Cracking the WIP: Print 21 magazine article

You work hard but never seem to get on top of all the work-in-progress. Maybe you need a more effective job management system to help you earn more profit, improve cashflow and keep customers happy. Sue Hirst has the answers.

Starting up any type of business is rarely easy. Running a business such as a printshop where you are selling not only products but labour can be very challenging to manage and there are many issues that can affect efficiency, profitability and cashflow. How you manage jobs and work-in-progress is one aspect that can have a real impact on your sanity as a business owner/manager.

Here are some of the benefits of good job and work-in-progress management:
* Job profitability (more profit from each job)
* Cashflow improvement (cash comes in quicker and stays in your account longer)
* Customer satisfaction (because jobs are easier to manage, customers are too)
* Better personnel productivity (more productivity for your wages bill)
* Ease of information management (find all paperwork relating to jobs easier)

Let's look at each of these benefits and how they can be achieved.

Where's the profit?
Many businesses don't measure their overall profitability on a regular basis, let alone their job profitability. No matter what type of business you are in, whether it is selling products or labour, or both, you need to know which products/services are contributing profit into the business. The reason you would want to measure job profitability is so that you can see clearly which jobs are profitable and which ones are not. Once you know which is which, you are in a position to investigate why a job was not profitable.

OK, it may be too late at the end of the job to do anything about turning it around, but you can learn from the experience for the future. By breaking down a job into labour and materials and setting a budget for both, you can analyse where the problem occurred to result in a loss on the job. Once you know where the problems are, you can manage the situation better in future, by improving quotes and/or efficiency.

Cashflow is king
Jobs can't be converted to income until they are finished or completed to an agreed stage. If you don't have good job management in place, it can be very difficult to know when is the time to invoice the job. When you have many jobs running at once it can be very difficult to manage them in your head. There can be all kinds of reasons why jobs get held up eg material delays, misunderstandings re labour requirements etc. To try and remember everything and manage it in your head or use the old fashioned way of manual job cards may be fine if you only have a couple of jobs, but if your business is growing you need to find a better way of coping.

Work-in-progress or not invoicing jobs at the first opportunity equates to your working capital being tied up. That is, you have money tied up in the wages you have paid staff and in the materials. If you have paid for these prior to invoicing your customers, then you have to find the funds to cover these costs until your customer pays. The longer you take to invoice customers and wait for payment, the more working capital you need to run your business. These funds may come from your own pocket as the business owner or from an overdraft or business loans, all of which can be very expensive in interest.

It makes sense then to minimise the need for loans by speeding up your invoicing of jobs. If your business is growing rapidly, this is one area you need to get organised, well in advance of taking on lots of jobs. If you ignore this and suddenly find yourself in need of extra working capital, banks take a dim view of rushing in and asking for funds yesterday. They will look at how you manage your own working capital before they will decide to lend you their money.

Keeping the customer happy
Unhappy customers are obviously very detrimental to your business and cashflow as they will delay payment and give a poor account of your services to people they talk to. Service providers who get the job done are much more likely to get paid and more importantly, get valuable referrals. Referrals can be a huge percentage of any business income and are often not recognised as an important form of advertising.

If your business relies on repeat business then a good job management system is vital. If you can be proactive rather than reactive about contacting customers when it's time for repeat work, this can have a huge impact on your business profitability. Customers will also see this as positive, as it helps them to avoid the crisis of missing stock and subsequent loss of income.

Productive personnel
When you are in a service-based business the main 'stock in trade' you have to sell is the 'time' of your workforce. There are two aspects to this situation, one being the hours you pay your staff and the second being the hours you sell to your customers. If you don't keep track of the number of hours staff are spending on billable activities, as well as non-billable such as travel, admin, cleaning etc, then it's impossible to know if staff are producing a profit. In a service-based business, staff need to be considered as income producing assets, just like a piece of equipment. This may sound a little cold and hard but at the end of the day you are in business to make a profit and only profitable businesses can continue to employ people. It's in everyone's interest to achieve personnel productivity.

A good job management system that tracks every hour staff are working and what they are working on, allows you to compare against the hours that you have sold. The differential can then be managed and practices improved to maximise the billable hours. For instance, a skilled person may be spending too many hours each week on administration. If you add up all of the hours all skilled staff are spending on this activity and multiply that by the charge-out rate, you may find that the result far outweighs the cost of employing an admin person to take over this task.

Information at your fingertips
When a regular customer calls, how easy is it to retrieve information about them, including previous jobs and quotes? This can be a real headache if you have a manual system or no system at all. It means you must keep customers waiting either on the phone or for a call back. This is valuable time they can be calling a competitor and increases your chance of losing the work. Poor information management also gives the impression this is how you run all aspects of your business. It doesn't auger well if you can't even find previous information about a customer, let alone manage the current job.

Information is the key to running a professional business. It may be fine to keep it all in your head when your business is small, but as soon as things speed up and you are handling many jobs and staff, it can very quickly cause crisis management and ultimate failure if you don't have access to information to run the business efficiently. A business that is run 'by the seat of your pants' or 'on gut-feel' has Buckley's of ever being sold for a good price when you are ready to retire or move on to something else.

You can see from reading this that there are many and varied benefits of getting jobs and work-in-progress organised. A good job management system can equate to greatly improved profit, cashflow and peace of mind for the business owner/manager.