I know we are already into the year, but it is never too late to hit the pause button and assess what is going on in and around your company. Over the past 20 years in business, I have learned that sometimes it is better to take one move back in order to take three moves forward. The easiest time for most companies in our line of work to make sure their company is efficient is in January when it is the quietest, but if for some reason that did not happen for you this year, make sure you take the time to do so now. It is very easy to get caught up and say everything is fine. Take even just a couple of hours each day for a week or two and comb through your company to check financial numbers, stock, staffing, training, ergonomics of your company, technology, equipment, and more.
All year, my wife and I pay attention to know our numbers, but the last three months are the most important for us since we know production is ramping up and the turnaround times will continue to increase. We also know that is when a lot of new products will be launching and pricing increases will take effect, so you must be ready to pivot at every step of the way. This year we learned a lot of valuable things that we are going to be working on right away.
For example, we have always offered a free delivery service up to a 50-mile radius, but over the years in our New York state economic climate, that is getting harder and harder to do. As such, we will reduce that radius to 30 miles and anything beyond that will now incur a minor delivery charge. Typically, we would divide the vehicle, maintenance, fuel, and employee cost into the number of pieces we offered per year and did not create a separate charge for anyone. But the larger you get, the more special trips to help people you now make. Most companies are used to a delivery fee when ordering online, so this will not just be a line item and it just part of the service costs now. We have also learned that most companies we sell to never count the cost of shipping into their actual promotional item budget.
Most customers will never have a real issue with the delivery charge since they know that everything in New York is going up, so all we have to do is be transparent with each customer and explain we could no longer keep absorbing the costs due to all of the increases. Our customers are always understanding since they know how hard we work for them each year.
By keeping a closer eye on the last quarter of the year, you can start making slight adjustments to pricing ahead of time in anticipation of other costs changing in January. You can also ease the customers into gradual price increases versus all at once. Doing all of this gradually can help your cash flow in case any of your increases force some customers to leave.
Watch your stock
Stock is another big part of your company to pay attention to. You can make money stocking supplies or you can lose money stocking supplies. Research your numbers. Learn what sells weekly, monthly, and yearly. With this knowledge, you can average out what supplies you need and when and how often. By knowing these stats, you can buy in bulk versus per-order. For example, if I know I buy over 60,000 T-shirts per year of one item number, I can then research with my vendor the colors and sizing for the year that I ordered.
Then take the total number for the year for the top five colors and divide them to a per-month average and do the same with the sizing breakdown. This allows me to know what, per month, on average this amount will go. But how am I making money doing this? I talk with my rep and guarantee I will keep so many on hand each month. Depending on the item and your volume, you can save 5 cents to 15 cents off each item. In our case of 60,000 units, saving even 10 cents per shirt equals a $6,000 savings.
Now, if your buying power is strong enough, work a deal to use your credit card to pay with zero credit card fees. Why? When you use your credit card to pay your net-30 balance, it gives you an additional 30 days, turning your original bills into net-60. However, make sure you are doing this with a credit card that does not charge interest, and make sure the credit card is paid off in full every month along with accruing points or cash to buy things which on most cards now you can gain 1% to 2% back.
So, let’s say every T-shirt costs you $2.55 each times 60,000 units = $153,000. Depending on the card, you just gained another $1,500 to $3,000 back per year on this part. By being strict with your buying and managing your finances, you just gained back close to $10,000 that you would never have had to begin with.
The other factor no one takes into account is manufacturer defects and getting orders out the same day. If you have the item in stock and something from your main order had something wrong with it, simply let the manufacturer know and they will inspect and replace the item. While waiting for a replacement, you simply pull another from your stock and get the order completed and get paid faster than having to wait for a replacement to come back in.
Training and technology
It is always a good idea to look at your staffing to see what training is needed, who is worth investing in, and who may be holding your team back. You also want to look at your production numbers to project any positions that will be needed next to plan for them. By cross-training people while you are slow, you will buy time until you need the next person.
Ergonomics is key to check out as often as possible. Look at how you can shorten the distance to get a task done. How many times does someone need to touch something to get a process done? Limiting the steps and touching of the product all equals time, which equals money in the end. Create as much efficiency as possible per step in the process.
Last and not least, think about technology and equipment. Research what is out there to allow your team to get more work done with the same amount of people. This makes their jobs easier and makes them more valuable as well to the company. Your staff seeing you make the investment into new technology often gets them excited.
They will like the fact that a machine can take the weight off them and makes them feel more productive. The same goes with technology in software. It is cheaper more times than not to let the software take on the workload, which frees your team up to be more productive.
Keep this advice top of mind throughout the year. That will help you speed up any necessary changes and make your job easier each step of the way.
