Strength in Numbers

theory that the incremental dollars will drop to the bottom line, then you will likely be part of a race to the bottom with no end in sight. The recent past has been one of almost unbounded price increases. The immediate future is likely to be one of higher competition and falling prices. You need to decide how you are going to play in this arena.

So here is your mission, should you decide to accept it. Take a hard look at your customer list with an eye toward trade business, broker business, low-margin business, short-run business, customers with difficult orders to run, business outside of what you feel is your core competence, and customers that are just generally difficult. Model your business without these accounts and orders. See if you can cut out a shift on certain machines and if you can reduce headcounts in other areas, such as customer service, design, maintenance, etc. Try to create a slightly smaller operation and focus on keeping your key employees happier. Profit dollars may go down, but profit margins should go up.

It may be time to prune the garden a little bit—pull out the weeds, let some of the fields stay fallow, and prepare yourself for profitable and sustainable growth. Focus on your core competencies and the types of business where you have an advantage over the competition. Keep your productive resources available for the good business, and set yourself up for a better future. The adage that sometimes less is more may be the right approach for 2023. If the goal is maximizing long-term enterprise value, then there will be periods of time when cutting back is the better strategy, and this may be one of them for you.

Mitch Klingher is owner of Klingher Nadler LLP. He can be reached at 201-731-3025 or mitch@ klinghernadler.com