Turning Printing Companies Around One Firm at a Time!
By John Stewart… Between the late 1990s and well into the first decade of this century I made my living providing individualized, on-site consulting services to printing firms throughout the U.S. and abroad. I sometimes joke with folks that while my short-term memory has really gotten bad recently, I can recall almost every single detail, including the layout of the shop and the problems encountered, involving the 400+ consulting visits I undertook in those days.
I consulted with printers in almost every state in the U.S. including two separate firms in Alaska. I also traveled to Australia, Brazil and Venezuela, the latter visit being exceptionally memorable because to this day I still vividly remember the press operators using gasoline as a press wash! I was still smoking in those days, but I was not alone – the press operators seemed fine with have a cigarette themselves as they washed up their presses!
I’ve often thought I could put on a pretty interesting seminar about all those consulting visits, and one of the first stories I would probably tell would be one about the owner of a business, who during an early morning conversation, asked me to step outside for some additional privacy.
Once outside, he confessed with a couple of tears running down his cheek that he had a personal crisis on his hands, a crisis so bad in his own mind that he had seriously contemplated suicide. He told me he actually had been thinking about taking this action during the past few weeks and was actually waiting to hear what advice I might have to offer.
“Once outside, he confessed with a couple of tears running down his cheek that he had a personal crisis on his hands, a crisis so bad in his own mind that he had seriously contemplated suicide.”
Someday, I hope to write more detailed account about that visit, but suffice it to say it we were able to resolve his major personal problems far quicker than many situations I had encountered in the past. The solution to his problem was so simple I still shake my head that it took a visit from me to resolve the problem.
The Secret Tool I Used
The problems I encountered during my many consulting visits covered the gamut from brand new owners perplexed as how to proceed with their new business to dealing with cantankerous owners who hated their employees and couldn’t wait to get out of the business. The variety of situations I encountered amazes me even to this day. I recall a couple that broke out into a horrendous argument in front of me and their employees. I remember another owner who had a heart of gold and believed she should clock-in on the time clock just to prove she was one of the team members.
Occasionally, I even found myself being hired by couples who were in the midst of purchasing a printing firm but had no hands-on experience doing so. They wanted a quick primer on the industry and that’s what I often ended up offering – an intense two-day seminar, sometimes in their living rooms, about the printing industry, especially what is often referred to even today as the “quick printing” of the industry.
During those many years of on-site consulting, I had one distinct advantage over other consultants in the printing industry – I had been the co-author of one of the printing industry’s oldest and most beneficial studies of all – the Printing Industry’s Operating Ratio Reports.
As the author and publisher of what is now referred to as the printing industry’s Financial Benchmarking Studies, I almost always brought along a couple of copies to share with clients. I invariably ended up using the facts and key ratios highlighted in these studies to illustrate my observations about achieving high levels of profitability. These studies, especially the benchmarking studies, turned out to be my “secret consulting tools” that I used during my consulting visits.
“These studies, especially the benchmarking studies, turned out to be
my ‘secret consulting tools’ that I used during my consulting visits.”
If the above sounds like a plug for the just-released 2017-2018 Financial Benchmarking Study I guess it is, although it was unintended when first written. I do know, deep in my heart, that the value of the information contained in these studies is unmatched, and I only wish I had the one-on-one time to convince printers that they ought give serious thought to ordering their own copy.
Visit www.printingresearch.org for more information. Remember too that this study is sold on a 100% money-back guarantee. No questions asked.
Key Ratios and Profit Quartiles
During a typical on-site consulting visit, it was not unusual for me to spend two to three hours reviewing some of the key financial data contained in these studies. I would often turn to my favorite section in the studies, the “profitability quartiles,” and point out the kinds of key ratios these folks needed to achieve to succeed in the industry. “You need to study this stuff, just like when you were in school, and commit some of these figures to memory,” I would preach.
By the end of a typical visit, I would leave with them a copy of the benchmarking report with various sections high-lighted with a yellow marker and a number pages with either a paperclip at the top or the corners turned down.
“Look, your payroll costs, compared to the companies in the top 25-35% of the industry, are way out of line. The bottom line is not that you are paying folks too much, but rather you have far more employees than you need to sell what you are selling. If you want to succeed and really prosper in this industry, you need to make some hard decisions before I leave,” I would tell them.
Sometimes, I would really get excited trying to emphasize key industry trends and point out the changes that had occurred in the industry. By the time I concluded a visit, the typical client had been provided an abundance of data indicating the steps needed in order to truly improve their profitability.
I remember one unusual consulting assignment I undertook that involved visiting four firms (all members of a specific franchise) within the course of a single week. I spent one day with each client. By the end of three of the visits, I remember talking to Mary and describing an unusual rash that had developed on my neck.
I described the rash and how it was bothering me, and without missing a beat she said, “You know of course what is causing your rash, don’t you?” I said “no,” and she told me the rash was being caused by all the individual crises I had previously described to her during the week. Every day I would call her first thing in the morning and describe what had transpired the previous day, and unbeknownst to me, I had been describing to her the types of situations that would make many individuals breakout in a terrible rash!
“You know of course what is causing your rash, don’t you?” I said “no,” and she told me the rash was being caused by all the individual crises I had previously described to her during the week.
Sometimes, before I left, we were able to turn raw data taken from these benchmarking studies, into practical action steps that needed to be taken in the next few days. It wasn’t that difficult, after spending a couple of days on site, to determine who were the productive employees that needed to be kept and those employees that were clearly expendable. Tough decisions for sure, but then again making tough decisions is what it takes to run a profitable business.
Sometimes, the problems facing a company were not quite as obvious, but I never recall a consulting visit where I did not feel I had left the owners with sound recommendations as to how they could improve their profitability and the overall operations of the firm. I estimate that 80% or more of the problems I encountered during these consulting visits were directly related to problems uncovered during an examination of their financial statements.
I am still amazed even today at the number of owners who send me financial statements lacking the most basic element of a profit & loss statement – the ratios (percentages) that should appear adjacent to each expense item that breakout the expense item as a percent of total sales.
Leading a Horse to Water
I am sometimes amused when I read some of the thousands of posts that appear on some of the industry listservs to notice how very, very few posts seem to question or deal with financial ratios in the printing industry. It often amazes me to read how many owners are so consumed with discussing equipment selection, solving personnel problems, running kraft envelopes and where to to buy golf shirts while seeming to ignore issues that I think ought to dominate every listserv. Firms that desire to move to the head of the pack need to spend a lot more time analyzing and improving key profitability ratios and spending far less time worrying about sourcing kraft envelopes and ball caps.
Proofing the above paragraph leads me to wonder how I ever attracted any followers or friends in this industry! <g>
“It often amazes me to read how many owners are so consumed with discussing equipment selection, solving personnel problems, running kraft envelopes and where to to buy golf shirts while seeming to ignore issues that I think ought to dominate every listserv.”
Almost everyone is familiar with the saying, “You can lead a horse to water but you can’t make him drink.” Well, that saying is quite appropriate when it comes to convincing printers how important and how valuable a benchmarking study can be to their business and the bottom line.
Ironically, most industries and most of the trade associations that serve them, simply do not publish operating ratio studies, and when they do, they often are under appreciated and rarely get the “rave” reviews they deserve. The printing industry is a case in point. The printing industry was one of the first major industries in the U.S. to publish operating ratio studies, but historically it has always been difficult to encourage printers to participate in the initial surveys or to purchase a study after it was published.
Unfortunately, you can’t make an owner participate in these surveys nor can you make them purchase a study and put into practice what they might discover inside if they spent the two to three hours (that’s really all it takes) required to really master what these studies have to offer.
Ratios Worth Analyzing
There are many ratios worth examining when running a printing business, but if the typical owner just concentrated on learning and mastering three key ratios they could easily surpass the profitability levels of most in this industry. Owners need to fully understand how to control and adjust ratios dealing with (1) payroll costs (all costs, direct and indirect, excluding those attributed to a single owner), (2) cost of goods and (3) overhead costs.
When you can analyze what other companies, similar in size to your own are reporting for these ratios, and when you can look at a breakout of printers broken down into four different quartiles and see what they are reporting you have a plateful of evidence upon which to act. Most of the time, it is not enough to just discover that your ratios are “off,” you need to have the guts and fortitude to make changes based upon what you uncover.
“Most of the time, it is not enough to just discover that your ratios are ‘off,’ you need to have the guts and fortitude to make changes based upon what you uncover.”
The problem with many owners in this industry (my opinion of course) is that they will rationalize to death that the facts revealed in these studies simply don’t apply to them, and furthermore, they will insist that their market is different and they can’t possibly make the changes that would otherwise seem pretty logical to anyone else armed with the same facts and scenarios.
A Closing Thought…
I actually miss writing for Quick Printing magazine, but then again it isn’t the same magazine that I wrote for for more than 25+ years. In those days, most issues averaged 100+ pages in length, and circulation and actual readership was much larger. Today, Quick Printing magazine can be more accurately described as a newsletter as opposed to a magazine. In the “old days” the editors (I went through four during my 25+ years as a senior columnist) rarely imposed strict word counts on my columns. Today, they would have a heart attack with the length of an article such as this.
I might consider bringing back to life my monthly column to this website, if I thought there was enough interest. As many readers know, I love to tell stories and I probably mentioned three or four possible stories just in this column. Your thoughts? Email me at: email@example.com