With her blood pressure rapidly rising, Mrs Print Boss decides it’s time for a health check. For her business.
When it comes to the vital signs of a printing company, the good news is there are some fairly obvious measurements that you can take on a regular basis.
But, just as with that under-used gym membership, it’s easy to let the best of intentions slip, especially for the typically busy owner/manager of a print SME who has to wear many hats.
Fortunately there is plenty of help at hand for printers, not least from the BPIF, which offers a range of health checks as part of its package of member benefits. These can be free, or cost £300 depending on the membership package. Non-members can also pay for the service.
As keen exponents of the business benefits of this type of appraisal, the federation unsurprisingly believes it is worth setting aside the time and resource to carry such checks out on a regular basis.
Phil Pateman, consultancy services director at the BPIF, says: “It is prudent to do a health check every year and it should cover all elements of your business: human resources; health, safety and environmental; business process development; and productivity improvement,” he says.
“Health checks are designed to help you understand opportunities and issues, any problem areas you may have and the potential solutions available to you,” he adds.
Nigel Lyon, managing director at £2.5m-turnover Pinstripe Print Group in Birmingham, has used a number of BPIF health check tools, and found them to be useful for both improving performance and ensuring the company remains compliant with legal requirements.
“My view is that a health check is pretty important. It gives management the opportunity to review performance. Can we do it better? Or, actually it turns out we’re doing this really well. It’s all part of a continuous improvement process,” he states.
The health check route also has other potential benefits. “Most companies want to stay legal,” observes BPIF membership director Dale Wallis. “A health check is also useful for making sure a company is actually doing what they say they are doing in important areas such as health and safety, and HR.”
Proactive approach
A good example is the health and safety assessment. If, say, the Health & Safety Executive turned up to make an inspection shortly after a formal health check focused on this area had been carried out, then a firm could point to its results as evidence of its efforts to maintain best practice.
The flipside being that this could also backfire if a health check has raised some specific action points, and nothing has been done about them.
“A health check can generate a lot of actions, so you’ve got to go into it with the mindset that you will put the necessary time, effort and resource into it,” Wallis notes. “Importantly, for every question we ask on the health check we’ve got a solution in place and the best advice on how to achieve it.”
Companies can also be rewarded for having formal processes in place through reduced insurance premiums. “It’s a small discount, but it’s there,” he adds.
A typical BPIF health check will involve a questionnaire with nine or 10 categories, with sub-points for each category. After the company has completed the questionnaire, the answers are fed into a spreadsheet that produces an immediate spiderweb analysis, highlighting any areas where improvement is needed.
This could result in a two-day follow-up diagnostic project, costing around £1,400, to get things back on track.
In the case of the BPIF, the federation sets out the potential savings of such engagement, to show there will be a return.
Alternatively, companies could choose to engage independent consultants with specific print expertise, or, conversely, bring in someone from another industry with a completely different perspective.
Environmental consultant Clare Taylor says that most of her work with printers comes from word-of-mouth recommendations. “With some companies I might just do the top-line stuff – the quick wins. Whereas other firms will want something much deeper.
“People feel more comfortable if someone comes via recommendation. Depending on the project I might be going quite deep into the details of the business, so they need to feel that trust,” she explains.
The price for such services is usually based on a day rate. Daniel Smith, partner at business advisory firm Grant Thornton, says it is key to agree the consultant’s scope before signing up, “and the more focused the consultation the better”.
Peer review
Companies wishing to measure themselves against peer businesses have a number of options. There’s the aforementioned PrintWeek Top 500, while the BPIF uses a number of tools to measure business performance against those generally achieved in the industry.
Equipment manufacturers also provide productivity benchmarking tools, such as Heidelberg’s Prinect Performance Monitoring and KBA’s new Global Remote Benchmarking offering.
None of these measures will mean anything in isolation, and Pinstripe’s Lyon believes there are four fundamental elements when it comes to running a successful business: sales and marketing; HR; production; and of course finance.
“Take any of those four away and you haven’t got a business,” he observes.
Improvements across different areas of a business should all flow through to benefit the bottom line. If a firm’s finances are not healthy, then it is ultimately likely to prove terminal for the whole organisation.
Lyon, who as it happens is a Fellow of the Institute of Chartered Accountants, likes to keep a firm grasp of his company’s cash position using a 13-week cashflow forecast. And he recommends reconciling banking “on a weekly, if not daily, basis”.
And, for those who might find management accounts perplexing (“a good number of people don’t understand them,” Lyon says), he recommends creating a simple income and expenditure statement as a handy health check.
It’s also crucial to keep looking ahead. Grant Thornton’s Smith notes that, while historical performance is important, it’s even more vital for print bosses to have a handle on the current financial picture for their business, and the forecasts when considering its health and on-going viability.
“In the case of weaknesses, management must act to address these before they become critical. For example, if your cashflow forecast is showing that cash will be tight in six months’ time, don’t wait for six months before working out what to do. Get a plan in place now to address the situation if it arises,” he says.
Financial health checks (see boxout) should be carried out on a formal basis at least quarterly, if not monthly.
“However, management should also be considering them informally whenever they make an important decision for the business; for example, how will it impact my cashflow if I increase the terms that debtors pay me on from 30 days to 45 days?” says Smith.
Ultimately, accounting measures can only take you so far. “Is the business today in a better position going forward? Accounts won’t tell you that,” he notes.
Smith believes that a vital business health check actually resides outside the company itself, with its clients: “Perhaps the best health reference point of any business is its relationship with its customers and the extent to which this relationship is developing and improving, in a sustainable way over time.”
Financial health check
These checks should be carried out on a monthly, or at the very least quarterly basis:
Does your business have enough cash to deliver on its plans for the next 12 to 24 months, including a contingency for unplanned events? If not, how will the funding gap be bridged?
Are any funding facilities used by your business secure for the next 12 months? Will the company pass all covenants set in respect of the lending during the period?
Is the working capital of your business being correctly managed? Is the firm carrying the correct levels of stock? Are debtors being collected in a timely fashion? Are payments to creditors being delayed and if so, how is this impacting on the business?
How is your business rated by the various credit reference agencies? What can be done to improve these ratings?
How certain is it that your business will meet its sales revenue targets in the coming months? How much of the future revenue has already been secured; and what is the level of the pipeline for revenues that still need to be secured? What level of revenues is needed to achieve breakeven?
Are there are external factors that are likely to impact on your business and if so, are you prepared for them? For example, the impact of the introduction of the National Living Wage or a potential increase in interest rates.
Source: Grant Thornton
