a business. In most cases, unlike labor and consumables, it doesn’t fluctuate as much when sales volumes go up or down. Reducing overhead gives the biggest bang for saved bucks.

Every print shop goes through cash-flow problems and extended periods of dropping sales. In my experience, next to wages and materials, overhead is probably one of the biggest costs to a business. In most cases, unlike labor and consumables, it doesn’t fluctuate as much when sales volumes go up or down. Reducing overhead gives the biggest bang for saved bucks.
I experienced this first hand once when our sales dropped for a couple of months in a row and some large jobs went bad. With the bank ready to call our loan, I got the biggest red pencil I could find and attacked our monthly costs in an effort to avoid ruin. Along with a number of smaller expenses immediately reduced, we figured our rent and space were more than needed. The building was also poorly insulated, resulting in wintertime heating costs that were literally through the roof. After failing to negotiate any relief from the landlord, we looked around and ended up in a smaller, custom-built space with radiant heat and great insulation. Savings amounted to nearly $3000 per month on rent and an additional $2000 per month on heat in the winter.
A move is a major disruption to any business, but any time a shop can reduce its monthly fixed costs, the savings over the long haul are easy to calculate. We saved more than $40,000 per year. As a comparison, if you had a net profit of 10%, you would need to add sales of more than $400,000 to match those numbers up on a balance sheet.

Material costs
I’m a believer in sticking with a trusted supplier, preferably local, and worrying less about rock-bottom pricing. People who chase the cheapest prices end up paying more if materials don’t perform or aren’t delivered properly. Most materials are commodities, so don’t lose sight of the intangibles for a few cents off. Having said all that, if materials and consumables are not doing the job for you, start shopping. Where you can also save is on volume discounts and freight. Look into trade-association discounts for delivery services.

Old equipment
A pet peeve of mine is the amount of money companies will throw at new digital presses, which have a useful life of maybe three to five years, yet they won’t spend much if anything on new screen-printing equipment—even though it’s 10 or 20 years old and continues to crank out jobs on a daily basis. If you have to fix a machine constantly, or if it stops in the middle of production, or the work it produces is not up to your standards consistently, then either step up your maintenance, invest in a major overhaul, or look for a replacement.
New equipment can deliver faster production, more accuracy, easier setup, and energy efficiency. All these things will save you money. If the machine is not used regularly, with no prospective work in the near future, then sell it. There’s nothing wrong with shrinking your footprint, especially if you are contemplating relocation.

Processing
The way jobs flow through a shop and savings from workflow changes are linked with your equipment and your workers. Take a real hard look at your operation, and be honest in identifying anything that slows down a job or takes away from a technician being able to complete tasks in a timely manner. Many shops could grab the low-hanging fruit in the form of a cleaner workspace, with all tools organized and at hand. Save aggravation and 10 or 15 minutes a day with the clutter and dust gone. That’s an hour a week. Multiply that by every worker in your shop and you have not only saved expense, but also gained billable hours.

Labor
The business mantra in the age of McDonald’s has been to simplify a job until it can be done by an unskilled, replaceable, minimum-wage worker who can learn the task in a few hours. The problem with that philosophy in screen printing and specialty graphics is twofold. First, we run custom jobs on machines doing complicated tasks that, in many cases, require cumulative knowledge only gained by on-the-job training over a period of time. The second part has to do with the materials we print and the attitude and attention required.
Make a sloppy burger or overcook a French fry—odds are the customer just inhaled it in their car and didn’t notice because the evidence was covered up by salt, sugar, and a second burger at half price. Screw up one little thing on a print job and the whole run can be rejected, costing you double, eliminating any profit, and damaging your reputation with the customer.
You can look at a slowdown as a gift. Every business, unless it is a one-person operation, eventually finds itself with workers who, at best, are perennial second stringers—at worst, disruptive to the team and never capable of or wanting to up their game or skills. Take the opportunity to lay them off and give the work to the people who demonstrate they want it.
Look at all options that allow you to retain your most productive and skilled workers. These might include flex time or job sharing. Investigate any programs that would allow you to train or retrain workers under government employment initiatives.
There are lots of ways to control cost, and these are a few that work in our industry.

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