Fall 2004                    return to newsletter contents page

The Ten Steps Toward Profitability

Presented at the 2004 Management Workshop, Las Vegas, by Mitch Klingher, CPA, M.S., Ackerman & Co. LLP

As always, Mitch’s knowledge of our industry allowed him to add a very personal touch to this presentation. Mitch is a partner in M.S. Ackerman & Co. LLP specializing in individual and corporate taxation as well as mergers and acquisitions. Mitch also works with the AICC… Association of Independent Corrugated Converters.

He began is talk with the statement that “there is no substitute for profits… it’s no longer possible to buy low and sell high!”

Following are the 10 Steps to Profitability presented by Mitch.

1. Work Your Niche – you have two choices to be profitable… be the low cost producer in your business OR dominate your niche. This can start with a SWOT analysis of your business… Strengths, Weaknesses, Opportunities and Threats.

2. Hire managers with Passion. Hire only natural leaders. Show people you care. Install formal performance measurement systems. Have regular meetings to discuss and evaluate.

3. Know your costs. This step has been moved from #5 to #3 because it is becoming increasingly important. Focus on contribution and keep it simple.

4. Deal from strength. Don’t let a customer, vendor or an employee see weakness. Stay away from temptations to price cut.

5. Don’t coddle sales people. This is really a spin off of #4. Don’t overpay and fear the loss of a sales person. Pay incentives based on new accounts. Let them know where the company has an edge and motivate them to sell it.

6. Initiate Waste Control. Too much waste can kill and every cent saved in waste goes right to profitability.

7. Motivate employees. Delegate! Listen to them and empower them. Make them feel they can contribute.

8. Forge vendor relationships. Treat vendors like you want to be treated by YOUR customers. Show them loyalty and fairness and they’ll take care of you when you need them.

9. Be a Booster. Be perceived as the “home team”. Support the local community and get involved. Local businessmen like to deal with people close to home.

10. Be careful with capital. Withdrawing too much capital from a business can be as deadly as not investing enough.

As a reality check, at least once a year you and your key people should go off-site for a day or two and have a “no holds barred” review of your company. Listen to your people and agree on at least two to three… but no more than six specific objectives. Create a measurement mechanism for each to track your progress. Most importantly, communicate these objectives to all of your employees.

For more detail on this topic from Mitch, see the March 2000 issue of Paperboard Packaging.