Learn from the print managers or work for them – magazine article

I just read the summary of the latest Printing Industries Report and the first thing that struck me is: I must have a different calculator to everybody else. Maybe I’m missing something, and I know it’s a survey so you can get skewed results but this is what is expected for the December quarter.

Increased Sales – That’s good (but from where? Other printers?)

Lower prices – That’s bad

Easier finance – That’s dangerous

Increased employment and overtime – That’s bad, = higher costs

Increased production costs – That’s bad

Increased investment in plant – Jury’s out on that
So the outlook is that everybody will be working harder, for lower prices, with higher costs and somehow the survey also finds that printers are expecting increased profit.

In the long term how, in an industry with very stable revenue patterns, does higher costs and lower prices equal increased profit? In this environment the survey respondents think this is a good time to take up easy credit and invest in some more gear.

Well I think it is time to invest as well but, before you invest, you should be having a very hard look at how another sector of the industry handles their investment. I know a lot of printers think of this sector of the industry as a cancer, as leeches, as opportunistic interlopers profiteering from the sweat off the brow of honest hardworking printers. In general this sector has not spent a cracker on plant and yet I would think they are the fastest growing part of the graphic arts industry – the Print Managers.

Dare I say the word?

How can it be that Print Managers are so successful when they don’t spend a cent on plant? When they don’t actually make anything except profits you would kill for. Answer: because they invest, not in plant but in the relationship with the customer. And because they own the relationship with the customer they can get away with things you hate, like reverse auction sites and driving your profits down.

So, in the last couple of years how much have you invested in plant? How much has your wages bill gone up? In the same time how much have you invested in the relationships with your customers? How much have you invested in making it easier for your customers to do business with you? How easy is it for your customers to interact with you? What makes you special to your clients and protects you from poaching?

You may resent my saying this but for the good and perhaps the survival of your business you need to look very seriously at this. Because regardless of how shiny, fast, hi-tech, labour saving and expensive your new press is, the likelihood is that the public face of your company is low tech, labour intensive, making you vulnerable and costing you an arm and a leg.

Extra $$$ in your pocket
Our studies have shown an average printer turning over $2 million a year, successfully revamping their public face, would put an extra $100k in the owners pocket in year two, after tax. In an industry that is making single digit profits, millions and millions of dollars are being wasted every month.

The main points are simple:

With the consolidation of the industry your competitors are getting more sophisticated at poaching your clients. This needs to be combated.

The market as a whole is stable and revenue growth is tough. If you want more profit, cost reduction is the easier route.

PDF and internet delivery are on the rise and set to dominate. Are you going to resist or embrace this wave?

You need a system for generating new work and an easy way to process it.

You need a growth strategy that actually results in more profit rather than just a higher wages bill.

The benefits of this investment quickly become lower costs and overheads, greater productivity, higher profit, protection of your client base from erosion, less dependency on reps to generate business and protection against ex-reps raiding your customers.

In the process you are also creating a system for winning and processing work with lower costs and higher profit that will live on long after you have left the business. This means the value of your business and the price you will get upon exiting will be much higher and a much better option than many printers face today.

Learn from the print managers or end up working for them. l
John Weichard is the Managing Director of D2P, now celebrating its seventh year of connecting printers to the Internet and delivering artwork to them. To take him to task over this article email jpw@d2p.com.au