I look forward to reading Inc. Magazine every month.  It’s chock full of insights and resources that any small business can benefit from.  In the October, 2008 issue, however, I was especially pleased to see an article directly relevant to my industry.  I should clarify, this was a case study that profiled a translation business and the challenges it faced getting to the next level.  The case study is followed by expert opinions regarding how the business should move forward.

The case study and the opinions were interesting, but lacked some important details.  As a fellow participant in this industry I felt the need to opine.

First, the company as described in the case study seemed overstaffed for its size.  By my count the firm has between 25 and 27 employees.  With revenue at $1 million this puts revenue per employee below $40,000.  This is lower than all but one of the Top 25 Translation Companies as ranked by the Common Sense Advisory on May 29, 2008.  Growth typically drives inefficiency in the translation business as more and more staff are required to manage the increase in work and a more sophisticated marketing effort.  That said, the company in the case remains small and thus should consider a leaner organization going forward.

Second, the sales staff is in desperate need of training if a call volume of 250 calls per day (5 sales people x 50 calls per day as described in the case study) is not yielding more business.  There is a lot of information easily available about metrics as it relates to sales and establishing some basic benchmarks should be a critical issue for the company.

Third, I found it incredible that with lack luster revenue and a relatively inefficient operation the owners could find the time and resources to participate in owning and racing horses.  I say pick a less expensive and time consuming hobby and reinvest in the company.

Finally, I think the company is right on with its idea to increase pricing.  The case study described that early in its history the firm offered its services for free.  This was a mistake and one can infer that the company’s pricing is still on the low end based on this initial strategy.  In the translation business, there is a positive relationship between price and the perception of value.  If you are going to go after the big fish I don’t think you’ll be successful if your strategy is to be the price leader.  These companies expect a significant creation of value and are willing to pay a premium for that.

In closing, it’s important to note that even at $1 million in revenue this company is larger than the vast majority of its competitors and that is a significant accomplishment.  If they can implement a few important changes and never give up there is a good chance they’ll get where they want to go.