This is the universal question being raised in every sector of the label and narrow-web industry. The September terrorist activities have accelerated the economic slowdown, leading to reduced sales and shrinking margins.

I regret to report that there is no magic tonic that will bring about a quick and complete cure. There is no single action that will turn your business around. The health of your operation will improve as a result of the implementation of numerous small changes and improvements.

Also, no single individual is either responsible for the slowdown, or capable of achieving a single-handed turnaround. Profit improvement and increased sales will require the combined efforts of many of your employees.

Don't panic. It will only make things worse, and lower employee morale.

Don't sit idly by and hope that things will get better by themselves. The business climate will improve because smart managers analyze their operations and initiate corrective action.

Don't abandon your annual business plan. Do a complete review of the plan in light of the current economy, and make whatever adjustments are called for by conditions.

Don't make wholesale percentage reductions in personnel and/or expenses. Take the time to look at every area on an individual basis and then initiate the appropriate adjustments.

Don't reduce your sales and marketing activities! In fact, you should step them up. Increased sales are needed. If you have marginal producers in your sales force, now is the time to dismiss them. Review every marketing program and expense category (advertising, promotions, public relations, etc.) to be sure you are getting the best "bang for the buck."

Don't stop maintenance programs. Repairs are almost always more costly than preventative maintenance. Machines in poor condition generate more waste.

Here are some "dos":

Do involve all of your employees. Step number one is communications. Meet with small groups and openly discuss the economic climate and its impact on your business. Step two is involvement. Request employee ideas, have them review the expense budget for their own department, and assign them to problem-solving groups.

Do review your material costs. Materials are usually your largest expense item and your biggest purchase. Appoint a team of three to five people (including someone from purchasing) to search for cost reduction opportunities. Contact your major suppliers and ask them what you might do to lower your material costs.

Do review each print job's performance. Each month, have your accounting staff identify the five jobs produced with the lowest standard margin, five jobs with the lowest actual margin, and five jobs with the highest waste.

Establish teams to review each of these low-performance jobs. Include press operators and sales management representatives associated with the customer and the order on each team. The team objective is to improve the margin contribution of their jobs. You may have as many as 15 job-review teams.

Do consider delaying entry into new activities that have a negative cash flow and/or significant learning curve. The demanding economy requires the total focus and attention of everyone in the organization. Activities that sap dollars from your operation will magnify the margin shortfall.

Neither consumers nor the government will turn the economy around. It will be people with positive attitudes, initiating well-thought-out business plans that will return us to an expanding business climate. Can you improve the performance of your business even in this economy. Sure, if you believe you can, and if you set this task as your primary short-term goal.

Skip Heintzelman

Consulting Technical Editor

704/366-5204