So, You Want to Sell Your Business?

Factors Impacting the Value of Your Business

So, You’re Thinking of Selling Your Business?
By John Stewart, Executive Director, NPRC

“Hi John, I think it’s time for a valuation. Lindsey and I are almost 60 and we’re giving some serious to selling the business and retiring, so what’s the first step we need to take to get a valuation done?”

How do I respond when someone calls me with a question like that?

Well, I start off by asking a bunch of my own questions. What are their current sales, and what do they think their business is worth. What are they going to do after they sell the business? How much is their net worth, and what percent of their total net worth is represented by the value of their business? What happens to their plans if their business simply doesn’t sell?

Sure, they may be calling me about a valuation, but virtually every single caller already has some preconceived notion as to what their business is worth.

Is the Business Value Inflated?

One of the early and most important questions I ask is, “what happens if it turns out your business is worth far less than what you think it is. What will you do then? Are you prepared emotionally and physically to continue operating it like you are today?” Some folks who call do have the time, the patience and the maturity to rationally answer those types of questions. Others are less fortunate and they are looking for instant solutions (selling) to problems that have taken years to develop.

One of the more challenging questions I raise with folks is, “What happens if you throw a party and no one shows up?” Unless you have one or two prospects already lined up and waiting to buy your business, what happens when you establish a fair market price for your business, put it on the marketplace and you are greeted with deafening silence?

Making More Money by Staying!

Many times, I end up suggesting to callers that they need to go back to the drawing board and rethink what they want to do, reminding them that they will never make as much money selling the business as they will from continuing to run the business on a day-to-day basis.

Even in cases where the callers are dead-set on selling their business sooner rather than later, postponing the sale by even a couple of years and concentrating their efforts on specific steps designed to increase the value of the business may very well be the best course of action.

Yes, that may be very discouraging for some folks to hear, especially folks who are biting at the bullet to retire now, but postponing the sale and working the business for a few more years may be a far more realistic option than what they have facing them now. There are many, many steps that owners can take in a relatively short period of time (12-24 months) to significantly increase the value of their business. We’re not suggesting these steps will be easy, but then again what is?

Business Valuations – Two Observations

I’ve been a consultant in the printing industry for more than 35 years, and I have also conducted more that 400+ valuations in the last ten years, and I feel comfortable in offering the following two, broad observations valuations conducted in our industry:

• Limited Market – First, unless you already have a serious, qualified prospect waiting in the wings to buy your business, the chances are better than 50-50 that no matter how fairly priced your business might be, you may never find a qualified buyer willing and able to buy your business, certainly not at the price you think it is worth, and certainly not for all cash, which is what many if not most sellers expect.

• Unrealistic Expectations – Second, most owners think their business is worth far more than most valuations would suggest, and they are sadly deceiving themselves to think they are going to find a buyer. PERIOD! Where or how some owners come up with their business valuations is beyond me. Anyone who suggests that a business is worth some multiple of annual sales needs to have his or head examined! Too many folks conflate the amount of money they collectively withdraw from the business on an annual basis with profitability or excess earnings. They are not the same.

Available only as a hard copy. Visit the NPRC website for details.

In 2007 I co-authored, along with my good friend and industry expert Larry Hunt, what is now considered a landmark industry publication titled, “Print Shop for Sale.” This 300+ page book has sold more than 4,000 copies, and remains as the only publication of its kind in the printing industry, offering “A step-by-step guide for establishing a fair market value for your printing firm, or one you are looking to buy.”

Valuation Lessons Learned

Since its publication, I have conducted well more than 400+ valuations. I have also been called upon to provide “expert testimony” at various legal proceedings where I have been asked to address various valuation methods as well as industry profitability ratios. Print Shop for Sale is available in the NPRC Bookstore.

I have encountered virtually every possible valuation scenario, ranging from nasty divorces where no one wins, to couples who had planned for the last 20 years to somehow retire at the magic age of 60 only to reach that age, and have nothing whatsoever to fall back on – their business having little if any value to anyone other than themselves, with the only source of additional income or benefits being what they will received from Social Security and Medicare.

As I alluded to earlier, the selling process is more likely to take a year or more, rather than months, and even then, there is no guarantee whatsoever that you will find a qualified buyer who is willing and able to pay your asking price, or anything close to that.

Remember too, that in at least a majority of the selling scenarios that occur in the real world, you are typically going to be asked to provide financing for the bulk of the selling price. If you think you’re going to show up at settlement, “Sign the papers and then walk away with a big check” you are mistaken. Consequently, the monthly payments you will come to depend upon will be closely tied to the success of the new owner and his or her ability to achieve all the promises that you made during the selling process.

“Even though sales have been somewhat flat the past four years, this business really has great potential, and with the right person at the top, it can reach the next level in terms of sales and profits.”

During the early stages of establishing a business valuation, owners who want to sell their business will often come up with a variation of the following: “Barbara and I have worked very hard the last 20+ years and we’ve made good money, and we’ve built a solid business, but we are getting burned out and we want to move on. Even though sales have been somewhat flat the past four years, this business really has great potential, and with the right person at the top, it can reach the next level in terms of sales and profits. Heck a new owner could easily double our sales if they got out there and properly marketed the business.”

Valuing a Business Based Upon Potential?

If you think you are going to sell your business based upon its potential you are sadly misleading yourself. In the simplest of terms, your business is worth nothing more and nothing less than (1) the current net, street value of your equipment and (2) the ability of the business to pay a new owner a “fair market salary” AND produce or generate enough excess earnings that allows the new owner to make payments to you the seller!

The bottom line in terms of selling your business is you are either a “leader” or a “Laggard” in terms of profitability and sales per employee. You either have it or you don’t. If you’re trying to make a “silk purse out of a sow’s ear” then good luck.

Just because you and Brenda worked 85-hour weeks and worked for less than minimum wage doesn’t mean a new owner should, certainly not if your business is half as profitable as you say it is.

Plus, if the business has potential to grow then you should have grown it. If the business has potential to be more profitable then you should have been the one to make it more profitable. If a new owner takes the bull by the horns and increases sales and profits as a result of their talents then the credit goes to them, and not you!

“If the business has potential to grow then you should have grown it. If the business has potential to be more profitable then you should have been the one to make it more profitable. If a new owner takes the bull by the horns and increases sales and profits as a result of their talents then the credit goes to them, and not you!”

If a business is unable to pay a new owner a working salary as well as generate enough “excess earnings” to pay the seller each month then it most likely is worth nothing more than the “street” value of the furniture and equipment used to produce those sales. We’re not talking net assets as found on the balance sheet, but rather the value that this equipment represents if a savvy business owner had to go out on the used equipment market and replace each key piece of equipment required or used to produce your current sales.

By the way, one of the biggest mistakes sellers can make is to load up their businesses with new equipment, leased or financed, in the last two or three years just prior to putting the business on the market for sale!

Regrettably, as many owners soon discover, there is very little interest in businesses producing mediocre sales and mediocre profits. Instead of being able to sell their business at a magical ratio of 60-70% of annual sales, they find they are unable to sell the business as an on-going entity, and instead end up closing their doors, selling off their accounts receivable, and then selling off key pieces of equipment one piece at a time, receiving just pennies on the dollar!

Owners ignore data like the above at their own peril. Many owners spend years in this industry never realizing how poorly they are performing as compared to their peers.

Five Factors Worth Considering

It would be easy enough for us to pull out the past dozen or so valuations and highlight what we found, but suffice it to say the five specific commentaries offered below would be near the top of just about any list I prepared.

(1) Confusing Salaries vs. Owner’s Compensation – Husbands and wives, or even brothers and sisters working as teams running and operating a business, often mistake the amount of money they collectively withdraw from the business as being the same as profits or owner’s compensation. They are not. Only the salary and benefits taken out by a single individual can be considered as part of the owner’s compensation calculation. So, just because Tony and his wife Carol collectively take out $75,000 on a business doing $750,000 in annual sales, this does not mean they are taking out 10% or $75,000 in profits. Far from that! Assuming a new owner would replace Tony as the new working owner, he would also have to go out on the market and replace Tony’s wife as well at a fair market, competitive salary. If that means spending $35,000 to replace her, then the unadjusted excess earnings for the company would now be $40,000, or 5.3% of sales.

(2) Failure to Achieve Top SPE levels – We can report with absolute confidence that firms falling in the top 25% of our industry report average “sales per employee” ratios of almost $160,000. We also know that those in the bottom 25% of our industry continue to struggle with reported SPEs of $125,000 or below! How owners (assuming they even track info like this) can sleep at night knowing their company’s SPE is so much lower than others in the industry is mind boggling, especially when it can be so readily improved.

(3) Ignoring Key Industry Statistics – The printing industry is almost unique in some aspects, especially its history of collecting, tracking and publishing key financial ratios. Owners who make excuses for not knowing the fundamental financial ratios that define this industry have no one to blame but themselves. To be blunt, if you can’t instantly put your hands on what those key financial ratios being reported by the top 25% of this industry then shame on you.

How on earth does a smart business person run a business without knowing the key benchmarks being achieved by competitors in their industry?

The 2017-18 Financial Benchmarking Study, one of many studies published by NPRC (and available in its bookstore) is packed with ratios related to what the winners in this industry report for benchmarks such as sales per square foot, current ratios, owner’s compensation, cost of goods and one of the most important ratios of all – employee payroll! It is not surprising that firms that lack this type of data tend to be under-performers.

(4) Rationalizing Key Ratios – It is one thing not to be aware of key ratios, it is a far different thing to actually have access to these key ratios, especially ratios reported by the very top performers in the industry, and yet to conclude that somehow they don’t apply to your firm. Rationalizing that key performance ratios don’t apply to your firm or that your company or market is different from all the rest is simply a recipe for disaster – It’s also a reason why no one in their sane mind will pay you what you think your business is worth. If only owners would stop rationalizing and act upon the wealth of information available to them they would end up making their lives so much much better, at least in the long run!

(5) The Enemy in the Mirror – Like it or not the biggest culprit preventing many owners from achieving higher levels of success (and higher values for their businesses) is the man or woman staring back at them in the mirror first thing in the morning. That individual typically exudes negative vibes. They are filled with excuses. They talk a good game, and say they are willing to change, but when push comes to shove they will fight the consultant and ignore advice from even the most qualified, most trusted advisers they can find. Sometimes that trusted adviser is a spouse or partner, but even then they are ignored. Many of these owners simply fail to push themselves or the folks around them. They make little effort to change, and remind one of the old expression, “It’s hard to teach an old dog new tricks.”

Ok, that’s enough negative rants for the day! <g>

Recovering from Hip Surgery

I just had my left hip replaced on Aug. 21, 2017 and I am very impatient to get back to my old self. If you sense from the column or comments above that I sound a bit “irritable” you are correct. Don’t look for a retraction! <g>

While I am pleased with my progress, it just never seems fast enough. The healing process pretty much is following what I endured five years ago when I had the other hip replaced. My hip was operated on Monday mid-day, and I was up on a walker walking around the ward five hours later.

I was discharged the next afternoon. By Thursday, I had given up using the walker, and I was walking up and downstairs as soon as I returned home. Each day it has been getting a bit easier to endure. Anyway, as I kept proofing and reproofing the above I kept stumbling upon one “negative” sound comment after another. I would revise or delete one and yet another one would pop up a couple of paragraphs later.

Nothing makes me angrier, however, to know that our industry has so many resources available to help troubled firms and yet so many just ignore them and think they “know better.” It is really a tragedy to find myself talking to owners who say they are now ready to retire but when I end up looking at their financial statements I discover one mistake after another than could have been avoided had they availed themselves of some of the many outstanding reports available in this industry.

Oh well, I hope you enjoy the column. Don’t hesitate to email me with any comments or questions you might have.

 

NPRC Releases Hourly Rates Report

The 2017 Hourly Rates & Mark-up Practices Report, a 58-page special report published by NPRC, will be available for purchase on June 28, 2017. This brand-new publication, based upon a recent survey conducted by NPRC in early June, attracted more than 240 printing firms.

The new report offers a special look at the popularity of various computerized estimating systems, and then quickly moves to various budgeted hourly rates used in graphic arts departments as well as hand labor rates for a variety of bindery and other back-shop tasks. The report also reports on mark-up rates used for handling sub-contracted services and products as well as rates used to mark-up paper used in offset printing. 

SPECIAL ALERT – If you believe you participated in this survey but have not received the PDF report then it is due to it either going into either your trash or spam folders, OR you accidentally deleted the email we sent you. It is also possible that you never received it because the email address from which it was sent (membership@printingresearch.org) was not “whitelisted” as we requested during the release of this survey. The PDF of this report was sent to 245 email addresses on both June 26th and then again on June 27. The subject line was, “Your Complimentary Copy of the Hourly Rates Report.” Please thoroughly check all email folders prior to contacting us.

Table of Contents… Click here to view the Table of Contents for this new report.

Table of Contents

Retail pricing for this new study is $49.95 (PDF) and $56.95 (Printed);

NPRC member pricing is $24.95 (PDF) and $31.95 (Printed).

Order your copy via the NPRC Bookstore.

Digital Pricing Study – Table of Contents

Table of Contents for the 2016-2017
Printing Industry
Digital Printing Pricing Study:

Preface…………………………………………………………………………………… 7
Executive Summary……………………………………………………………………… 9
Terminology & Definitions …………………………………………………………… 19

Section I: Profile of Respondents and Pricing Data……………………………….. 21

Part 1: Basic Company Information………………………………………………… 27
Basic Company Information
2014 Gross Sales of all Respondents……………………………………………. 27
2015 Gross Sales of all Respondents……………………………………………. 27
2016 Gross Sales (projected) of all Respondents……………………………….. 27
Projected Increase/Decrease 2015-2016 of all Respondents…………………….. 27
Percent Single vs. Multiple Location……………………………………………. 27
Age of Firm……………………………………………………………………… 27
Number of Employees…………………………………………………………… 27
Distribution of Respondent Firms by Region…………………………………… 27
Distribution of Respondents by Estimated Market Size…………………………. 28
Sales Per Square Foot…………………………………………………………… 28
Age of Owner…………………………………………………………………… 28
Sales Per Employee……………………………………………………………… 28
Distribution of Respondents by Annual Sales…………………………………… 28

Part 2: Pre-Press, Graphic Services & Industry Trends…………………………… 31
Minimum Charges …………………………………………………………………. 33
File Handling Fees………………………………………………………………….. 33
Hourly Graphics Charge……………………………………………………………. 33
Jobs Provided by Whom?………………………………………………………….. 34
Percent of Color Digital Jobs Finished On-line…………………………………….. 34
Percent of B&W Digital Jobs Finished On-line…………………………………….. 34
Variable Data Color Printers……………………………………………………….. 35
Variable Data B&W Printers……………………………………………………….. 35
Variable Data Minimum and Hourly Fees………………………………………….. 35

Part 3: Pricing for Digital Color Printing…………………………………………… 37
Flat Sheets In Color:
100# Coated Text……………………………………………………………….. 39
100# Coated Cover ……………………………………………………………… 40
Variable Data Pricing……………………………………………………………….. 41
Carbonless Forms:
2-Part Carbonless……………………………………………………………….. 42
3-Part Carbonless……………………………………………………………….. 43
Color Click Charges Only………………………………………………………….. 44
General Stock Mark-Up Practices………………………………………………….. 45
16-Page Self-Cover Newsletters……………………………………………………. 46
32-Page Self-Cover Newsletters……………………………………………………. 47
16-Page Booklets with 4/4 Cover…………………………………………………… 49
32-Page Booklets with 4/4 Cover…………………………………………………… 50
Finishing Methods Used for 16 & 32-Page Booklets with Cover………………….. 51
Digitally Printed Envelopes…………………………………………………………. 52
Business Cards……………………………………………………………………… 54

PART 4: Pricing for Digital B&W Printing………………………………………… 57
60# White Offset, 8.5×11…………………………………………………………… 59
60# White Offset, 11×17……………………………………………………………. 60
80# White Cover, 8.5×11…………………………………………………………… 61
80# White Cover, 11×17……………………………………………………………. 62
32-Page Booklets…………………………………………………………………… 63
Carbonless Forms:
2-Part Carbonless……………………………………………………………….. 64
3-Part Carbonless……………………………………………………………….. 65
B&W Click Charges Only………………………………………………………….. 66

PART 5: General Discounting Practices……………………………………………. 67
Special Discounts Offered………………………………………………………….. 69

Section II: Usage & Ratings for: Digital Color Envelope Printers, Primary and
Secondary Digital Color Printers, Primary Digital B&W Printers 71

Usage & Ratings for: Digital Color Envelope Printers
Ratings of Dedicated Inkjet Envelope Printers………………………………….. 74
Ratings of Dedicated Digital Envelope Printers…………………………………. 74
Ratings of Digital Printers with Envelope Capabilities………………………….. 74
Envelope Printers – Ratings of Devices & Service………………………………. 75
Usage & Ratings for: Primary and Secondary Digital Color Printers
Color Printer/Copier Vendors by Placement…………………………………….. 77
Average & Median Copies/Month by Color Printer Vendor……………………. 78
Average & Median Click Charges by Color Printer Vendor……………………. 78
Average & Median Vendor Ratings for Color Printers…………………………. 79
Average & Median Service Ratings for Color Printer Vendor………………….. 79
Device & Service Ratings by Printer Vendor & Model Number ……………….. 80
How was Primary Color Printer Financed?……………………………………… 81
How was Secondary Color Printer Financed?…………………………………… 81
Usage & Ratings for: Primary Digital B&W Printer
B&W Printer Placements………………………………………………………… 83
Average & Median B&W Copies/Month by Vendor……………………………. 84
Average & Median B&W Click Charges by Vendor……………………………. 84
Average & Median B&W Device Ratings by Vendor…………………………… 85
Average & Median B&W Service Ratings by Vendor………………………….. 85
Average Device & Service Ratings by Printer
Vendor and Model #………………………………………………………… 86

Section III: Industry Snapshot Comparisons……………………………………… 87

2016 Industry Snapshots…………………………………………………………… 89

Market Baskets Based Upon Geographic Regions
Northeast………………………………………………………………………… 92
Southeast………………………………………………………………………… 93
Central…………………………………………………………………………… 94
West…………………………………………………………………………….. 95
Canada…………………………………………………………………………… 96

Market Baskets by Population Density
Rural…………………………………………………………………………….. 97
Small…………………………………………………………………………….. 98
Medium…………………………………………………………………………. 99
Large…………………………………………………………………………… 100
Major…………………………………………………………………………… 101

Market Baskets by Annual Sales
Sales $200,000 to $499,999……………………………………………………. 102
Sales $500,000 to $799,999……………………………………………………. 103
Sales $800,000 to $1,499,999…………………………………………………. 104
Sales $1,500,000 to $4,999,999……………………………………………….. 105

Industry Market Basket Analyses, Independents vs. Franchisees
Independents…………………………………………………………………… 106
Franchise………………………………………………………………………. 107

Market Baskets by Sales Per Employee
SPE <= $99,999……………………………………………………………….. 108
SPE $100,000 to $124,999…………………………………………………….. 109
SPE >=125,000 to $139,999…………………………………………………… 110
SPE >=140,000………………………………………………………………… 111

Special Pricing on Benchmark Study Ends June 7th!

Based upon the feedback received from recent surveys, as well as a strong desire to get critical information about profitability into the hands of as many printers as possible, the National Printing Research Council (NPRC) recently broke with a 34-year industry tradition and slashed pricing on its latest study.

Since it was first released in April 2017, the study has been offered at an exceptionally low, low price of only $115. That special introductory pricing ends on Wed., June 7, 2017. The study is now available as either a PDF or hard-copy!

Traditionally, the biennial Financial Benchmarking Study, due to higher than normal research and production costs, has always been one of the more expensive studies sold in the industry, typically selling in the $175-$225 range. However, a recent survey of both NRPC members and non-members strongly suggested we would better achieve our goal of getting this type of critical information into the hands of as many readers as possible by considering a drastic reduction in price!

And that’s what we have done! – Because we believe this study has the real potential of dramatically improving the profitability of every printing firm that purchases it, we have decided to drastically reduce the price of this study to ONLY $115. In addition, even though it is far more expensive for us to do so, we are limiting the distribution of this study to hard copies only, rather than offering PDF copies as an alternative. To place your order visit the NPRC Bookstore. All orders are shipped within 24 hours or less via USPS Priority Mail. Order processing begins April 12, 2017. Participants have already received their complimentary, VIP copies.

With an overall margin of error of better than +/-4.4%, this year’s 2017-2018 Financial Benchmarking Study provides an analysis based upon the input of 130 firms ranging in size from $200,000 to $5 million 2016 annual Sales. The study offers up almost 100 individual breakouts and analyses. This 66+ page report provides detailed breakouts based upon annual sales, sales per employee, franchise vs. independent as well as firms that emphasize brokering as opposed to those that don’t.

Discover the kinds of financial ratios being reported by the companies at the very top – discover the kinds of ratios being reported by the top 25% of our participants that enable them to achieve owner’s compensation levels of between 25-27%! Analyze their ratios for cost of goods, payroll and overhead expenses and compare those ratios against those reported by others in our survey. Compare the “profit leader” ratios against your own and then use our special worksheet at the end to set real-world goals for the next 12-18 months!

Some Study Facts… The average study participant reported 2016 average annual sales of $1,080,000; reported median sales was $727,200. Average owner’s compensation for 2016 was 16% – the highest reported in years. Broken down by quartiles, owner’s compensation ranged between 5.9% for those in the lowest quartile to 25% for those in the top quartile.sales. The study details the types of key ratios required for cost of goods, payroll and overhead expenses required to produce above average profits.

Sponsored by AccuZIP, this latest study by NPRC features an “Executive Summary” by highly acclaimed industry expert and author Larry Hunt. Hunt has authored the the “Executive Summary” of this biennial report since it was first published in the early 1980s. Hunt’s special industry analysis, takes you through a step-by-step look at what has transpired in the industry since the early 1980s – both the good and the bad!

Not only does Hunt examine and explain key trends that have developed during the past 33 years, he also offers up insight as to why some firms are actually achieving higher levels of profitability today than ever before. He details the key ratios you need to track and improve in order to achieve “profit leader” status. 

To order, visit the NPRC Bookstore today. 

New Net Worth Survey Published!

The National Printing Research Council (NPRC) has released its latest industry survey providing a detailed analysis of the personal net worth of printers. The report was mailed 1st Class and or distributed via email to more than 120 participating firms. The report is now available for sale (hard copies only) in the NPRC Bookstore.

“Successes, regrets and advice section was priceless. I have followed many of those suggestions over the years and it has paid off.”
John Byrd, Bryd Printing Co., Norcross, GA

“I have been in the printing business for over 36 years and always wondered how I was doing compared to other print shops. With this Net Worth Study, now I know. No more guessing.” 
Dan Tiedt Sr., PIP Marketing/Signs/Print,Iowa City, Iowa

Click here to review additional testimonials provided by fellow printers. Read what they have to say about the value of this just-released report.

Retail Price… $225    
NPRC Member Price… $112.50
At the present time, this report is only available as a hard copy. No PDFs.

In the meantime, NPRC has released some preliminary statistics uncovered in the survey:

  • 24% of survey participants report a net worth between $501,000 and $1 million.
  • Average net worth of all participants is $2.2 million
  • Average 2016 sales of participants is $1.5 million
  • Approximately 62% of all owners surveyed indicated they owned their own building. It’s even higher among those with the highest net worth.
  • Estimated average value of building (if owned) is $709,000.
  • 28% of owners indicate they also own other commercial real estate.
  • Approximately 37%  of those surveyed indicated they owned other “non-commercial” real estate such as second homes, vacation cottages, etc.

The National Printing Research Council is dedicated to publishing hard-hitting, fact-based research studies and surveys that directly benefit its members. We employ a full-time executive director with extensive knowledge of the industry, and we are available 24/7 to answer questions about pricing, profitability, wages, key financial ratios, and valuation methods. And best yet, we offer those services and more for low annual dues of ONLY $240!

A special new-member bonus! Printers who join NPRC between now and March 16, 2017 will receive a FREE copy of the above-mentioned confidential report on personal net worth. This is a “first-of-its-kind” report and is sure to spark a lot of discussion in the printing industry. 

This represents data representing the net worth of the average American Household in 2013 (latest available). As you can see, as the owner of a small, closely held business the odds are in your favor of far exceeding the average net worth of most Americans.

More than 120 owners, with sales ranging from $200,000 to $7.5 million, shared highly personal data about their personal net worth and told us where and how this wealth was acquired. This report, which will retail for $295.00, is expected to be released no later than Jan. 31, 2017. No other industry trade organization gathers, analyzes and provides this type of in-depth information.

Allegra Member Praises New Study

2016-17-nprc-wage-benefit-backup_6244_image015This is what an Allegra franchisee had to say about our latest industry Wage & Benefits Study… “I like the analysis options based not only on regions, population, and size, but also on profitability. I also liked the sales representative breakout. Good work and thank you.”
Jim Elder, Allegra St Louis, St. Louis, MO

For additional information, visit the NPRC bookstore. This just released study retails for $179; NPRC members can purchase the study for only $89.50, a 50% discount off retail.

Improving SPE Critical to Profits

According to new research data recently gathered by NPRC, the average SPE in the printing industry has now reached almost $140,000. Put another way, if your SPE is less than $140,000 your firm would now fall into the bottom half of the industry when compared to your peers, according to findings in the soon-to-be-released 20176-2018 Quick Printing Industry Wage & Benefits Study.

Highlighting the direct relationship between SPE and profitability, NPRC sorted the data gathered from our latest Wage & Benefits Study and found that firms reporting the highest profits (20% or higher) reported average sales per employee of $152,000, while firms reporting profitability of less than 6% reported average SPE of $104,000, or an SPE 31% lower than those at the top!

2016-17-nprc-wage-benefit-backup_6244_image017The direct relationship between SPE and Profitability “There is little doubt in my mind that there is and always has been a direct relationship between SPE and profitability in this industry. Without high SPEs it is almost impossible to achieve high levels of profitability,” notes John Stewart, NPRC Executive Director. “Owners need to quit rationalizing that they can somehow increase productivity while living with a below average SPE.” (Read more about this relationship and how you can quickly improve your SPE in upcoming articles to be posted on this NPRC website.)

NPRC is putting finishing touches on its latest Wage & Benefits Study where in you can find more detail on the findings noted above. The new research study is based upon responses from more than 180 participants and is packed with wage and salary information covering 22 of the most common positions in our industry.

Check back soon for a more detailed analysis on SPE and how you can improve it in 60 days or less!

 

Digital Pricing Study Receives Praise

Testimonials continue to pour in on this just-released study

“These studies are the best source of quality
industry information available.”

 “Being located far removed from a larger city containing support services for the printing industry, our company is starved for readily available local industry related resources and information.  Over the years we have found studies by John Stewart to be a welcomed, valuable resources to help us operate our business profitably.  His latest study the ‘2016-2017 Printing Industry Digital Printing Pricing Study’ has once again proven to be an extremely useful, comprehensive study providing in depth knowledge of industry pricing for digitally produced printing.  The content of this thought provoking study is a requirement for any printing company, large or small, with a goal of producing digital work profitably.”

Skip Novakovich
Esprit Graphic Communications
Kennewick, WA

“The Digital Printing Pricing Survey is the most valuable yet. The pricing info helped us identify irregularities, bringing some prices up to increase profits, and identify high prices that were likely resulting in lost business. The equipment ratings were most valuable as we prepared our transition to all digital and new equipment decisions. Your recent report on the shift to digital was instrumental in our decision to make the shift… Your information has helped us transform into an efficient, profit making machine.”

Greg Batchelor
McCabe’s Printing Group
Fairfax, VA

“I find the study very helpful. I have been too low in some areas and too high in others. It is a great study. Also learned from this group about the way to hire a shopper which was also very helpful.” 

Peggy Hoobery 
Burdine Printing 
Arroyo Grande, CA 

“The information in the 2016 Digital pricing study helps us a great deal. Most pricing is regional so we take that in stride. But is also shares new ideas and maybe services we can charge for that we left on the table. Each year we learn new items to increase profitability and give better service to our clients.”

David Adams
Quality Printing Services
Petaluma, CA 

“Hi John,
I have participated in every one of your studies for more than 15 years. For the first 20 years in business I had to guess what the rest of the industry was doing. Then I ran across your studies. In my estimation these studies are the best source of quality industry information available. Whether it be wages, pricing, industry trends etc. these studies give me valid up to date information to run my business that is available nowhere else. Please keep up the good work!”

Jon Robson
Auburn Document Centre
Auburn, NY

“I immediately raised my digital envelope prices 5%. It more than paid for the study in less than a month.”

Bob Roenfield
Edison Press
Sanford, ME

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Click above to download sample pages.

Check out entry on the Home Page of this website titled “FREE Sample Pages…” where you can actually download four sample pages from this just-released study. As always, all studies sold by NPRC and/or QP Consulting, Inc. are sold on a 100% money-back guarantee!

 

Presidential Poll Results

For Immediate Release

Party Affiliation Does Not Correlate to Expected Presidential Outcome according to the result of our latest Presidential Preference Poll, conducted Oct. 19-20, 2016.

Melbourne, FL – With the third presidential debate mercifully behind us, we at the National Printing Research Council (NPRC) thought it might be interesting to see how this year’s tumultuous presidential race is playing out among entrepreneurial quick and small commercial printers. With that in mind, we launched a brief Survey Monkey poll of print shop owners.

image014Not surprisingly, the percent of printers polled who identified themselves as Republicans far outnumbered those saying they were Democrats. In fact, more respondents identified themselves as Independents than identified as Democrats. With nearly 200 responses tallied, the results were: Republican (59.5%), Independent (23.7%), and Democrat (15.0%). A tiny percent (1.7%) said they were something else.

When printers were asked which party’s policies they generally agreed with, the Democratic party (18.2%) edged Independent (9.9%) but Republican party policies were far and away the most popular with respondents at 66.3%.

image003This trend held when respondents were asked who they planned to vote for. Donald Trump (63.7%) far out-polled Hillary Clinton (26.3%) with Gary Johnson (8.8%) and Jill Stein (1.2%) trailing far behind. However, when asked who they expected to capture the Presidency, Gary Johnson and Jill Stein got no votes, which was not unexpected. What was somewhat unexpected was by a two-to-one margin survey respondents said they expected Hillary Clinton (66.9%) to trounce Donald Trump (33.1%).

While this poll is not scientific, it does give a snapshot of how printers are feeling as the presidential race winds to a close.

 

New Relationship between Sales & SPE – Seeking Your Feedback

For many years, virtually every study that I worked on that dealt with profitability and productivity strongly indicated that smaller $$$ volume firms, as a general rule, tended to be more profitable than larger $$$ volume firms, at least in terms of percentages.

As an example, 10 years ago, the top 25% of the industry (in terms of profitability) reported average sales of $961,500 and owner’s compensation of 23.3%. The SPE of this group was $125,644.

The bottom 25% in terms of profitability reported sales of $1,098,541, owner’s compensation of 4.2% and an SPE of $109,689.

Move forward to 2013 and the top 25% reported average sales of $925,849, profits of 24.6% and an SPE of $142,372.

The bottom 25% reported average sales of $1,070,548, profits of 4.81% and an SPE of $114,858.

Data Indicates Possible New Trend?

However, in a recent survey dealing with time management that we just completed, it appears that firms who classified themselves as high profit firms reported significantly higher sales and SPE than their peers who indicated they were at the bottom in terms of profits. I can’t help but wonder whether this is a fluke, or a real trend based upon various factors.

Here are the three breakouts we recently reported in our Time Management Practices article that appears as a free download on our National Printing Research Council website at www.printingresearch.org. (Three tables below)

allfirms

lowprofitfirms

highprofitfirms

Comparing Profit Leaders vs. Laggards

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It was interesting to observe that out of the 207 participating firms, an almost identical number of owners described themselves as low profit as opposed to high profit firms. We appreciate the candor of the former in that their input is often just as important as what we receive from “profit leaders.”

Granted, there were only 20 participants in each of our ‘Top” and “Bottom” groupings, each representing 10% of our total respondents. Nonetheless, the data was clean with no unusual outliers that we could detect.

So the question that seems to arise is whether or not there is a good explanation for what appears to be a significant, and quickly developing trend that suggests there is a direct, though not necessarily linear, relationship between sales per employee and annual gross sales. Analyzed a bit further, we could examine two possibilities:

  •  Do highly trained & productive employees naturally facilitate and make it easier for firms to achieve higher and higher sales?
  • Do firms with higher sales naturally tend to acquire more productive equipment thus leading to higher SPEs?

The response rate was very good, and the data was exceptionally clean, so the question remains – has there been a significant turn-around, almost a reversal, in this industry whereby firms with higher profits tend to be larger firms as well.

We tend to believe that the level of sophistication and higher levels of productivity offered by a variety of digital devices (printers, copiers, creasers, collators, available software,etc.) has enabled printing firms that have upgraded their equipment to achieve levels of productivity almost unheard of just a few years ago.

Conclusion

We welcome your feedback and would love to publish your comments on our website. Tell us what you think about the relationship between sales per employee and the production equipment currently available. Another question – should a company struggling with relatively low levels of productivity and only modest sales take a major financial risk and upgrade to more expensive and hopefully more productive equipment? Send us your comments and feedback to: mailto:www.printingresearch.org

With your permission, we will append your comments to this article. Don’t be bashful… share with us your thoughts and opinions.

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