Signs of the Times - July 2013 - (Page 18)

VINYL APPS Dale Salamacha is co-owner of Media 1Signs/Wrap This! (Longwood, FL). By Dale Salamacha Mind Your Money You won’t grow if you don’t understand your finances. Thislittle different; it won’t feature month’s column is going to be a a wrap or sign project. We’re going to address something many signcompany owners rarely talk about, or don’t want to talk about: financial management. Although often neglected, it’s vital to a successful business. It could be THE most important factor for a business owner. Why? Because making money is why we’re in business. If we didn’t need money, most of us wouldn’t work. We’d be at the beach, fishing or doing whatever we call fun. We work to provide for ourselves and our families. Even if you truly love your work, if it’s not profitable, why do it? If you don’t make money, your business will eventually fail, period. Without cashflow, we can’t pay for materials, our employees’ wages, rent or elec- tricity. It sounds so simple, right? Then, why do so many business owners shy away from the financial aspects of running a company? Chances are, they’re not familiar with how to interpret financial details. This includes being able to read (and understand) a profit-andloss (P&L) statement, and determining the effect your fixed costs have on your bottom line. Managing the intricacies of employee payroll makes most of us shudder in apprehension! My experience When I started my company at 16 years old, I thought I only had to be good at painting signs, and the money would come. Sure it came, but then it went, and it always went out faster than it came! I had no idea that financial aspects dictated my future success. Even during the Dale Salamacha founded his sign business at age 16. Since then, he’s learned a great deal about effectively managing his money – and that profit margin, not revenue, is the key to success. For this type of job, Wrap This! enveloped a Ferrari Four, a hatchback with four-wheel drive that seats four, with 3M matte-black film, and complementary red, plotter-cut graphics. To thrive and enjoy the opportunity to complete such wrap jobs, it’s important to get the best deal possible on such services as insurance (particularly important when wrapping exotic cars), accounting, office supplies and any number of factors that impact a shop’s profitability. 18 SIGNS OF THE TIMES / JULY 2013 / following years, I thought that selling and production were the only management components I had to master. So I only perfected those two facets. In doing so, I left a huge gap in my company’s functionality. Remember, size is irrelevant. Whether it’s a mom-and-pop shop making signs in a garage on weekends, or a multimillion-dollar enterprise that produces signs worldwide, the financial consequences are the same. Not similar, the same. If there’s no profit at the end of the month or year, eventually, there will be no business. I’m sure you’ve seen a small signshop down the street closed for good, or a huge national sign company shutting its doors and leaving hundreds of people out of work. Being profitable is the only thing that keeps the doors open. For years, I said, “I’m shooting for revenue of $10 million a year!” I thought reaching that figure would make all the difference, and had no doubt that much money would make me profitable. My bubble burst when a friend told me: “It doesn’t matter that you made $10 million this year, how much was your net profit? How much is in your pocket?” He was right about what really matters! Obviously, a huge company has the potential for a larger net profit, in terms of simple dollars, than a one-man shop. However, you don’t have to have a huge shop to run a highly profitable operation. Your net profit is calculated as a percentage of total revenue. You shouldn’t be concerned with sales of $10,000 that month; you should strive to take home 25% (or so) of what you did bring in that month. It gets tricky when you start considering your obligations and bills to pay, because you’re always plugging away, not only to maintain, but to grow. Once you understand your financials, you can focus on the only

Table of Contents for the Digital Edition of Signs of the Times - July 2013

Signs of the Times - July 2013
ST Update
Technology Update
Vinyl Apps
Strictly Commercial
Lighting Techniques
The Moving Message
Technology Review
Technology Review
Design Matters
New Products
Vehicle Graphics Contest Entry Form
Public Displays of Affection
Electric-Sign Company 1 on 1’s
Screenprinting for Signmakers
A Century of Going Places
Industry News
Advertising index
Editorially speaking

Signs of the Times - July 2013