You Can’t Manage What You Don’t Measure
The quote above from Edwards Deming sets the tone to this three-part report dedicated to the challenges of running a profitable translation business in today’s markets.
And these challenges are numerous: language service providers have started competing globally while customers’ demand for services has grown without their budgets following suit. The pace of doing business and the expectation for faster turnaround times is ever increasing. Due to globalization and the advances in technology, the retail side of the market is under pressure from freelancers and start-up LSPs. All of this translates into an increasing price pressure and a growth in expectations from our services – both factors eroding profits.
In response to this changing environment, we must adjust and take the way we conduct business to the next level. To remain competitive and profitable – we must be able to act proactively and make decisions in our day-to-day operations based on facts and not just limited to educated guesses. Business process maturity is the key difference between start-ups and established companies.
The first stage of this maturity is the ability to control the costs of your services. This doesn’t only cover the directly visible operational costs of running your business, but the more hidden ones that tend to creep up on you and strongly impact on your bottom line. These hidden costs usually lurk in the following areas:
- Project Management. Very often, the amount of work done by project managers is not reflected directly by the revenues generated. Especially, if on the side of the costs, not only the suppliers and vendors are taken into account, but also the hidden costs of the hours spent to manage projects. Do your project managers spend their time on tedious, repetitive tasks that could be automated? Are they losing time on projects that actually cost more than they are bringing in when all is taken into account?
- Vendor Management. With no clear policies on vendor selection, it is very easy to fall into the trap of having a group of “favorite” vendors who receive most of the work. Such an approach can easily backfire. Playing favorites does not help with quality – as no vendor should be used in all areas of specialization, nor does it help with the bottom line, as it eliminates the possibility of having more flexible rates dependent on the projects at hand. Furthermore, from a long term perspective, it leads to a quicker burnout of your most trusted translators and does not help you with the expansion of your vendor network.
- Sales. Is your sales team aware of the issues occurring within the production team? Do they know that they shouldn’t pursue opportunities which will actually make you lose money? More often than not, the sales team’s goals are not necessarily aligned with the goals of the company and this is a risk that should not be taken lightly.
To address the issues above, you need a deep insight of your current processes. In depth business reports are required to help you make decisions that will help you get rid of those elements that cause you to lose money. Without them, you risk trying to fix things that are not broken, damage the process and thus fail to solve the real problems.
Awareness of the problem is the first step in fixing it. The fix itself is usually not easy nor simple, but attainable in a realistic timeframe with a proper plan and set of tools. The mentioned challenges can be handled with a set of relatively straightforward guidelines. The real end-to-end costs of projects should be monitored. Vendors’ selection policies should be established. Sales and production should be brought together to the same page. Only then can you regain control and start making mature and informed decisions on how to run your translation business.