Everybody loves a bargain and wants to spend as little money as possible to get the best results but in business we need to be wary of this – both when purchasing products for our businesses and when selling them.

Purchasing – cutting corners isn’t always cost effective

Over recent weeks I have seen a number of examples of companies cutting corners when it comes to spending on their business systems and in every one of these cases the few hundred dollars they saved has cost them thousands in the long run – in time, and literally in money.

The first was a case of a company that used a free on-line Employment Agreement builder.  They relied on this to give them the protection they needed if they had an employment issue.  The agreement included a poorly worded 90 day trial period and when they were challenged on a dismissal they made relying on the 90 day trial period clause, they lost because the clause was ambiguous and found by the Employment Authority to be insufficient.  The outcome for the company was a payment of over $15,000 to the employee.

The second example relates to the first prosecution under the new Health and Safety at Work Act that came into play in 2016 with its much higher penalties..  The company was found guilty of failing to ensure the health of its workers so far as was reasonably practicable. Worksafe asked for a starting point of $900,000 previously around $90,000 for high/medium culpability). The court looked at a penalty range of between $400,000 and $600,000, reduced to $275,000 because the company pleaded guilty.  Ultimately the company was ordered to pay $138,500 based on its ability to pay.  Even at this rate it is still a figure well in excess of the time and money that would have been spent to have suitable health and safety systems and processes in place.

The third instance relates to a company that did not have Terms of Trade in place.  They were caught up in a claim for defective goods with the company threatening to sue for losses.  They didn’t have any terms and conditions that would have relieved them of any third party responsibility for losses, and ended up having to make a payment in excess of $10,000 to settle the matter out of court.

Each of these problems could have been solved by paying for sound advice.  PrintNZ has documentation for each of these matters and the cost of membership, or a small fee to buy the correct documentation is nothing compared to what it will cost you if you get it wrong.  We come across businesses that will copy someone else’s documentation, or download something off the net for free, but you get what you pay for – and if you pay nothing, sometimes that is exactly what you get.  That can be an expensive mistake – and I have seen instances of this also.

 

Selling – value the work you produce, price intelligently and pass on cost increases

The printing industry has always been competitive and pressure is put on businesses to cut their prices to win work, but there is a point where this is not good for the business and not good for the industry.  It is vital that as a business you know the costs of producing a job and ensure that you are charging enough to recover those costs.

And if your costs increase then it is important that you look closely at the impact of price increases on your business and that you make any necessary adjustments to your own pricing to recover those costs.  There are many MIS systems available now that provide this information at the touch of a button and as a business you should use the wealth of information that they provide.

 

Warren Buffet said “Price is what you pay – value is what you get.”  Make sure you don’t cut corners when either buying and selling.