Don’t Let Your Business Live In One Head
The Online Print Coach, Colin Sinclair McDermott, makes the argument that whether it’s yourself or a key individual in your company, relying on “invaluable” people could be the biggest risk to your business
From making sure you have a buffer to refrain from making impulse investments, Colin Sinclair McDermott offers his advice and tips on the financial lessons he learned whilst running a printing company
In this month’s article, I wanted to share with you some of my own personal lessons from running a printing company. Many of us end up running a business for various reasons. Perhaps the family business baton has been passed on to you? Maybe you’ve been pushed into it through redundancy?
Or, in my case, I simply saw an opportunity to give my clients a better service and had the backing of a few good clients to get me going. I was pretty good at sales so surely if I could just bring the work in, I could run a successful business? Wrong!
In the years that followed, I set off on an epic educational rollercoaster that at times had tragic consequences. In my role as a Print Coach today, I see many other business owners repeating many of my mistakes and that is the very reason I want to share these lessons.
This may seem like an obvious one, but I assure you, I see this far too frequently, and it terrifies me because I know where it leads if you let it go on too long. You can’t make proper and informed decisions about your business if you don’t know its current state of play.
Every business owner should know their ‘break-even number’. That’s the number you need to hit each day/week/month to simply switch the lights on and start trading. It only takes several months of falling short of hitting that ‘break-even number’ and life can start to become complicated. A healthy cash flow is crucial and you don’t want to find yourself in a position of chasing sales to be able to keep trading.
I used to believe that by having multiple companies I could call myself an entrepreneur but if I’m honest with myself now, anyone can run eight different brands badly. Every time a new idea popped into my head, I’d find myself hopping on over to 123-Reg and grabbing yet another domain name before someone else came up with the same amazing idea. I’m not saying you can’t have more than one successful business but running one is hard enough. Focus on getting the first one right before moving on to the next one.
Like many businesses today, I was struggling month to month just hoping that enough sales came in to cover the outgoings and get me by until the following month. This is a pretty stressful way to run a business and if we learned anything during the pandemic, it was the need to plan for the unforeseen.
We were very lucky in this country with the support the government did offer, but how would your business have survived had it not been for the furlough scheme and bounce-back loans? The smart business owners are planning for situations like this, so they don’t need to rely on the support of others.
Many banks these days have the facility to create savings pots, so you are in effect future-proofing your business. Put set percentages away each month for tax liabilities, business savings, marketing budgets, etc. This is something I should have done much sooner.
This is one thing I wish I had done better and falls appropriately after Lesson 3 because one thing I found myself doing back in the day, especially when cashflow was tight, would be using up credit with one supplier and hopping over to another to do the same until my cashflow had caught up with itself. That’s if it did!
There’s a name for this. It’s called ‘Trading Whilst Insolvent’ and it’s illegal. You need to keep your suppliers on board. News travels fast in this industry and trust me, your suppliers talk to each other. Without your suppliers, you have no business so look after them, communicate with them, and pay them on time. Become their best client and they’ll look after you!
My experience with suppliers is one of the reasons I prefer to pay for everything up front nowadays. It just keeps everything right and it keeps me in control. Back around 2012 I took the decision to remove a credit facility from all my clients.
This was following on from a conversation with my cousin who ran a design agency in Oslo, Norway. He advised me that they simply didn’t have the same cashflow issues there as we did. Everyone paid each other up front and the industry was financially stronger for it.
It was a bold move for us at the time and yes, we did lose a few clients but if I’m honest, the ones we lost were the ones who always haggled on price and caused us the most issues anyway. The majority understood and with many print orders starting to be placed online at the time, it was becoming more expected. Even the local authorities we worked with somehow managed to find a way to source a credit card.
The way I looked at it then, if someone can’t afford to pay for 5,000 flyers up front now, what’s going to have changed in 30 days? If you’re good enough at what you do, your clients will pay you up front.
I came into the world of business when everything seemed pretty hunky dory. My business manager was taking me out to events every other week, they were literally throwing money at me to help me grow my business. However, overdrafts and business loans soon mounted up, and in my naivety as a new business owner, I’d overlooked the whole ‘PG’ (personal guarantee) thing that came with these.
I never thought about being in a position where the business wouldn’t be able to pay them back and what that meant for me. The clue really should have been in the name. Now I appreciate there will be times in your business when it will be unavoidable to not sign one, but this is why I stress so much about building that buffer.
After my first business failed in 2008, I was left paying those personal guarantees for several years. I’ll personally never sign one ever again. If I can’t buy something outright, it’s just not worth the risk for me because of my own setbacks. However, I do appreciate I’m now in a space where I’m not looking to invest in kit anymore. If you do find yourself in a situation where you must, it’s crucial to make sure you are building up those surplus funds.
During the pandemic, I saw lots of companies utilising the bounce-back loan offering and treating it a bit like free money to buy new kit. I saw one company go and buy a full embroidery set up having never sold one garment. Thankfully, the garment decoration industry is thriving at the moment, however, it was a bit of a risky strategy.
One thing I’ve learned over the years is that if you do want to invest in production, build a case for it first. There are enough good trade suppliers out there to allow you to test the market. In this case, perhaps the person just needed to cover their costs and bring in £2,000 in sales consistently for six months to build the justification for the investment. Surely, this is a much safer strategy with a more predictable outcome.
I wonder how many of you right now are pondering over that spare bit of kit you have lying around in the print room that barely ever gets used?
If any of this has resonated with you and you would find it useful to talk with someone who’s also been through it, you can get in touch with me via www.theonlineprintcoach.com.
Having been in the print industry since the mid-late 90s, Colin Sinclair McDermott entered the world of self-employment in 2004 and over the years that followed, experienced a number of highs and lows running his own print company, learning what does and doesn’t work.
In 2022, he trained with The Business Coaching Academy to become a fully certified corporate coach with the Worldwide Association of Business Coaches.
Through The Online Print Coach, industry members can access an online training platform, Print Mastermind and private 1-to-1 coaching with Sinclair McDermott.
www.theonlineprintcoach.com
