From: TomCrouser@aol.com
Date: Sat, 19 Oct 1996 17:26:19 -0400
Subject: Letters: Current Ratio, Again, More               
Content-Length: 21108
X-UIDL: 845841050.000

Crouser Report OnLine Copyright 1996 Thomas P. Crouser, October 19, 1996 -
Material may not be reproduced in whole or in part without prior written
consent of the copyright holder.
***** *****
Not making enough money in your Print Shop, but really don t have time to do
anything about it? Making lots of money but don t have any time? People
problems? Cost or pricing challenges? Sales slump? Sales increasing but no
cash? Transitioning the business to children?  For a free, no obligation
evaluation of your circumstance, please reply to this message with your name,
company, address, telephone and fax. Crouser & Associates. . . Helping
Printers Prosper since 1985. (Upcoming visitations in California, Texas,
Florida, Louisiana, and Arizona can be extended to save you money.)
***** *****
Letters: Current Ratio, Again, More
                                              
Transmitted from Columbus, Ohio

Index: Responses from Perfectionist OWNERS; Sales Lunches: GOOD or Bad?; a
message from an OLD friend; and a note on printing education from a NEW
subscriber; a question on MAC Computers; Current RATIO, Again; the most
downloaded Crouser Reports - an UPDATE from PrinterNet; How to handle OBSCENE
Job Content; and a suggestion on Pricing Preflight TIME$.
*****
Last issue s comments on Perfectionist Owners brought this reply.
*****
Subj:	Perfectionist OWNERS
From:	AlmostPerfect
To:  	TomCrouser

Tom. . .I read your white paper with much interest as there are a lot of
points I can relate to. I  m sure I have tendencies toward perfectionism and
I understand many of the traps this personality type can fall into. Your
paper did open my eyes to many that I hadn t thought of previously.

I  learned years ago to let many things happen on their own since I didn t
have the time to deal with them. On the other hand, there are still many
areas of  management where I expect high levels of performance from other
people such as productivity, product quality, and showing up for work.

Practically speaking, I think we continually have to  compromise between the
extremes of perfection and a complete lack of it. Champions in any discipline
have focused their drive for perfection primarily in one direction only...and
in other directions, they have learned to let go. We need to chose carefully
in our businesses just when to push the peddle to the floor and when to let
up. There is certainly a cost to people and operations to drive (or lead)
without restraint in this demanding mode. And the same concept applies to our
personal life with spouses and children.

I ll be reading your paper again because I know there is more in it for me to
work with. Thanks for a very enlightening class in front of the mirror.
Perfect
*****
Champions strive for perfection in results. . . .Perfectionists strive for
perfection in processes. I see much of the ladder and little of the former in
many. We must do what is most important, not what is most fun. Identifying
and prioritizing is everyone s big challenge. Here s another comment  bout
the same subject.
*****
Subj:	Perfectionist Owners
From:	AlsoPerfect
To: 	TomCrouser@aol.com

Tom: Ouch!     :>)    AlsoPerfect.

P.S.:  My CPA is following your suggestions/instructions regarding future
equipment purchases.   Good for him, good for me, and many, MANY thanks for
your help.  And, as always, best to you and Pamela. . .One of these days (!)
I ll be able to repay you for all you ve done for me.  But for the time
being, you ll have to settle for 

Thank You

 and a very large IOU.  When the
time comes for you to cash it in, all ya gotta do is call.
*****
Writing down telephone number in tickler file . . . Thanks for the kind
words, Also. Now, let s hear from Hungry.
*****
Subj:	Sales Lunches: GOOD or Bad?
From:	Hungry
To: 	TomCrouser@aol.com

Tom. . .I wrote to ask . . . about taking clients to lunch. I have never been
comfortable with either taking or being taken on a business lunch. It seems
to me somewhat dishonest to provide a benefit to an individual in exchange
for business from the company. . .Nevertheless, I currently have a sales rep
who is pushing for a 

business lunch

 budget. His argument is that this
practice works. Does anyone have an opinion about this? Does the practice
work, or is it just a way for the sales rep to weasel a perk from me? What
guidelines would you use if you were to institute this practice? Prospects,
established clients? What billing level? Regards, Hungry
*****
Dear Hungry. . .Lunches work. They re not perks when used as part of a real
sales program and someone is not trying to weasel something out of you. The
tone of the question, though, tells me something else: you re NOT involved in
your own sales program. If you were, YOU and your salesperson would be taking
key customers to lunch and you would know how effective they were. You would
know the importance of protecting your top 25 accounts which provides some
50% or more of most printers  sales. Instead, it sounds to me like you have
hired someone to go out and take care of the dirty job of sales which you
won t do yourself, and you are trying to control and direct this effort as an
accountant. Won t work. Never has. And, never will. You ve got to put the YOU
into YOUr sales. Good luck.
*****
Now, here s a message from an OLD friend.
*****
From:	Pennsylvania
To: 	TomCrouser@aol.com

Dear Tom. . .Everyone here is doing well. We have passed our tenth year in
operations and I must say now that I am older, I am beginning to understand
all the things which you and your group had tried to teach a stubborn young
man about the Printing Business. If I ever had the opportunity to say so, I
would apologize for anything which I might have ever said or done that
appeared in any way to be unappreciative.

I read, with great interest, the one article which was on the AOL reference
section in which you described the different type of owners. I was especially
interested when I caught your description of the owner which best fit my own
profile. It is comforting to know that I am not the only 

techno

 obsessed
printer in this country.

Although we still have never set the 

world on fire

 in business, we have
survived, sometimes prospered, and sometimes failed, but I have learned a
great deal and I would like to thank you for all the information which I have
gotten from you either directly or indirectly. By way of information,
update on his progress. So far so good, and as I have often heard you say


Sell something to somebody

, is probably the most valuable lesson you have
ever taught to anybody, and I could not stress that lesson enough to others.
Thanks again for all of your support and advice throughout the years. . .
.Pennsylvania
*****
Now, here s a NEW subscriber which gives me a chance to tell you something
important.
*****
Subj:	Crouser Report OnLine
From:	jsours@mail.pittstate.edu (Jim Sours)
To: 	TomCrouser@aol.com

Tom. . .Subscribe. . .Please send me the Crouser Report OnLine. It has been a
part of my Printing Administration class for several years. This will be a
great addition. Thanks, 

James S. Sours, Associate Professor, Print Management
Department of Graphics and Imaging Technology
Pittsburg State University, Pittsburg, KS 66762
*****
Sure will, Jim, thanks. Okay, so what s important? Well, as noted, Jim and
others have been using materials which we provide free to printing management
programs. We have been doing since we started and, as long as I have a buck
or two left over to do it, will continue. Why? Well, when I was teaching
printing management at West Virginia Tech, I came to realize programs face
quite a challenge in keeping relevant and pertinent information in the
classroom. So, if you are associated with a printing management college
program, please contact me and we chat about how we can help. Again, thanks
to Jim and many others like him across the country for all you are doing for
our industry and a great group of young people. Now, what have you done to
assist education of our next generation of printers lately?
*****
Subj:	Question on MAC Computers
From:	Minnesota
To:       TomCrouser

Tom, do you have information on what other printers around the country that
you visit are using for Macintoshes? For example the speed of the processors
(150, 200 meg processors), how much RAM do they have. What number computer,
like the PowertTower or the PowerMac or the PowerPC. How do you know what s
fast enough? Your insight is sincerely appreciated. . .I am really looking
forward to your visit. Please let me know if I can provide any additional
info before you arrive, so we can hit the ground running when you get here.
Thank you! 
*****
I told Minnesota that the big secret of today was many print shops have gone
heavily for PC compatibles. But, we forwarded the letter to John Giles of the
Computer Applications Network of the National Association of Quick Printers.
Here s what he said.
*****
Subj:	Question on Mac Computers
From:	JohnG247
CC:	TomCrouser

Hi Mike. . .Tom is right. The mix of PCs and Macs are about 50/50 in the
quick printing world. Right now the Mac still holds a lead on the PC in
handling color, but PCs are catching up fast. Windows 95 is making the PC
very Mac-like.

The size of the computer (and processor speed) depends on the sales level and
what the computer is being used for. You don t have to have the fastest
computer if your sales are only $3,000. You need speed if you are moving
large color files (more than 10 megs) or pushing a color copier.

Most quick printers get along with the midrange Macs. They are running at
least 40 megs (the minimum required by Adobe Photoshop).   Most are getting
64. They also are opting for larger hard drives. So if budget is an issue, go
for a slower processor with more RAM and bigger hard drive.

I have several clients doing wonderful sales levels (more than $5,000 per
month per operator) running 7100 Macs and slower. Hope this helps. If you
have any other questions, feel free to call me at 304/586-3548 or email me.
John
*****
Thanks, John. Now, let s get back to something fun. . ..like finance. 
*****
Subj:	Current RATIO, Again
From:	Doodledive
To:       TomCrouser

Hi Tom...  Still enjoying your weekly newsletter.  Am putting quite a bit of
it to use.  Still confused as to the 2:1 ratio.  I know this is probably
basic, but for the neophytes would you cover the basics again.  I m running a
20% profit right now, but that doesn t include my payments on my press and my
weekly draws, which come out of that 20%, which leaves about 5% true
profit...... Have purchased your outbound sales tapes and am in the process
now of implementing an outbound sales program.... Haven t quite listened to
all of them, but they re pretty good.  Thanks for your help.  Sharon
*****
Pretty good. Humm. Well, current ratio is not just a question for neophytes
for some very experienced people in our industry still don t grasp it. Let me
try it this way. The income statement measures what we sold and what it cost
and what we earned during a period and it RESULTS in what we ve got at the
end, the Balance Sheet. 

The Balance Sheet measures the total stuff we ve got whether we own it or not
(assets), which include cash, accounts receivable, inventory, equipment,
buildings, etc., and balances it (get it, balance sheet), against what we OWE
on this day. We typically owe accounts payable, taxes payable and notes
payable. What s left over is what we OWN. The equation is Assets =
Liabilities + Owner s (Stockholder s) Equity and it s always in balance.

On a classified balance sheet, we separate assets and liabilities into
current and non-current. Current relates to the accounting cycle of twelve
months. If an asset is cash or will be cash within twelve months, it is
current. That s like cash, accounts receivable and inventory, among others.
If the asset will not convert to cash within twelve months, it is considered
non-current. That s like equipment, building and land. The same is done for
liabilities. Those things requiring cash during the next twelve months
(accounts payable, taxes payable, current portion of notes, etc.) are current
and those requiring cash later on (non-current portion of  notes) are
non-current. Please note, the amounts on the balance sheet are NOT ESTIMATES
of what we owe and own. They are facts. The only estimating here is what is
current and what is non-current.

The REASON for all of this work is to MEASURE WORKING CAPITAL, or the amount
of current cash we have (current assets) versus the amount we will need
(current liabilities). Current assets minus current liabilities equals
working capital. The reason we measure working capital is COMPANIES DIE WHEN
WORKING CAPITAL GETS TOO LOW.

HOW MUCH working capital do we need? It is not a specific dollar amount, it
is a relationship or ratio between current assets and current liabilities. A
conservative ratio I highly recommend is $2 of current assets for every $1 of
current liabilities or a 2:1 current ratio. Companies with current ratios
which are in the .5:1 or less category are subject to immediate closure by
creditors.

A company can be extremely profitable, but yet DIE because it doesn t have
working capital. How? A good current ratio can assure you survive a downturn
in business caused by your biggest customer being purchased and moved out of
town; a significant amount of customers going bankrupt; or a downturn in
sales just because your area s economy goes down, for instances.

SUICIDE: Some owners commit suicide for they convert too much of their
current assets to non-current (such as buying equipment) and not leave enough
cushion (current ratio) to survive a downturn. Some even actually spend
themselves into involuntary bankruptcy.  And some even fool themselves into
thinking they are doing good when they are earning 38% net owner s
compensation, yet the owner take out the 38% and spend it on current living
requirements, leaving a .5:1 current ratio and DIE because they don t survive
the next cash crisis. NO BUSINESS CAN BE CONSIDERED HEALTHY UNLESS IT HAS AN
ADEQUATE CURRENT RATIO.

RECENT EXAMPLE: A ValuJet crashes in Florida and ValuJet is grounded. No
revenue coming in. Period. ValuJet has a good current ratio, fixes the
problems and works itself back into the air and is today again creating
revenue. Kiwi Airline, on the other hand, doesn t crash but sees a drop in
sales as a result of  ValuJet crashing. Kiwi does not have, nor has it ever
had, a good current ratio. It was started by pilots and crew members who use
to work for Eastern and Continental who mortgage their homes, etc. to start
up a business. They didn t raise enough for a good current ratio, but put it
into airplanes (equipment) and routes. More routes, more equipment, more
sales and positive net income and everything is great, huh. Nope. They
couldn t survive the downturn in business. Result: Kiwi has declared
bankruptcy and ValuJet is flying again. And, just think, ValuJet is the one
who crashed.
*****
Well, speaking of sales tapes, one printer wrote, 

I just got a note from
another printer about your sales tape series.  What s the skinny on these???
Here  tis.
***** *****
SUCCESSFUL OUTBOUND SALES. This audio-cassette learning program does not rely
on 

cold calls

 nor a 

super salesperson.

 The program is a proven and
effective one you can implement now, without hiring anyone. . .without paying
a consultant. . .without changing your personality. Learn the proven steps of
beginning an outbound sales program. Learn who should make the calls; who
should be called upon; and what should be said once you get there. You ll
hear how customers choose printers and why. You ll learn how to understand
your sales style and use it to your advantage. And, most importantly, this
programs helps you identify you competitive advantage. All this and more in
twelve programs on six audio cassettes with workbook. US $175 + $5 shipping
(US and Canada). $35 airmail shipment other destinations. Twelve programs on
six audio cassettes with workbook. To order: Fax (304) 342-5187 or message
Crouser@aol.com or call (304) 342-5100.
***** *****
What are the most downloaded Crouser Reports? - Let s get an update from
PrinterNet and Terry Montgomery.
*****
Subj:	Just an UPDATE ...
From:	sysop@printer-net.com
To:	      tomcrouser@aol.com

Hi Tom. . .I just wanted to update you on the four most popular newsletters
(# downloads) from the Crouser library on PrinterNet. The message seems
clear.

1. Feb. 27, 1996: 

Shop Layout


2. Nov. 20, 1995: 

Five Reasons Printers Stay Poor


3. Sept. 24, 1995: 

Family Business: Family Pay


4. Apr.  3, 1996: 

Profitability: How to Get There

Hot tip for the day. This year (1996) is a leap year.  If you have a calendar
program that you can update from year to year (I use CalendarMaker from CE)
make sure there is nothing on February 29, 1996. That can really mess up
attempts to update to next year - at least it cost me 2.5 hours tonight
trying to figure it out.  After I changed that one event to Feb. 28 my
upgrade went just fine. FYI   Ted
*****
Thanks for the tip, Ted. Now, we get a question from Hot Potato about Hot
Potatoes, or is that potatos?
*****
Subj:	OBSCENE Job Content
From:	HotPotato
To: 	TomCrouser

Here s a hot potato. Occasionally, we have work come in that may be offensive
to some on our staff, but not to others. Do you have a policy about what you
will, or will not, do in your shop.  Three examples come to mind. 1.  T-shirt
transfer caption with profanity. 2.  Cassette J-Card lyrics to be typeset -
with profanity and vulgarity. 3.  We have done several PG (underwear)
calendars over the years but last week we got a set of professional studio
photos in for an R rated calendar - they forgot the underwear - but it wasn t
graphic (X Rated). Do you have a line and if so where do you draw it?  On
Language?  On Graphic material?  On other content? If you have a 

line

 how
do you define it and how do you present it to your customers? I m open to
your practices and interpretations... HotPotato
*****
Well, Hot, I remember sending off a business card to a thermographer when I
was young and got back a note which said, 

Thank you, but we don t wish to
print this card.

 After that, I really started thinking about it (I was young
and hadn t given it much thought), so I adopted the stance of Thurgood
Marshal, former Supreme Court justice, who said he only knew it when he saw
it. So, I d apply the same principle, don t do stuff which you consider to be
unreasonable. And, remember, freedom of the press only applies to those who
own one.
*****
Subj:    Pricing Preflight TIME$
From:	GARobbie
To: 	TomCrouser

Tom, I ve read your column for months now and really enjoy it. Once we got
our own Imagesetter, we very quickly found out the dangers of believing
customers when they say they re file is 

ready for output

. We soon
implemented the 

Preflight

 policy, which basically is for $25 per file, we
will inspect it for missing objects such as fonts or supporting graphics, and
then if it is complete go ahead and image it. It there is a problem, then the
typesetter reports the problem to the CSR who then gets the missing pieces of
the prepress puzzle. This however does not include checking traps. That is
priced at normal typesetting per hour fee. 

This system has worked well, and our customers have had NO problem paying a
$25 fee (not charged if nothing is wrong BTW) instead of eating a lot of
unusable negatives. It covers the cost of the time our prepress staff plus it
keeps our imaging prices competitive with local service bureaus whereas
upping costs for hidden prefighting would have made us non-competitive. Being
up-front and explaining the process to our clients has really worked out
great. I hope this helps! Robbie
*****
Sure does, Robbie. I think your approach is great. Let s hear from the rest
of you on this topic.
*****
Well, the blonde woman and I have been in Ohio and are now headed for
Minnesota, Michigan, upstate New York, New Jersey and Kentucky. Trying to get
there before the snow flies. Hope to see you soon.

Happy Trails, Tom and Pamela
***** *****
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