There are two separate philosophies attacking the attitude of how you are running your business… “Penny wise and dollar foolish” or “watch your pennies, your dollars will take care of themselves”! You must be the JUDGE as to which philosophy you need to apply daily in making your business decisions.
The economic watch word in today’s economy is run your business “Lean & Mean”.
No matter what country you live and manufacture in, the EXPENSE BUDGETS, and how you manage them is KEY in sustaining your business survival.
Let’s take some known basic facts about our Textile Apparel Industry…
All the expenses for our business whether they are Cost of Goods or Operating Expenses fall under these below four headings:
1. SALES/MARKETING
2. MERCHANDISING/DESIGN/ENGINEERING
3. PRODUCTION/OPERATIONS
4. FINANCE
Let’s understand some challenges that the industry faces and options to choose from:
If you do not have sales you do not have a business?
1. Therefore in order to get sales do you spend big dollars to market and advertise?
2. If you have sales, but your gross margins are low, do you cut sales commission?
Do you really need a design staff as a private label manufacturer?
1. Should you expend monies to present to your buyer from another market, updated designs to show your market awareness?
2. Should you just have engineers, for costing, and coping samples that you receive from an agent?
Do you invest in new special equipments to go after a specific market, or are you remaining a generalist producing knit or woven apparel?
1. Do you have properly trained supervisors in place, or do you cut your supervisors in order to reduce your cost?
2. If business is very slow, do you take orders with little or no profit, or do you close down until orders come in that satisfy your gross margins?
Do you work at your banking, financing, and credit relationships?
1. What are you doing to reduce your credit interest cost on raw materials?
2. Are you sharing your profits with your employees, or have an incentive program for your staff in all areas to increase your sales and service?
Watching every expense (signing off on every invoice), rechecking all your cost for materials, reviewing your general administrative expenses at least every quarter, or prior to renewal, calling in competitive proposals, so that you feel comfortable you are receiving the BEST cost and service for your business needs (NOTICE I DID NOT SAY LOWEST COST).
It would be nice if business was like driving a car on the open highway, to reach from point A to point B, but business is more like driving a car in traffic city driving as well as country driving, and then being always alert (it is called DEFENSIVE DRIVING), because you may be alert, but not aware what others around you may be doing.
So, in some cases are you looking for pennies and really not watching the big dollars, or do you have the infrastructure in place to control your big dollars, and now you have to see where the pennies are falling through the cracks.
Operating a business is a balance of decisions that will affect the bottom line. You must have reporting systems in place, to allow you to make the best decision.
The operating of business in a Lean & Mean, methodology, is having the newest Facts, to revise your Plans, then the timely Execution, and with proper Supervision in place.
We all are going to have a very long recovery period, in today’s global economy, therefore take a “HANDS ON”, attitude and make the decisions wisely…
