A Portfolio Approach to Evaluating Your Business

In today’s competitive market, businesses need smart ways to evaluate their performance and growth potential, and this is especially true for printing companies. Revenues and profits can shift based on the types of services you offer and your customers’ needs – and these changes can come overnight. Using a portfolio approach to evaluating your products and customers can help the leadership team better evaluate both the opportunities, and the risks in their business.

While this method is common in finance and investment management, it works just as well for assessing the different parts of a printing business. A portfolio approach lets you evaluate your products and services not just by profitability, but also by growth potential risk, and how to best allocate resources to get the most out of your business. It helps keep everything balanced and sustainable in the long run.

To get started, you’ll need to categorize the services and products your business offers. These might include things like digital printing, offset printing, large-format printing, graphic design, promotional literature, packaging, and direct mail. Each service is treated as its own “product” within your portfolio, with its own costs, revenue, and market factors to consider.

One common tool used in portfolio management is the Boston Consulting Group (BCG) matrix, which divides products into four categories:

1. Stars: High-growth, high-share products that generate a lot of revenue but need continued investment.
2. Cash Cows: Established, low-growth products that provide steady cash flow with minimal investment.
3. Question Marks: High-growth, low-share products that could become Stars with investment or fail if left unsupported.
4. Dogs: Low-growth, low-share products that aren’t generating significant revenue and may need to be phased out.

It’s also important to evaluate each service not just in terms of revenue, but also in terms of value added and profitability. Just because a service brings in a lot of revenue doesn’t necessarily mean it’s profitable—if the costs are too high, it might be dragging down your bottom line. By using financial metrics like gross margins, net profit margins, and labor-to-value-added analysis, you can figure out which services are truly driving contribution and profits. This insight helps you make better decisions on pricing, cutting costs, or whether certain services should be discontinued.

In the end, using a portfolio approach gives you a structured, data-driven way to evaluate your products and services. By grouping them into categories like Stars, Cash Cows, Question Marks, and Dogs, you can make more informed decisions about where to invest, where to grow, and how to manage risk. This approach keeps your business agile, allowing it to adapt to market changes while still optimizing profitability. In an industry like printing, where things are constantly evolving, this strategy helps ensure sustainable growth and keeps you competitive. If you’re currently offering a wide range of services, this tool could be a great way to evaluate and strengthen your portfolio.

That’s it. Stay curious, learn from every situation, and learn how to use this growth matrix so that you can teach it to someone else. Have fun and enjoy the ride!

Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to ambitious owners and CEOs in the Graphic Communications Industry by providing direct and realistic advice and insight, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at mphilie@philiegroup.com.