2014 may prove to be another challenging year for commercial printers. The continuing trends of industry overcapacity and the declining demand for print products have resulted in reduced profit margins and strong competition. The result is that some companies have sold or exited the business, while others have regrouped and grown stronger. Although gloomy, this market requires you to take stock of yourself and your company. As an owner of a printing company, you need to make a very important strategic decision this year — whether to grow your business to generate higher sales and profits or to sell your company.
Business owners need to ask themselves whether they have the energy to do the tough work of bringing leadership and new ideas to work every day and to commit to making their company competitive. For those of you that want to grow your business, you will need a focused business strategy backed by strong customer input. Some may take the path of growing their company “organically” while others may take the opportunity to buy competitors to strengthen their product offering and/or improve their presence in new customer markets.
Whether you decide to grow or sell your company will depend on your company’s current situation and whether you have the personal drive to make the necessary changes to take advantage of opportunities. Selling is a valid strategy to maximize your return, but timing is very critical. The “wait and see” strategy isn’t the wisest one.
I met with a printer a while ago to discuss selling his company. His company was profitable but vulnerable as a few of his customers accounted for a large percentage of his sales and sales were slowly dipping. He also wasn’t close to his customers, especially the new younger staff who were in charge of selecting printers. He thought he should sell but couldn’t quite bring himself to make that decision as he had owned the firm for over 30 years. I saw him about a year later and he told me he had to liquidate his company as he lost some important customers, his sales dropped below a critical level and his profits disappeared. Gaining customers back was not an option as they had happily moved on to other suppliers who offered broader and faster services at lower prices. On top of that, many of his talented staff had left for better opportunities elsewhere. In the end, the best he got was selling off his equipment, piece by piece. Pondering and waiting to see how the year unfolds in hopes of improvement is not a prudent strategy!
To help you make the decision of whether to grow or sell, what questions should you ask yourself? First make an objective assessment of your company. Do you know the profitability of each product and customer? Do you know the type of customers you need to attract and how to get them? Do you know where the product and service opportunities are today? How well do you know your customers and what they think? Take the time and effort to find out why they buy from you or your competitors. Do you know your customers’ business models and how, or if, you fit into them? You may find that you are in a good position and that you can pick up valuable ideas from this process and develop a new understanding of how you can provide better value to your customers. Growing from this base takes effort, insight and a commitment to implementing your plan of action, but you have a solid platform from which to build on.
On the other hand, if you do not know why your customers buy from you, they may be asking themselves the same question. Being vulnerable and rudderless in this market does not make for a good night’s sleep! If you feel it may take more money and effort to grow or to turn the ship around than you are willing to commit, maybe it is time to make the decision to sell while your company still has good value. Maybe selling now is the better path for you to maximize your investment return and secure your future.
Making the decision to grow or sell your company is not an easy one. If growing your company is your decision then do the research, develop a credible plan and implement it. If selling is the better route for you, prepare your company for the sale and move on it. Regardless of the path you choose, delaying shouldn’t be the choice.
