You completed a whole stack of projects and got through a mountain of work. But at the end of the day, the financial results do not reflect your efforts. This happened to me more than once, as it is easy to get bogged down in projects that do not bring a satisfactory return.
There are many rapid developments in the translation industry. Often, project budgets do not match the increased demand. There is a constant inflow of numerous small requests. These factors can cause the profitability problem described above.
The only way forward is to regain control over your bottom line. It means being able to work out the margin for each project. We control only what we can measure, so appropriate tools and processes must be in place to help you get the information you need. Only then can you start making improvements.
When I first introduced margin tracking procedures, one thing became clear. Taking all factors into consideration, some projects cost more than they bring in. I was much better off not doing them at all. Getting rid of them helped me focus on the projects that grew my bottom line.
In our industry one crucial factor is usually overlooked when calculating the real cost of a project. That factor is the cost of managing a project or simply put, the amount of time internal staff spends on a project. To get better margins you need to improve your efficiency. Market pressures force us to do more in less time, so working smarter, not harder, is the only way forward.
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 valuable.
Be ready to reject jobs that would cost you too much. Usually, it is the numerous small jobs. Rejecting them can be difficult or strategically unjustified. In that case, you have to 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 other staff.
In general, minimize the amount of manual and repetitive work – it is usually the most error-prone but can be easily automated. This especially applies to the management of a lot of small projects.
Reduce mistakes by using appropriate tools.
Automating the generation of purchase orders, invoices, etc. helps to prevent human error. Prevention is always better than cure.
Many translation companies do not pay sufficient attention to their profitability. We are working in a dynamically changing market. Prices are getting lower. Turn-around time is getting shorter. Staff is expecting higher salaries and vendors are increasing their rates. These issues make profitability the key to the success or failure of any modern, competitive translation business.