How do we promote growth?
With the state election looming there’s a number of topics in everyone’s mind. From Water Security, to Cost of Electricity, to Adani, Power Stations, Crime, Environmental Concerns, and Jobs (and of course more!), there’s so much to think about and research when considering the future and it’s at the forefront of our minds right now more than ever.
Regional Queensland has been stagnant for some time, but opportunity is starting to rear its head. Townsville Enterprise CEO Patricia O’Callaghan recently spoke in a video broadcast about the generation of jobs, with over 900,000 jobs being created in metropolitan areas compared to just 5,000 jobs in regional areas.
“How do we in business take advantage of the slowly rising economy in a way that contributes back to our regional communities?”
How do we in business take advantage of the slowly rising economy in a way that contributes back to our regional communities? The answer is both simple and complex, we strictly review our costs and manage our overheads. Prevent unnecessary costs and profit leakage and grow in a healthy way.
Profit leakage is a broad term that can be applied dynamically throughout a business. Essentially it refers to any cost of sale that is not correctly accounted for and billed to a customer. We’re not talking about ripping a customer off, but instead being aware of what our true costs are, and making sure that we’re not selling at a loss.
In the print and imaging industry this is straightforward enough – are you performing tasks for your clients such as printing documents, and just passing on a generic “printing” charge? Do you know if you really billed the right amount? What systems do you have in place to monitor and manage this?
If I were to tell you that through careful investigation we have found clients who were billing 15-20% less than what the printing actually cost them?
Overheads are part of everyday business life. They can’t be avoided, and can easily be overlooked. But some overheads can be controlled. You can use energy saving light bulbs, test the market on your insurance and products, and reduce outsourcing where possible.
One of the biggest contributing factors to high overheads is loyalty. Staying with a vendor just because you’ve been with them for a while is a logical fallacy which puts you at risk of being overcharged. Typically we have found that clients who have been loyal have not tested the market, and when they do perform a review on their systems they find their costs have blown out between 15-40% higher than current market value.
During a period of growth it is hard to see the forest for the trees, cash flow becomes difficult to maintain as your need to invest in new systems, staff, products, equipment can seemingly dwarf the increased income your business is generating. Keeping a close eye on these costs through due diligence and appropriate systems and processes is an excellent way to ensure that your business growth will be sustainable.
Sustainable growth is what we need in Regional Australia right now. We’re always going to be behind Metro in terms of job generation, just due to pure numbers. But perhaps with smart decisions we can close that gap, even just a little.