***Advertisement: Ascent Partners 16 June 2010***
Most printers today are trying to fill their sales bucket. Many would have found that over the past 18 months some holes have appeared, over and above the norm. The problem is that the bucket is getting continually harder to fill. Richard Rasmussen of Ascent Partners has some advice on what to do.
Sales retention has always been an issue with printing companies. We know that we will lose customers, often through no fault of our own, due to a variety of circumstances such as a change in the customer’s management structure, or ordering of print being done nationally / internationally.
The problem now for many traditional printers (read offset printers all sizes with no real form of differentiation) is that there are an increased number of causes for the sales leaks. Recent (say last 5 years) causes now include
• Print management firms targeting your larger customers
• Digital Printers – targeting your short run / colour / variable data customers
• On line ordering systems / trade printers – CJ King, Vista, CMYK, LEP, Whirlwind etc.
• Other media web, email, social networks
• Designers / print brokers who farm out print work
• Far more efficient manufacturing operations
In the past, you really only had to watch for direct commercial printers, who pretty well had the same equipment. Now, with this increased competition, when you lose a customer and try to fill your sales bucket, it is that much harder.
So, what to do?
Firstly you need to understand that your half filled sales bucket may never be filled again to previous levels.
If you want to chase more sales you’ll have to have a very good offering, and the traditional, (read offset printers all sizes with no real form of differentiation), is NOT likely to be one of those.
So, faced with decreased sales and with little realistic chance of increasing sales organically, it follows that you need to match your present manufacturing operation to your present sales volumes, or perhaps a little under.
The aim for most in the manufacturing game is to be the cheapest cost to manufacture (that’s what you were before the abovementioned new competition). You’re certainly not going to achieve this with major peaks and troughs in your sales
So wouldn’t it make more sense to downsize your manufacturing operation to a level that you think you can average each month? I say “average” because in most cases it is smarter to run a continually busy operation and in busy times limit your overtime and use more of the hungry, and often more cost effective trade printers.
Today’s environment needs proprietors to re-think their operation.
A key in most instances is to aim to have the cheapest cost of manufacture, and generally this means consistently high equipment utilisation rates. The abovementioned new competitors are here to stay (and perhaps even more will be added to the list). If you can’t do this, then it’s likely you need a re-think.
We all should be thinking now about building sustainably profitable businesses. Unfortunately some won’t be able to achieve this and many will refuse to accept the market realities and fall by the wayside. For others their best option is to get out now.
As independent advisors we provide some realism, and can help plan to build better businesses, or plan your exit. Contact Richard Rasmussen on 0402 021 101, at Ascent Partners, for a confidential discussion about how this may be achieved.