The Big Picture - April 2013 - (Page 18)

business ++ management business management Right-Sizing Your Staff By Marty McGhie O ne challenge all shops face is the constant need to manage the cyclical nature of sales. In today’s economy, all of us regularly deal with months that are very busy followed by months that are much less so. And to make matters worse, a very high sales month sometimes will be immediately followed by a low one. While one solution to this peak-and-valley problem is to determine a way to “even out” cyclical sales, that can prove a very daunting task. Instead, you might want to take a look at managing the ups and downs of your sales volume from the cost side of your business equation. First, though, it’s critical to develop an accurate measurement of your sales ﬂuctuations from month to month and year to year. This doesn’t have to be a highly sophisticated process. Just go back over the past three to ﬁve years and graph out your monthly sales so the patterns of your business cycles are clearly visible. Next, evaluate some of the primary reasons why one month is higher or lower than another. Once you determine some of the cause-and-eﬀect relationships to your monthly sales volumes, planning will become much more eﬀective – and your forecasting will provide the accuracy that’s needed for planning. As you strive to match your changing sales volumes with your production resources, you’ll likely discover some areas of focus that can really help your business. For example, controlling your inventory levels can signiﬁcantly improve your cash ﬂow. Knowing in advance when sales are going to be low will then allow you to adjust your inventory levels in advance to reﬂect the sales volumes. ConMARTY MCGHIE is VP ﬁnance/operations of Ferrari Color, a digital-imaging center with Salt Lake City, San Francisco, and Sacramento locations. He is the author of Business + Management for Digital Print Providers + Sign Shops (ST Media Books, stmediabooks.com). marty@ferraricolor.com 18 THE BIG PICTURE APRIL 2013 versely, as you approach the busy months, you’ll be able to make sure your inventory levels are suﬃcient to meet the demands and avoid production issues. Your most signiﬁcant area of cost control, however, will be in the management of your labor force. Right-sizing your employee count can dramatically aﬀect your ability to save money from month to month as sales ﬂuctuate. Craig Miller’s “Inside Output” column this issue (see pg 16) provides his ideas on this topic; here are mine. A temp solution One solution to adjusting your workforce to meet the ebb and ﬂow of sales: the use of temp workers. But there are pros and cons to this approach. For example, when you use a temp agency, labor rates will almost always be higher, even for relatively unskilled labor. Also, when using temp labor through an outside company, you never really know what kind of workers you’ll get. Hiring an unknown person can be rather risky when quality and accuracy are critical. The use of temp labor, though, can be a huge advantage when managing production spikes – even from week to week. Our company takes this approach for temp work: Rather than turning to an agency, we’ve created our own list of available temp workers through a network of people we know and trust: employees, neighbors, family members, etc. Often, these are workers who don’t have to work full time (or even part time), but always appreciate the opportunity here and there to earn extra money. Typically, we’ll qualify these workers through initial close supervision. Then we ask the best of these workers to come back to help us out when needed. If someone comes recommended but doesn’t turn out to be the type of employee we desire, we remove them from the list and use someone else. Determining your best staff size Of course, the use of temp workers can only do so much to help defray the costs of excess labor. Determining the “correct” number of full-time staﬀers that you employ at any given time is critical to managing your labor resources. Here, I’m referring to regular employees who >43 http://www.stmediabooks.com

Table of Contents for the Digital Edition of The Big Picture - April 2013

The Big Picture - April 2013
Contents
InSight
Wide Angle
UpFront
Inside Output
Business + Management
Becoming a Pace Setter
RIP Tide
Success with Dynamic Signage
R+D
Explorer

The Big Picture - April 2013