Signs of the Times - July 2013 - (Page 18)
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
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
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!
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 / www.signweb.com
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
The Moving Message
Vehicle Graphics Contest Entry Form
Public Displays of Affection
Electric-Sign Company 1 on 1’s
Screenprinting for Signmakers
A Century of Going Places
Signs of the Times - July 2013