***Advertisement: Ascent Partners 7 July 2010***
FY 11 is now upon us, and it's time to reflect on FY 10, and start planning for the coming year, says Ascent Partner's Richard Rasmussen.
Many commercial printers suffered greatly in FY 10, and some large firms, particularly in NSW, didn’t make it. My feel is that many were expecting to see some green shoots following the GFC, but they failed to eventuate.
The need to develop a realistic plan in FY 11, based, for most, on the back of a poor FY10 is essential. The market has changed dramatically, and new technologies and business models will continue to erode traditional offset markets. The question most need to ask is – What can I do to turn the business around? And, Can the existing business model realistically be turned around?
Unfortunately I think many commercial printers will continue to go down the same path, hope for an upturn, have no plane, make minimal changes and continue to suffer poor returns, or losses. Realistic planning and good implementation could have avoided much of the pain.
There are a multitude of options available to proprietors of print businesses. First, understand, your client base is of value. Many proprietors, and indeed administrators, falsely believe that because the clients are not providing an adequate return their value is minimal – this is not true. In another person’s hands, they hold much value. In fact the client base is generally more sought after then anything else.
People pay good money for client bases and in the process many purchasers decide to employ staff, including the proprietor. I’ve seen some fantastic results for both sides, for the proprietor for example, moving over to a new firm can give them a new lease on life – they can generally can arrange to work at their own pace, for a market wage and get paid well for their clients. It’s a great way to exit the industry.
The less dignified way is to not know when to go. To hang on to the bitter end. And leave paying administrators fees to wind then up, and leave many creditors very unhappy.
Of course there are other alternatives that you may wish to consider in your planning and the grand plan certainly needs to consider how and when to exit. A range of options certainly needs to be developed and evaluated. And they must be realistic. For example, saying your business will grow by 10% per annum needs to be supported with some realisable actions.
In your exit strategy you need to have a realistic view of what your net business value (after paying out creditors)is now and what it may be when you want to get out. What will your machinery be worth for example, and what sort of equity will you have in them when it is time to exit. This is perhaps the biggest mistake proprietors make. It certainly pays to know what your equipment is worth. But if you haven’t checked lately, be prepared, because in FY 10 most have taken a massive hit, and there is no reason to believe they will bounce back up. Negative equity in plant and equipment needs to hence be considered.
Some further questions to consider – how will your business look when you exit? Will it be the same business model (ie a manufacturing printer)? Who would want to buy your business? What will they value most in my business (ie machinery, client base, business model, profit)? What will make it attractive to them, and provide you with the best return?
This year, perhaps more than another year, requires a plan; a plan based on a realistic appraisal of where you are at the moment, and how you may end up, perhaps with changes, this time next year.
That’s part of what Ascent Partners do – appraise printing businesses, make recommendations, and help with developing realistic action plans – Call industry specialist, Richard Rasmussen on 0402 021 101.
So, what does FY 11 hold for you?
