Margins are tight and competition is fierce, there is no magic pot with the enticing label “Extra Profit” waiting for you to find, open up and tip out all that extra margin. If the pot was there you would have found it already and surely be enjoying the contents. Maybe you haven’t looked in the right places.
Even the best-run companies have hidden margin
In our experience there usually is hidden margin, even in the best-run companies but you’re going to have to look a bit harder to find it and this will involve looking in many different areas. This is why we developed the RAISEITUP methodology to help look for these pockets of extra profit. Think of it a bit like a road map which guides you where to look and what to look for.
To see how this works, take a look at just one area of the RAISEITUP roadmap, ‘Unplanned Activity’. In simple terms, this is work you’ve done or costs you’ve incurred that you haven’t built into your selling price and probably aren’t being paid for.
When we carry out this work for our client we have the luxury of ‘fresh eyes’ and so we see things many company managers sometimes miss because they are too close to their own business. This is why we are proficient at finding things that print businesses do but don’t necessarily get paid for.
What are the causes? Sometimes it is unforeseen work or can be expensive activities or costs that just don’t get passed on. Extra costs for transport, amending poor artwork, rescheduling due to late clients, unplanned overtime worked and even paper cost increases are all examples of these and you’ve guessed it. They all add up
Why isn’t the customer charged?
It’s an obvious question we ask all the time and we hear recurring answers, “The client won’t pay extra”, “We’ve always done this without charging so we can’t start now”, or how about “We didn’t even know we were doing this extra work”?. More alarmingly, a common reason is that the client hasn’t been approached “In case they say No!”
We all know that there are times when customers expect these little extras or favours without charging as ‘part of the overall service’ and this is all fine provided that you know how much you’re giving away and why. Maybe, you choose to score the relationship ‘brownie points’ to use at a later time or will remind the customer that you may ‘have to charge the next time’ or maybe you just won’t charge because it’s a difficult conversation. There are strategies that help to deal with these scenarios that deliver cash results and without losing clients but these are only easy if you know how.
You could be missing out on much-deserved profit
What if the client has done nothing wrong and the extra costs are caused internally? This is the time to take a closer look and decide whether a better process is needed or this is just a one-off event to be written off.
Whatever the reason, there is one certainty. If you’re not looking at these unplanned activities then these questions will go unanswered and you could be missing out on some much-deserved profit.
This is just one of 9 areas you can look at. Find out more about unlocking the hidden profit in your business .