Here’s a common story.

See if you recognize this scenario . . .  A sign shop is not meeting profit expectations. What is usually the first thing that happens? The owner looks for more sales and looks for cost-cutting opportunities, right? And what is the obvious cost-cutting target? Material costs, because that’s the most visible item and the easiest to address. It’s certainly easier to tackle than say, laying off staff (even slackers) because that’s something nobody likes doing until it becomes absolutely necessary. And it’s easier than crunching numbers on overheads and other “hidden” expenses.

But therein lies a problem inasmuch as cutting material costs usually means buying poorer quality materials which brings with it the risk of poorer quality output. And poorer quality output is not going to improve sales or allow for price increases. So, rather than focusing on cutting material costs and risking lower quality output, do a little more intense scrutiny and look at overheads for savings, look for improved efficiency in operations, look for price increase opportunities, and look for an additional market area.

Cutting quality is false economy