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Sign Business Basics

(April 2017) posted on Fri Apr 28, 2017

Mastering the nitty-gritty elements of financial management is a precondition for long-term business success.


By Bill Dundas

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The decision to launch a new sign business or purchase an existing company sometimes is taken without understanding some critical basics. Likewise, current sign company owners or managers may find their businesses underperforming due to insufficient focus on the key roles of cash flow and operating costs in a firm’s performance.

To examine these crucial elements, I called on the sage advice of some experienced sign-industry professionals including Kevin Stotmeister, president and CEO of Federal Heath Sign (Oceanside, CA), Steve Gerson, president of VIS Signs/Visual Information Systems (Pittsburgh), Mike Lauretano, Chairman of Lauretano Sign Group (Terryville, CT) and Steve Kieffer, retired former CEO of Kieffer & Company (Sheboygan, WI). Collectively, this group has more than 150 years of top-level management experience in the sign industry.



MONEY MATTERS
It’s surprising that some sign company owners, particularly new businesses or those with limited experience, fail to devote adequate attention to effective customer vetting and credit policies.

“You must establish a sound credit-review process and a disciplined method to carry it out,” said Stotmeister. “Define a ‘good customer’ criterion for your company that includes their ability to pay bills on time as a necessary component.” Thus, beyond the obvious need for a business to attract new customers, it’s equally crucial to attract qualified customers. “We are very selective in the customers we work with,” said Gerson. This is particularly relevant to Gerson’s firm because a majority of his business involves electronic signs, which typically entail higher costs than conventional signage. “Most of our customers are Fortune 500 corporations such as financial institutions, or schools, churches and municipalities. In almost all cases, though, we still get a 50% deposit.”

So, how do you avoid pitfalls like customers who refuse to pay, or who delay their payments? “Set terms that will net you the majority of the project before the final installation,” said Lauretano. “For example, you can ask for a 50% down payment, then 40% just prior to installation, and carry the 10% balance on a net-30-days basis with a penalty for late payment.”


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