Has it occured to you that although you closed a lot of projects and gone through a tremendous amount of work, at the end of the day the financial results were rather not reflecting the amount of effort put into them. It happened to me more than once, as it is extremely easy to get bogged down in projects that do not bring a satisfactory return on the work put in.
The rapid changes happening in the Translation Business, budgets not matching the increased demand for services, the constant inflow of numerous small requests are especially conducive to the problem described above.
The only way to solve this conundrum is to regain control over your profitability. That translates into being able to determine precisely the margin of each undertaken project. As we control only what we can measure, appropriate tools and processes must be put in place in order to help you to obtain the information needed. Only then you can start improving your situation.
When I introduced relevant margin tracking procedures for the first time, one fact became prominently apparent – taking all factors into consideration some projects cost more that they bring in. I would be much better off not doing them at all. Getting rid of such deadweight projects helped me to focus better on those projects that were crucial for my bottom line.
In our industry one important factor needs to be always included when calculating the real costs of a project. That easily overlooked factor is the cost of managing the project, or just simply the amount of internal staff time that had to be allocated to the project. In essence, to improve your margins, you need to improve your efficiency. The market pressure forces us to do more with less time in our hands, so working smarter, not harder, is the only option left here.
Below are three basic tips that will help you improve your efficiency, and hence your profitability:
- Track and measure the profitability of each project so that you can focus on those that are the most profitable. Be ready to reject jobs that would cost you too much – usually these are the numerous small jobs. If rejecting these projects can be difficult or strategically unjustified, standardize their handling processes and automate them as much as possible.
- Measure not only the production costs of a project but also the cost of time allocated by project managers and the reast of your team.
- In general, minimize the amount of manual and tedious work – this is usually the most error-prone and but be easily automated. That applies especially to the management of a lot of small projects.
- Reduce the amount of mistakes made by using the appropriate tools. Preventing discrepancies in Purchase Orders, Invoices, Specification etc. as well es preventing other errors is so much more efficient than correcting them.
Many translation companies do not have enough knowledge or pay insufficient attention to their profitability. A dynamically changing market with growing price pressure and reduced turn-around time imposed by clients matched with higher salary expectiations and pressure for increasing rates from vendors, does not allow us to be reluctant anymore. The issue of profitability must be brought to the forefront of any modern and competitive translation business.