Effective Email Marketing Programs

Worried About Sending Too Many Emails
And Wearing Out the Welcome Mat?

By John C. Stewart

Sometimes I can write a column in a couple of hours. This one has taken more than three days to complete. I think I started it and re-started it 3-4 times. The intent of the column was to share with readers my personal experiences as to how I use email marketing to boost participation and sales of products and services that provide to the industry. So finally, here we go…

As many of you may know, I am currently the executive director of the National Printing Research Council (NPRC). I was formerly the founding executive director of the National Print Owners Association (NPOA). Both positions required substantial marketing efforts on my part, all directed at attracting new members and soliciting participation in various indusgtry surveys and studies.

I relied heavily on aggressive direct email campaigns to promote and encourage participation in these surveys, as well as to direct visitors and members to association websites where we maintained bookstores and provided various links to other helpful sites. In an average month, we typically mailed out 60-70,000 emails. Some recipients receiving 4-6 emails a month while others, because of the lists they were on, only seeing 1-2 emails.

As I noted previously, the primary objective of most of our emails was (and still is) to direct visitors to visit our website. That’s definitely where the action is – our bookstore, or mini-reports, and news about our latest research. One important note that I want to stress – no matter how valuable our content and no matter how frequently we change it, we would never get folks to visit our website as frequently as they do without the constant and large-scale use of email blasts.

An Aggressive Marketing Tool

First, let me state that I believe aggressive email campaigns are one of the most under-used and under appreciated marketing tools in our industry.

Second, I believe that the ability and willingness to send out one or two thousand emails every week, or at least every two weeks, can prove to be a very powerful, effective and yet inexpensive marketing tools at your disposal. Note that while I said “inexpensive,” I did not mean to imply that an aggressive email campaign won’t take time and commitment on your part.

Good, effective email campaigns may not require a bunch of money, but they will certainly require some time and dedication on your part. You will need to spend at least one or two hours a week towards your email efforts. And your efforts also require a long-term commitment on your part – not just a flash in the pan effort that ends up with you saying, “I tried it for a couple of months and nothing happened.”

Ok, I can already hear a few of you saying something like, “Hell, that’s way too many emails and my customers would yell and scream if I sent them something once or twice a week.” Generally speaking, folks who spout those types of statements typically don’t know what the hell they are talking about. They’ve probably never tried a regular, consistent email program, and generally speaking, they’re rarely able to back up their claims with hard cold facts. Most of these people give off negative vibes all day long and I hate to be around them! <g>

“Hell, that’s way too many emails and my customers would yell and scream if I sent them something once or twice a week.”

I can only imagine the number of readers I have already turned-off by the comments above. Nonetheless, I make my living consulting and valuing firms by being brutally honest and not telling folks just what they want to hear! I do recognize and accept the possibility that by the time I get to the end of this article, there may only be 3-4 readers left! <g>

Email Marketing Programs

We rely almost 100% on email to conduct surveys as well as to promote the sale of studies we publish.

As many of you know, I have been publishing statistical studies dealing with profitability, wages, bindery operations and pricing of offset and digital printing services for 30+ years. In the last ten years, we have relied heavily (almost 100%) on large scale email campaigns to encourage participation in these surveys as well as to sell these studies after they are published.

Although I used the word “campaigns” to describe the mailing efforts above, let’s make no mistake about it…. They are really blasts or huge torrents of email messages being sent frequently to as many prospects as possible, and sometimes with only one or two days between one blast and the next! The bottom line is that I send out a lot of emails.

I may send out 8-10 different emails over the course of 20 days to the same basic list of approximately 4,600! – All that effort just to promote and encourage participation in one single industry survey. And you know what? Very, very few of the email recipients complain or ask to be removed from our lists. Unfortunately, even when I send out at that frequency and volume levels, it may still not be enough to get the responses I need.

As an aside, I also have access and use an email list of 34,000+ printers as well. The price for me to use that list is incredibly low… so low I would be embarrassed to share it publicly. However, you also get what you pay for, and I know the list is less than perfect with lots of entries I would prefer to delete but simply don’t have the time. I also do not have the reporting tools available to me with this list as I have with my current email marketing program.

Using GetResponse

I currently use an email marketing program called GetResponse to design and mail my emails. I formerly used MailChimp. I can’t even remember why I switched from MailChimp to GetResponse – probably a temper tantrum on my part! There are now many additional choices as well. However, if you’re going send emails out to customers and prospects you must, however, use one of these types of email marketing programs.

Don’t think you can do this on the cheap and copy a mailing list of 800 to 1,200 customers into the addressee line or CC portion of your email program and send out a blast. In fact, you would be lucky to send out 40-60 via your email client without quickly having the entire mail rejected, returned or declined. Each mail server establishes limits as to the maximum number of emails they will allow you to send out at one time. Plus, that number changes daily to keep you from getting comfortable with a specific number.

If you attempt to use your personal or company email address to mail out large quantities of emails you take the risk of quickly being denied service and be identified as a spammer. Not only will your email be returned or blocked, but you take the risk of or your email address being blacklisted in the industry.

If you’re going to become a frequent email marketer (which I strongly encourage you to do) you are going to have to spend a modest amount of money to do it RIGHT!

My Costs and Experiences

I don’t tend to shop on price alone. There may be cheaper alternatives, but I can tell you that I currently pay $75 monthly for GetResponse. That amount allows me to maintain various ‘campaigns” or lists containing upwards of 10,000 email addresses. I can send out an unlimited number of emails to that list every single month. I maintain more than 22+ separate email lists within GetResponse, representing a myriad of breakouts – past survey participants, purchasers of various studies, association members and various listserv subscribers 

Many of the email addresses I maintain on Get Response are duplicated across various lists I maintain. In reality, the actual number of unique email addresses is approximately 4,600 in size and the statistics that I provide below are based upon that number.

GetResponse has many, many tools and features that I never use, but it also has many features that I love. I can create an attractive email using existing templates they offer, or I can create a custom maker with my own artwork, graphs, photos as well as special links and buttons. I can also test these mailers by send it to myself numerous times, especially to check if the links are working properly.  

GetResponse provides me with hundreds if not thousands of templates you can use to promote products and services. For better or worse, I tend to design my own.

GetResponse provides both pre-designed templates for various groups and organizations plus maintains an “art/photo” gallery. I also maintain my own gallery of artwork within GetResponse and I can pull or select from more than 100 photographs, charts and banners almost instantly.

I am constantly adding artwork to my Get Response library, including jpgs of various report covers and studies.

If pushed or in a rush, I can design a mailer from scratch and have it ready to go in 30 minutes or less, especially if I am using a format or template that I have used previously. I change the headlines, the subject lines and possibly change the colors a bit, and I can send it out immediately to 4,600 recipients. GetResponse also allows me to schedule that mailing for some time and date in the future. So, I can design something on Thursday, but decided that I want it sent out at 6 a.m. on Monday! Pretty neat!

AB Tests and Other Features

Another nice feature is that GetResponse allows me to conduct various AB tests using various subject lines. I can come up with two subject lines that I would like to test. How does it work?

Let’s say that I have a list of say 4,600. I tell the program to send out the email with subject line A to a fixed number or percent of the total list – say 10% or 460. It will also send out 460 emails with subject line B as well. After that, everything is pretty automatic.

The program measure the response rate (based open or click rates– your choice) for each of the two subject line over a duration of time that you have selected (2 hours or 2 days). Then it automatically sends out the email with the winning subject line to the remainder of the list (3,680 emails) and provides you with hard data as to the final results as to opens and clicks. Although I have used AB testing, I will be candid in saying such testing is ideally suited to email blasts involving 20-50,000 recipients than it with the size of lists I use.

What I have come to appreciate, more than anything else, is the ability of GetResponse to provide me with some valuable statistics. As you will see below, I can check almost immediately after sending out 4500 or so emails exactly how many were actually opened, how many folks clicked on one or more links, how many folks unsubscribed and even how many complained.

Another really neat feature of GetResponse is not only does it tell me who opened my emails and who didn’t, but it also allows me to follow with emails to each of these groups. You can send a simple “thank you” note to those who did open an email, and you can send another email follow-up email to folks who didn’t open the email and make them a special offer. You just have to use your imagination as to how best to use these tools.

Sample Open and Click Rates

In the first 20 days of November (2017) sent out 14 unique emails to approximately 65,000 emails. I don’t even know how many more I will send out for the remainder of this month. In addition, I have also used my 3rd party vendor to send out 150,000 emails to printing firms during that time as well.

Let’s take a look at three recent emails I sent out using GetResponse and and look at the response rates reported:

Campaign #1 – Emailed 11-14-17 – 6th or 7th promotion sent out to encourage participation Color Digital Printing Pricing Study. The subject line for this mailer was simple – “Check-out Sample Digital Pricing.” Not very creative, but folks want to know about pricing.

A 37% open rate is pretty good in anybody’s book. The click rate is outstanding, and much higher than I have ever experienced in the past.

Another outstanding open rate of 33% in our effort to encourage participation in our latest digital pricing survey.

Campaign #2 – Emailed 11-13-17 – Another promotion sent out to encourage participation Color Digital Printing Pricing Study. Subject line was only two words and very direct – “Deadline Alert.” Note that Campaign #1 and #2 were sent out back to back on Monday and Tuesday of the same week to the same list of approximately 4,460 printers.

This GetResponse email dealt with my recent experiences using a standing desk; from the statistics above, at least 256 readers actually clicked the link and read the column I had written.

Campaign #3 – Emailed 11-10-17 – A special promotion to get folks to read a recent article written about “Standing Desks. Note, once again, the excellent open rate.  Titled simply, “Standing Desks – Are they for You?” – this emailer generated an equally good open rates. 

Note that I will gladly trade 2 tenths of one percent (.002%) of unsubscribes (11 in the case of these three mailings) in order to get 4,500 emails opened and read.

Size Really Does Matter

If the above comments about GetResponse sound like a commercial they certainly were not meant to be. I have had issues with the company, but I have issues with everyone. I suspect that most of the more frequently mentioned email marketing programs out there offer either equivalent features or possibly even better ones.

Make no mistake about email marketing – It is indeed a game of numbers. While it is hard to beat really great subject lines or good content for the messages inside, it still comes down to list size – Size does matter. The bigger your list, the greater your response rate will be in terms of sheer numbers.

If you have the opportunity to purchase a list of businesses in your market area don’t make the mistake of being cheap and trying to eliminate emails to save a few dollars. Do some testing first.

Next to list size, is the frequency you use the list. Based upon my personal experiences, I don’t think, within reason, that you can wear out your welcome or turn folks off because you mail to them every 2-3 days. You should try, at the very least to send emails every single week!

Mailing out to a list of 2,500 or 5,000 once a week, possibly twice a week on some occasions, would not be too much in my book! On the other hand, if you can only put on your “creative” hat once a month or every two months I would honestly suggest that you find another approach to marketing your business.

Email Lessons I Can Share 

Below are just a few of the lessons I have learned from my email marketing campaigns. And yes, I am still learning. I have learned that with any specific email that I send out that…

  • Open Rates – Most people (a large majority) likely will never open up a specific email that you send them. No matter how clever and well written the subject line might be. However, many of those who will not open the email you sent them today will indeed open the very same email if you send it to them tomorrow. That’s life.
  • Click Thru Rates Even Worse – No matter how small your open rate is, the click-thru rate on links that you offer will be far smaller still. Sometimes, though, the subject line is so good and the message inside so clear and compelling that you will even amaze yourself with the open and click rates you find. Special note – If you’re going to have them click a link, you better make sure it is worth their time – offer something of true value, and don’t boast about your neat, online ordering system.
  • Time of Day -The actual time of the day the email is sent as well as the actual day of the week it is sent is probably important, but no one on earth seems to know the correct time or day. Some folks say Fridays are a bad day to email. My experiences are the opposite. Some folks say early AM delivery is best, but Get Response actually tracks opening times of your customers and they can adjust the time each specific email is sent based upon the open rates of each specific email recipient. This is a standard feature of GetResponse. A pretty neat feature, but I rarely use it.
  • Great Subject Lines – lots of opinions in this area as well. But let’s face it, good marketing efforts typically start with a great headline or in this case a great subject line. Learn to steal good subject lines. Look at the list of 30-40+ emails you received this morning and just check out the subject lines that seemed to attract your attention the most. I recently read that, “three words or less” constituted the most successful subject line. “Deadline is Tomorrow,” “We’re disappointed,” or “Counting on you.” I will grant you, however, that limiting subject lines to three words can be stressful! Sometimes, you just have to go longer! There are certain words you definitely don’t want to use in subject lines. These are considered Spam Trigger Words. Go here for more details: https://www.simplycast.com/blog/100-top-email-spam-trigger-words-and-phrases-to-avoid/ Something I learned just the other day – don’t use exclamation marks in your subject lines.
  • Unsubscribe Requests – With each mailing you send out, it is possible that at least a couple of recipients will submit an unsubscribe request – Maybe they hate you, or maybe they had a bad day! Whatever you do, don’t get upset, don’t take it personally and don’t allow a miniscule percent of recipients (the unsubscribes) to alter your long-term objectives. My unsubscribe rates is less than one-tenth of 1%. I can live with that. 

Conclusions About Emails

I accept the fact that a large number of the emails I send will never, never be opened. I will also tell you the good news and that is only a very small number of recipients will actually unsubscribe as a result of sending them “too many emails.” I used to take “unsubscribe” requests personally, but these days I figure it is their loss, not mine!

If you’re not already conducting regular emailings at least once a week then shame on you. They are easy, fun and they can be very satisfying when you start seeing the results of your efforts. Whatever you do, however, make sure that your emails are either offering legitimate news, savings or discounts or the sites to which you direct them offer the same. Please, please don’t direct readers to a boring site. Make sure it offers something of true value as well.

I think my next article is going involve a random visit to 8-10 websites and report what I find.

Happy holidays.

John Stewart
Executive Director, NPRC

Standing Desks – Are They For You?

Standing Up for Standing Desks!
By John C. Stewart

There are two types of individuals who start looking at standing desks – those who are basically healthy and wish to remain so, and those who have one or more physical ailments such as a bad back or temporary leg problems (that’s me) and hope that one of these desks will help alleviate their problems.

This is the Apex model that I ended up purchasing.

Having just gone through my second hip operation in the past four years, as well as suddenly experiencing some lower back pains, I fall into the latter group above.

As a result, I started doing some basic research on what I called adjustable desks. Ultimately, I ended up purchasing one of these new desks and this article is about my experiences, and offers some tips for others who might find themselves doing similar research.

First, there are indeed “adjustable desks” that actually replace your current desk or workstation. Some of these desks are fancier than others, but most are basically rectangular desks that come in various laminate colors, and they typically measure between four and six feet in width. These desks can be automatically raised and lowered to accommodate you whether you are sitting in a standard office chair, or when you choose to work standing up.

Although they appear simple and possibly very plain, these types of adjustable desks can end up being far more expensive that the desk-top models I was looking at.

In almost all cases, these height-adjustable desks are raised and lowered electrically by pressing a button on the front or side. Some of these desks controls can get pretty fancy (and expensive) and offer “pre-sets,” meaning that once you have found the “perfect” height for standing and sitting, you can store that setting. Many of these desks also feature multiple USB ports as well as other outlets for plugging in various devices.

Selecting an Alternative

I quickly eliminated considering one of these standing desks because I already have a large office desk that I like, and I am a creature of habit. My desk is a fairly large “U-shaped desk,” with cabinets and shelves behind me and is basically a full-size wrap-around piece of furniture that I was not willing to give up.

What I was really looking for was what I would refer to as an “adjustable desk stand,” or ADS. I just made up that acronym because as I did my research I found that even the manufacturers have a very difficult time from a marketing standpoint when it comes to clearly distinguishing between what are truly two distinctly different types of devices – (1) Height Adjustable Stand-alone Desk – An entirely separate desk that replaces a previous desk that raises and lowers as opposed to (2) A Height Adjustable Desk Stand – an adjustable desk “stand” which is a separate piece of furniture designed to sit on top of an existing desk.

In the fully lowered position, the new desk top sits 5.5″ above the “old” desktop.

Almost by definition, An ADS is a separate piece of furniture that is designed to sit on top of an existing desk. It can be quickly and easily raised or lowered to accommodate your requirements.

ADS devices should not be considered mobile devices that can be quickly placed and then removed from the desk top. They are substantial enough in both size and weight that you shouldn’t plan on casually lifting them off your desk and then replacing them two hours later.

Anyway, I pretty much knew early on that I wanted an ADS so I began to refine my search.

Searching Out an ADS

It is hard to believe, but if you visit Google and type in the search phrase “standing desks” you will end up with 24,000,000 results! Let me tell you something, if you can’t find what you want in the first 2-3 pages you’re probably a bit anal, and the rest of this article is probably not for you. Better yet, just take a look at the two links listed near the end of this article. My apologies to all the other companies out there selling similar products, but I am not a patient person. I have a life to live and in the short time I have remaining I will not be spending it researching desks.

The trick in using a standing desk is finding that “perfect” height for your size. It does take some considerable amount of time to find that “perfect” height. To be honest, I am still looking for the right height for me.

Since my current desk set-up relies on two 21” Acer monitors side-by-side, my new ADS had to accommodate the same. I also needed a desk-top with room not only for the monitors but also some front to back space  on which I could place stuff like folders, notes, calculators, coffee cups, etc.

My full U-shaped desk is often a picture of utter chaos, so I needed some room on my new desk-top to spread out. As it turns out, front-to-back space was not an issue in making my final decision.

Most of the basic desk models I looked at came in three basic widths – 30”, 36” and 48”. The latter was overkill in my book, and a 30” width desk is simply too small to accommodate two monitors sitting side-by-side.

I will note (as you can see in the photos) that my monitors are angled slight towards each other. Even though the two monitors measured horizontally measure approximately 42” in width, their stands are centered and thus two 21”+ monitors can easily fit on a 36” wide surface. If by chance you use three monitors on your desk, you will definitely need a 48” wide ADS.

Electric or manual?

The Varidesk model appears to be solid and well-built but it did not offer the electric up and down feature.

After conducting less than a thorough research, I ended up choosing an electric model made by Apex. Even though I work out at a gym 2-3 times a week and can easily bench press 225 lbs. (that’s me bragging!), I really didn’t want to exert myself raising and lowering my new ADS, no matter how little effort or strength was required. I wasn’t absolutely locked into an electric desk, but if price wasn’t a major consideration electric was going to be my choice. As it turns out, at least in my case, electric also turned out to be less expensive.

The non-electric ADS desks are spring-loaded, and it is just a question of gripping a lever on each side and either lifting-up slightly or pushing down. Very little exertion is required, at least so they promise.

No big deal either way. It occurs to me now, however, that if the electric motor goes out it is going to be a hassle to get it fixed or replaced, and in the meantime you are going to be stuck with a desk that you can’t adjust. I suspect that a manually adjustable desk would present a lot fewer problems in this regard.

Minor Cautions and Considerations?

A Rubber Mat – First, you are going to need a firm, rubber floor mat to provide for a cushioned support while standing. I don’t suggest trying to stand for any length of time without one of these mats. However, when ordering a mat, you also need to make sure that it is firm enough to accommodate a desk chair on wheels. (UPDATE 11-21-17) – I must admit finding an adequate rubber mat that is comfortable to stand on while at the same allowing a desk-chair to freely move on top of the mat has been a much bigger challenge than I thought. I’m still looking.

Wireless Keyboard – For efficiency sake, you’re also going want to purchase a wireless keyboard and mouse if you don’t already have one. Standard keyboard and mouse cables may not be long enough in some scenarios. The wireless feature also allows for much easier position between the ADS keyboard tray and your normal keyboard tray or standard desktop. I bought a wireless keyboard and mouse for $19.95 on sale at Office Depot.

A Chair Cushion – You may also want to consider purchasing a 3-4” thick chair cushion, but not for the reason you may think. I am not suggesting a cushion from an enhanced comfort standpoint, but rather it is based on the fact that the ADS desk top, even when fully lowered, is approximately 5-6” higher than your current desk height. I discovered that many adjustable desk chairs may or may not offer that much additional adjustment in height to accommodate the new desk height, even when the ADS is in the lowest position. I have not yet purchased a cushion but it is worth considering. Also, I have not settled into a routine yet to decide when I am in the seated position whether I like my keyboard on the original beneath-the-desk platform or located on the ADS keyboard platform that comes with the new desk.

Coffee Cups and Cell Phones – Used coffee cups and soda cans typically don’t present a problem on the standard desk top, but your new ADS calls for you to give a little extra attention as to where you place items on your desk top. When standing, it is not unusual to casually place a cup, a soda can or even a cell phone on the desk top directly beneath your new ADS and then forgetting you placed the item there. If you lower the desk and forget about these items you can have a real mess on your hands when the items are crushed, the liquid spills out, or your cell phone ends up being much thinner than it was minutes before!

Health Benefits and Considerations?

I could have easily placed this section at the top of the article, but I assumed that if the original headline caught your eye you’ve probably already read about the numerous health benefits of standing desks.

Common sense strongly suggests that sitting on your ass six to eight hours a day staring at a computer monitor simply cannot be healthy for you. It might be necessary, but it still isn’t healthy. Of course standing for that same period of time in a single spot, at least without the benefit of a cushioned floor mat, probably is not going to be much better.

Nonetheless, if you must spend this amount of time working at one or more computer terminals then an ADS might improve your overall health. One of the “health” articles I came across during my brief research suggested that, “If you’re not getting out of your seat much during the day, you really are hurting your body. If you’re sitting 8 or more hours a day, your risk of dying prematurely increases by about 15%.” Go here for a fairly well balanced article on the pros and cons of standing vs. sitting: http://lovework.standdesk.co/standing-desk-vs.-sitting-desk-which-is-best-pros/cons

If you’re want to be frightened to death and convinced that you should buy one of these desks in the next 10 minutes you need visit a site named Mercola – Take Control of Your Health. One of the many health and fitness articles they feature includes a great article titled, “Improving Your Health by Ditching Desks and Chairs.” This is the link to that site: https://articles.mercola.com/sites/articles/archive/2016/11/27/sitting-standing-moving.aspx

My Final Choice

After talking and bragging around the office to anyone who would listen to me (they never do) that I was going to get a standing desk, I finally started some serious research. To be brutally honest, a few years ago I would have first posted my interest in this subject on the old Printowners list serv, and I would have asked subscribers for their help.

Unfortunately, I have been permanently banned from the list by the NPOA BOD because they apparently are worried about losing more members if I am allowed to post questions and comments. They worry too that exposure to another association or industry consultant somehow represents a threat to their own association. Sad – no, make that pathetic!

Now back on track – So, anyone who conducts any type of serious research is going to stumble upon what I believe are two of the leaders in the field of stand-up desks:

1. Varideskhttps://www.varidesk.com/products/ (Pro-Plus 36 Black, $395.)

2. Apex Deskshttps://standingdesknation.com/collections/electric-adjust (Vivo Electric, $298)

I tend to shop based upon features and not price, but my final choice offered the best of both worlds in my opinion. I ended up selecting the Apex Desk because the “electric” feature appealed to me. The bonus for me was the APEX desk was actually cheaper as well. We purchased it from Amazon and paid slight less than the list price noted above. I am sure that either of these two devices can be readily purchased for less than list price, especially if you are good at such things.

The Apex desk was literally plug and play. No assembly required, but because of its weight and bulky size it did require two individuals to place it on my desk.

If you have any questions, don’t hesitate to email me at either membership@printingresearch.org or johnstewart@quickconsultant.com

P.S. By the way, if you’re considering buying or selling your shop or you are just interested in company valuations, visit our home page and check-out some of the other articles we have posted in the past few weeks. 

Owner Offers Praise for Surveys

Sometimes we seem to hear more complaints that compliments, no matter how hard we work… so, when we get a short email offering praise we are not going to let it slip quietly into the night <g>. Instead we want to share it with you:

“Hi John, just a short note to thank you so much for what you and NPRC do. It has always been worth the few minutes it takes to do your surveys in order to get the wealth of information your reports provide. From which machines perform best and their features, to salary/wages and possibly most important – pricing! It is all great information to help us run our business.”

Jennifer R. Jordan, 
Jorndan Enterprises, Inc.
SD Visual Images
Marlborough, MA

Don’t Make This Mistake…

Let’s Do A Trade…

An Information-Packed Study In Return
For Approximately 1-Hour of Your Time!

Yours FREE when you complete our survey!

Too many owners tell us that they had every intention of completing this key industry survey, but they kept putting it off and putting it off… Suddenly, the deadline came and went and they missed this opportunity.
 
Not only do owners tell us they get angry at themselves for having to pay for a study they could have received for free, BUT they missed the chance to test out their own estimating systems to compare their prices to national pricing trends! Many owners tell us the mere completion of the survey itself is a great management exercise and tool!
 
Why on earth would you pay $150 or more for this information-packed study when you can receive it for FREE simply by completing our survey and returning it by the published deadline! Survey forms must be submitted no later than Nov. 20, 2017. 
 

Based upon feedback suggested by printers just like you, This soon-to-be- released study will provide you with the very latest data for pricing products such as booklets, newsletters, flat sheets, business cards, digitally printed envelopes, as well as mark-up practices and discounting methods currently being used in use in our industry.

Best news yet is that this study will be yours absolutely free if you complete our on-line survey and submit it by our Nov. 20, 2017 deadline. 

Easier than ever… Not only have we shortened this year’s survey by 30%, we’ve made participating in this survey easier than ever. Just follow the two easy steps as outlined below:

Step #1 – Download and print-out our PDF Survey Worksheet, and complete it at your leisure (Deadline for Survey is Nov. 20, 2017). We strongly urge you not to skip this step.We use specific algorithms to test all survey forms and we reserve the right to reject any survey where it appears that this step has been skipped. Once you have completed your worksheet, it will take approximately 10 minutes or less to enter your data into our on-line survey form.


Step #2
 – Once you’ve completed the worksheet, click the button below and that will take you to our website where you will enter your answers from the worksheet into our on-line survey form.
 
 
As with all our reports and surveys, we guarantee 100% Confidentiality of all data received. Once verified, all identifying information is removed from our data base. Only one individual (John Stewart) ever sees or has access to that database. 
 

NPRC Reveals Findings of Latest Survey

Dear Fellow Printer,

First, we want to thank you if you participated in our recent survey about “Industry Surveys.” If you haven’t participated there’s still a couple of days left to participate. Go below for a link to our latest survey.

Second, we’d like to tell you what fellow printers told us and how we plan to react to the many suggestions we’ve received.

Independents vs. Franchises – 80% of our respondents were independents, while most of the rest were franchisees. About 48% of our respondents were members of one or printing associations. The rest claimed no association affiliation.

Participation Rates – Approximately 90% of our respondents have previously participated/completed one or more industry surveys, with 65% have completed or purchased three or more surveys/studies. It is obvious that our list is heavily skewed towards printers who tend to be far more active and involved in the industry than the industry as a whole. We may in fact be preaching to the “choir” and we are not sure how to correct that.

Popular Studies – When it comes to surveys printers would most like to see published, the clear winner was a “Color Digital Printing Pricing Survey.” Following close behind in terms of popularity were “Financial Benchmarking Studies” and a “Bindery Services Pricing Study” Based upon that feedback, we will attempt to published the three studies noted above in the next 6-18 months.

Serious Misgivings – We do have serious misgivings about pursuing or publishing a new Financial Benchmarking Study. In my mind, and that of many top-notch printers and consultants in the industry, there is no study of greater potential value to the average printer than this specific study. And yet, recent participation levels are the lowest they have ever been and the sales are equally low. Without sufficient sales, we simply cannot continue to publish this study. Maybe we’ll change our mind but at this point this study may never be published again.

Reasons for Not Participating – When we asked printers 
who have not completed a survey in the past three years the reason why they had not done so, almost 73% of respondents told us,
“I never could find the time to complete a survey.” Approximately 37% told us, “I never

Survey Deadline is Friday – Please help us serve you better. The deadline to complete this 3-minute survey is this Friday. We’ve heard from about 104 printers but we’d still like to hear from you as well.thought the resulting studies related to my size shop.” Based upon that feedback we are going to make a concerted effort shorten surveys, and emphasize in our marketing efforts that these surveys are based upon an almost equal distribution of very small firms with sales in the $250,000 to $500,000 range as well as fairly large firms reporting sales in the $1.2 to $1.5 range.

Increasing Participation Levels? Survey participants suggested “shortening surveys” (55%) and “offering special incentives” (47%) as the two major methods for increasing participation levels. Since we already offer a FREE study to every participant we’re not sure what else we could offer. A special discount coupon on NPRC publications is a possibility, and we are of course open to other suggestions. Almost 26% of respondents suggested sending out more reminders – that was surprising and reassuring, especially since it is contrary to what we often hear from folks who tell us we send out too many reminders!

Pricing of Studies – Approximately 72% of all participants suggested a price range of $85-$105, with another 21% suggesting a range of $110 – $135. Knowing how expensive and time-consuming these studies are to produce, and recognizing that we receive virtually no industry sponsorship, we are inclined to stick with the $110 – $135 range.

Editorial Board Volunteers? – Approximately 30% of survey participants indicated they would be willing to serve on an editorial board and provide assistance in developing one or more surveys. We appreciate those who volunteered and we will be in touch with them shortly.

SURVEY DEADLINE – FRIDAY, OCT. 6TH! 
Click Here to Take Survey

Free Excerpt From Financial Benchmark Study

Critical Financial Data About Industry…

NPRC Releases Free Excerpt From
2017-18 Financial Benchmarking Study

The 2017-18 Financial Benchmarking Study, sponsored by Accuzip, is by far the most valuable, information-packed study publichsed in the printing industry, especially for firms with sales ranging between $400,000 and $3 million. It is filled with useful graphs, charts and real-world profit & loss statements (and balance sheets) depicting, among other things, the key ratios that distinguish the “profit leaders” from the “profit laggards” in this industry.

 

Click on the artwork above or click here to read the entire PDF excerpt

Because we believe so strongly in the value of this document, we have decided make available a PDF containing an excerpt from the Executive Summary for this key industry report – just to give you an idea of what it contains. Authored by industry financial expert Larry Hunt, Hunt tracks and explains the ups and downs and the successes and failures that have occurred in this industry for more than 30+ years. 

You can of course purchase the entire report by visiting the NPRC Bookstore.

10 Suggestions for Increasing Company Value

Recent Analysis Reveals Huge Disparities in Values
Among Firms Reporting Almost Identical Sales!
By John Stewart

35 Valuations – Even the small portion of valuations excerpted above illustrate the huge variations in valuations for printing firms in this country. For explanations of the
“headers” please visit the full chart at the end of this post. As to why the huge variances?
Read further…

Rules of Thumb for Valuations

In the old days, one of the most popular rules of thumb for determining what a printing business was worth was based upon nothing more than a multiple of sales –one times annual sales was probably the most common, but sometimes it went higher. The amazing thing about that rule was that it never took into account profitability or what a working owner was able to take out of the business.

Other valuation rules that are still floating around today may be a bit more logical in that they take profitability into account. Some rules rely on a multiple of excess earnings, and some modify that by adding in the value of net assets. Still other rules use a average of owner’s compensation over a period of time multiplied by a factor between 2-6. Unfortunately, many owners don’t understand the term “excess earnings,” nor do they fully understand terms such as “owner’s compensation,” or “earnings multipliers” and thus have great difficulty determining the value of their own firm.

“Print Shop For Sale” Published

In 2007 Larry Hunt (a highly respected printing consultant) and I published a book titled, “Print Shop for Sale.” PSFS, a 280+ page publication, has been reprinted numerous times and at last count had sold more than 3,800 copies. At the time it was published, “Print Shop for Sale” was the only book published in the printing industry dedicated strictly to valuing printing firms. It remains so today. As noted on the cover of the book, it is intended to provide readers with, “A step-by-step guide for establishing a fair market value for your printing firm, or one you are looking to buy.”

Writing the book with Larry was a true labor of love. Neither of us imagined that it would eventually lead to numerous inquiries from printers around the country asking if we would value their firm. Naively, we assumed our $89 book would do the trick. We figured the book did a pretty good job at explaining the “Modified Excess Earnings” approach and how to use that to arrive at the value of a printing firm.

Wow, were we wrong! We began getting calls from both independents and franchises alike asking us if we would prepare a valuation for their firm. Larry decided he would prefer to retire early and play golf. I don’t play golf, but I do own an airplane which is very expensive to operate and maintain, thus I continue offering valuation services when asked. <g> (Interestingly enough, after we evacuated the plane during the last hurricane we returned to Melbourne only to discover that we had developed a crack in the engine block and we are now looking at a $37,500 cost for a re-built engine!)

When an independent or franchise owner would call about valuations one of the first things I would recommend is that they should buy the book and gather together the various forms suggested in the book and then provide answers to our valuation questionnaire. If they still had questions then they should call me.

Sometimes, you just have to do the “hard” work. There are no “rules of thumb” or shortcuts to valuing most firms.

Interestingly enough, many of the printers told me they had already bought to book but still wanted me to do the work. They wanted more than “Print Shop for Sale” had to offer.

Some owners, although telling me they had purchased the book, admitted they were not really into the “numbers” and wanted me to do the work. Some wanted a detailed valuation of their firm and were willing to pay the price. Other owners had found a business they were interested in buying but wanted my help in coming up with a “fair market” offering price.

Avoiding Valuation Pitfalls

Since that time, I have conducted more than 450 valuations and I continue to provide valuation services today. However, I am NOT trying to sell valuation services. What I do want to share with you are some general comments about valuations and why some owners seem to be able to receive “top dollar” for their businesses, while other owners end up, even after 10-15 years of operation, end up owning business that has little if any value. The result, they work it to the very end and then close the doors.

For those of you who used to read my columns in Quick Printing magazine, or have read some of my recent articles posted on the National Printing Research Council website (www.printingresearch.org) you know that I tend to rant and rave sometimes just to make a point.

That’s what I am going to do with the column – Offering up some “rants” and “raves” about company valuations and what causes some to be valued extremely high, while others end up being shockingly low.

First, let me observe that in today’s world, it does strike me that many of the owners that I encounter are far more realistic than they were in the past as to what they think their business might be worth. Buyers also strike me as being better informed and more realistic as to what they are looking for and what they are willing to pay. You’re probably not going get away with the old, “Hey, this business is a goldmine and someone with some real marketing skills and who is a good sales person can easily take this business to the next level.”

Unfortunately, there is also a substantial number of owners who have worked more than half their life to build a business, only to discover that it is worth far less than they thought it was. They had put most of their eggs into one basket (the business), only to discover too late that they had been making poor decisions almost from day one – decisions that would really hurt them in the long run.

Low Valuations and Lost Friends

The sad thing is that I have actually lost a couple of friends along the way as the result of valuations that came in much lower than what they had expected, and they blamed me for the low valuations. They had been counting on a valuation of $$$ for the last few years, and then I prepare a valuation based upon the numbers they provided and I end up telling them their business was worth less than 50% of what they thought.

Another owner bragged about how much money he was able to take out under the table and thus avoid taxes. When I valued his firm, and told him we couldn’t use that “stolen cash” to value his business he was shocked!

Still another owner bragged to me about his excellent package of equipment and that he could produce 95% of all his work in house. What we discovered was that he was asset-rich and excess earnings poor. He had accumulated far more in equipment than he really needed to produce his annual sales.

Sure, the equipment was really neat, and worked extremely well, but a lot of it was only used 2-3 times a month and for the remainder of the time it sat in the corner collecting dust. Excessive amounts of hard assets, as a percent of sales, combined with low excess earnings, typically produce low company valuations. Most savvy buyers are not interested in buying all of your fancy assets, but rather what those assets can produce in terms of excess earnings!

The Worst Case of All!

Of course, the worst case of all is to put a fairly-valued firm up for sale hoping to get lots of offers only to hear dead silence. Even the best, most logical, common-sense valuation doesn’t guarantee and that that you are going to find qualified buyers in your market willing and able to pay your asking price. Bottom line, that unlike in the residential real estate market, there really isn’t much of a market in which to advertise, let alone sell printing businesses.

Special Editorial Note: Actually this entire article is an “editorial note” <g>, but I want to point out the values assigned to various businesses noted in this article are not meant to imply that these businesses sold for those prices, or in fact sold at all! Many businesses just never sell. Some are taken off the market by the business owner or broker and some never get even a nibble because of excessive value placed on the business by the owner, a business broker and yes, even a consultant. 

“Print Shop for Sale” quotes a well know author on valuations as saying:

“Despite the commonly held belief that markets are efficient, and efficient market does not exist for privately held businesses… unlike the NYSE or the NASDAQ, there is no place to buy and sell privately held businesses aside from the business brokerage community, which is small in scope. As a result, it is very difficult to determine what a privately held business is worth in the marketplace. This lack of an efficient market presents a critical need for valuation services.

This study is “worth its weight in gold,” say many of the profit leaders in the industry. Unfortunately, this may indeed be the last edition of this study to be published in the industry due to a lack of support by printers.

Let’s face it, this industry, taken as whole, is also a very mature industry. Sure, we’ve evolved in the products we produce and how we produce them, and we’ve added more services and products but it is difficult to argue against it being a mature industry. To claim that the printing industry offers up boundless opportunities for sales, growth and profits has to be taken with a grain of salt.

When it comes to valuations there is one thing you don’t want to do and that is to be caught with “your pants down” when you are are approached by a competitor asking, “Have you guys ever thought of selling your business, and if so what do you think it is worth?” That’s not the time to be scrambling around to come up with some value.

To be blunt, valuing your own firm ought to be done every couple of years, just like to update your statements of personal net worth – Of course you do that, don’t you? If the value of your firm has continued to grow over the years then congratulations! If it hasn’t, then do something about it. See my list of “Key Take-aways” near the end of this article.

35 Randomly Selected Printing Firms

Recently I was looking for a specific chart I prepared a few years listing and comparing company valuations but for the life of me I could not find it. So I went searching out some of hundreds of valuations I have conducted in the last 7-10 years and started opening up one folder after another, retrieving basic information from each valuation.

I extracted data for 35 firms. I could have easily extracted 50 or even 100! However, I know from experience that once I passed the 25 count or so, that the average and median data I was searching for would change little if any.

I assigned a fictional name to each company folder I opened, and then retrieved the following items:
       • Annual Sales
       • Calculated Excess Earnings
       • Value of Net Assets* (sold)
       • Excess Earnings Multiplier used in the valuation
       • Estimated Valuation of Firm

*NET ASSETS, as defined in the accompanying charts, is the true, market value of the essential assets (equipment, furniture and fixtures) transferred and sold to the buyer. This value is not necessarily “book” value, but rather the value that a savvy buyer would pay if he or she had to go out on the street and replace the equipment used to produce the sales in question.  As a general observation, many owners want to assign a much higher value on their equipment package than would be warranted in the real-world marketplace!

 

For purposes of comparison and sorting, I also calculated the percent of net assets to annual sales as well as the value of the firm expressed as a percent of annual sales. Below is one of four charts I prepared. It illustrates, without sorting, the first 17 firms for which I recorded data. Note that we eliminated two “outlier” firms (#4 and #17) – One was worth 110% its annual sales (certainly possible but still a clear “outlier”) and one firm that actually had a negative value – that scenario is also quite possible, but it too was an outlier that would have otherwise distorted our average.

SPECIAL CAUTION: Be advised that the above company names are totally fictional and have no relationship whatsoever to firms that might coincidentally have the same name. You don’t know how hard it is to actually come up with a fictional name without a real firm name coming to mind.

Of the 35 companies for which we retrieved valuation data, the smallest firm we uncovered (Instant Copy) reported annual sales of $230,256 and was eventually valued at $114,905, or 49.9% of its annual sales.

The largest firm in our selection of 35 firms (Signature Offset) reported $4,199,105 in sales, and it was ultimately valued at $931,116, or 22.4% of its annual sales.

All Firms Ranked – Although the above chart reflects the remaining 18 firms we analyzed, we have included at the end of this article a single table ranking the above firm in terms of calculated value to annual sales.

As you examine the two tables above, you can’t help but notice the range of valuations based upon annual sales. Some firms are valued extremely low at 3-29% of annual sales, while other firms, those near the top, are valued at 52-75% (and some even higher) of annual sales.

Each of the valuations were subjected to the same valuation tests and formulas. You would like to think that the highest valued firms were those with the highest ratio of “Excess Earnings” to “value” but that is not always the case. The same expectation might be said for “Net Assets to Value” but that too cannot be said. What we can say is there are so many variables when it comes to preparing a valuation that it pretty much precludes the ability to offer up a neat “rule of thumb” that you could quickly apply to just two or three ratios.

Below is the entire list of 35 firms sorted by their value as a percent of annual sales:

Partial Definitions of headers:
   Annual Sales – Self explantory
   Excess Earnings – Total owner’s compensation less “fair market salary” for working owner. Explained in detail in Print Shop for Sale.
   Net Assets – Hard assets (“real world” street market value of equipment, furniture & leasehold improvements) transferred free & clear at time of sales. Does    not include cash, AR, etc. as those normally are retained by seller.)
   % Of Assets to Total Sales – A comparative ratio of Net Assets to Sales.
   Earnings Multiplier – Multiplier and score arrived when sellers complete valuation questionnaire as explained in Print Shop for Sale. Questionnaire is also available for inspection at our Valuation Services Page on our companion site.
   Estimated Valuation – This is the value (we sometimes determine a range rather than a specific figure) that we arrived at when applying and using the Modified Excess Earnings Approach.
   Value as a Percent of Sales – We divided estimated value by annual sales to arrive at this ratio.

Key Take-Aways for Increasing Value

While I cannot offer up hard “rules of thumb,” I can still rant a bit and offer up suggestions for improving the overall profitability of your firm and thus its value. Some are common sense, others are not as obvious:

1. Monthly Financial Statements – Generally speaking, the most troubled firms I have encountered over the years, including many of those with a low valuation as a percent of sales, are those that either don’t receive monthly financial statements, or if they do they don’t read them! Some owners just don’t seem to care too much about the “numbers” and it shows when it comes time to value their firm. It’s probably preaching the the choir, but my guess is a vast majority of the most troubled firms in this industry have never, never examined an Industry Financial Benchmarking Study  and that is a tragedy. (This link directs you to our bookstore where this key study can be purchased)  Hell, Larry Hunt’s Executive Summary is a treasure trove of suggestions for becoming a profit leader! Do I feel sorry for these folks? Not a bit. That’s a rant!

2. Properly Formatted Financial Statements – Of Course, you can get financial statements every month, but if they are not formatted properly you’re not going to be able to find the key info that you need to manage the business. At the very least, your financial statements need to breakout expenses into three basic categories – Total Payroll, Cost of Goods and Overhead Expenses. When it comes to payroll, you also need to be able to quickly distinguish payroll costs and benefits paid to a single owner as compared to what is paid for all other employees. This is critical info required for a valuation. P.S. If both husband and wife work the business, one of those salaries needs to be shifted to general payroll. By the way, it is up to you and not your CPA or bookkeeper to determine how your P&L should be formatted.

3. A Huge Mistake Made by Many – Far too many owners allow either their CPA or their internal bookkeeper to provide raw dollar figures without providing them with an adjacent column reflecting the the actual ratios or percent of annual sales that each cost item or category represents – These are critical ratios you need to commit to memory and if someone isn’t giving these ratios to you then fire them! These ratios, whether good or bad, can be used to compare to the ratios for profit leaders and laggards found in industry benchmarking studies.

4. Excess Earnings vs. Owner’s Compensation – “For a business to have any appreciable value to a potential buyer, it must produce a cash flow above and beyond what would be required to pay a fair market salary to the new owner or manager. It is this ‘excess cash flow’ or ‘excess earnings’ that is used to purchase the business from the former owner.” (Excerpt from Print Shop for Sale.) If you’re unfamiliar with this principle or don’t understand it you need to hit the books! If you think someone is going to buy your business and not take out a reasonable salary while he/she uses the profits of the business to pay you off you are sadly mistaken. That new buyer is entitled to pay himself/herself a fair market salary and still have enough money left over to pay you! Where is that money?

5. Truly Understanding Owner’s Compensation – Most owners don’t fully understand what is meant by the term “Owner’s Compensation.” “Owner’s Compensation” is defined as, “all the money that is left over in the business after covering all expenses of the business (cost of goods, payroll and overhead expenses) but before paying the primary working owner a salary or giving that owner any fringe benefits.” “Owner’s Compensation” DOES NOT include combined salaries or benefits paid to a spouse or partner. You should be able to calculate your owner’s compensation quickly and without trying to play games with the numbers.

6. Blood Sweat and Tears Don’t Count – Just because you and your spouse or partner have worked the business very hard for so many years plays little if any role in its value to others. In “Print Shop for Sale” we discuss the “Endowment Principle” – “The endowment principle suggests that an owner of an object tends to attribute a higher value to that object because he owns it. Consequently, the owner of a business may think that the business has a higher value than it actually does, merely because he or she started it, nurtured it, etc.” That principle is often the cause for the vast differences in valuations prepared by sellers as opposed to those prepared by potential buyers.

7. Whatever You Do, Clean-Up Your Balance Sheets – In 90% or more of sales involving small businesses, the seller typically keeps or retains all cash and AR and assumes responsibility for paying off all short and long-term accounts payable, including notes, loans, etc. (Operating Leases remain on the books as an expense) As for all those special liabilities or notes payable to owners or relatives forget about them! No buyer is going to pay-off those types of liabilities. If the company owes you money you better take care of it now because it won’t happen at the time of sale. The same is true for fictional entries like “amortization” or trade secrets or other ill-defined items listed as assets.

8. Increasing Value by Decreasing Costs – You may think you are running a tight ship. Chances are you’re not, certainly not when compared to the real “profit leaders” in this industry. For every $10,000 in annual expenses that can be trimmed means that the value of your business can increase by anywhere between $25,000 and $60,000!

9. Inability to Make Hard Choices – Sometimes, owners with the best of intentions fail to make decisions that would almost immediately enhance the value of their business. Terminating bad apples or at least apples that are starting to rot. Like it or not, almost every company with six or more employees has one of these employees. Failure to act on the obvious ultimately leads to lower excess earnings and lower valuations. It is also possible that you have a great team of long-term, very loyal employees, all of who are highly valued AND YET it is also quite possible that you may have one more employee than you really need. (for a good article on Sales Per Employee and how it is related to profitability, go here.) If you terminate just one $40,000 employee that could easily increase the value of your firm by $120,000 to $200,000! But you can’t do that at the very end and expect to benefit from that increased value!

10. Spending Too Much Time on Social Networks – While I rarely go out in the field these days, I can tell you that many owners I know spend an enormous amount of time on social networks. In many respects, I believe Facebook, Twitter, LinkedIn as well as various listservs can be tremendous time-wasters, preventing even the best-intentioned owners from really pursuing what needs to be done. What’s fun to do, is not the same as what needs to be done!

Thanks for Reading

Tired of my rants? I understand if you nod “yes.” If you spotted a couple of grammatical mistakes or missing words I am constantly reproofing so if you notice a mistake chances are good it will be corrected soon. On the other hand, if you find something wrong or unclear let me know ASAP and I will correct it. For those that finished this article I want to say thanks as well. I welcome your comments, although I can’t promise that I will be able to get back to all of them. You can email me at johnstewart@printingresearch.org

SPECIAL NOTE – Last week, we launched a special 22% Discount Sale on all NPRC publications. The offer was originally set to expire Sept. 26th, but that offer has now been extended until Sept. 29th! You must use “Irma2017” for your coupon code. “Print Shop For Sale” is excluded from this special offer.

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 New Digital Printer Survey

NPRC has just released its newest study – The 2017 Survey of Color Digital Printers, a 60-page report providing average and median ratings and performance data for 36 different digital devices. The new report is based upon input received from more than 280 survey participants.*

If you’re looking to upgrade to a newer digital printer this study will prove invaluable. It provides weighted ratings for 19 classes of digital printers, plus ratings and recommendations for nine different envelope printers, as well as the conveyors and feeders that are often sold with these devices.

“Another great report! The latest Color Digital Printer Survey allows me to evaluate all the current machines on the market and allows me to consider what machines can work and most important which machines to avoid. Not to mention information about service calls, envelope printers, click rates and all the other data. Each time I read one of NPRC’s Survey Reports, I am able to take away many actionable points to better my business and bottom line. I am grateful for the efforts of John Stewart and Bob Hall! Keep it up.”
                  Eben Miller, Miller Printing, Amsterdam, NY

The new report provides user ratings and data for a variety of devices manufactured by Canon, Konica Minolta, Ricoh and Xerox. We report the overall rating for 19 different classes of printers, plus average and median ratings as to whether users would recommend the specific device to others. Discover for yourself which currently available digital printers rate the highest and which ones received low scores from our participants.

“Thanks so much to the folks at NPRC and for what you do. It has always been worth the few minutes it takes to do your surveys in order to get the wealth of information your reports provide. From what machines perform the best and their features, to salary/wages and possibly most important – pricing. It is all great information to help- us run our business! Thank you.”
Jennifer Jordan, SD Visual Images, Marlborough, MA

To place your order for this or other reports, visit the NPRC Bookstore. This new publication is now available for processing and shipping. As always, this study/report is sold on a 100% money-back guarantee. No questions asked. If you believe you participated in this survey please read notice below.

Retail Price (PDF): $114.95
Retail Price (hard-copy): $124.95

NPRC Price (PDF): $57.50
NPRC Price (hard-copy): $67.50

Survey participants received special emails containing a download link on Friday, Aug. 18 and again on Aug. 23. The subject line was: “Your digital color copier survey available now.” Please check your spam, deleted and trash folders carefully. If you are not sure whether you participated or not, please visit our home page and check-out the list of participants.

List of Digital Printer Survey Participants – Are You Eligible?

The list below is an alpha listing by company name of firms who participated in NPRC’s recent 2017 Survey of Color Digital Printers and thus are entitled to a FREE PDF of the final report.

All participants, as listed below, were sent an advance notice email, plus two special emails on Aug. 18, 2017 and Aug. 23, 2017 advising them where to go to download their complimentary PDFs. 

If you do not recall seeing such an email we encourage you to go back to your “trash,” “spam” and other miscellaneous folders and check  for an email sent out on Aug. 18, 2017 with the subject line: “Your Digital Color Copier Survey Available Now!”

Please do not call us and request that an additional copy be sent until you have conducted a thorough examination of your email records. We do our very best to make sure all participants are sent a FREE PDF of these studies, but we don’t have a lot of sympathy for firms who casually delete emails and then ask us to send another copy.

Company City/Town State
A&B Digital Printing New Liskeard CAN
A. Carlisle and Co.  Reno NV
Abbotts Printing Inc Yakima WA
Accel Printing and Graphics Mount Kisco NY
Accurate Printers, Inc. Norcross,  GA
Action graphics Charlotte NC
Action Print Helena MT
ADPRO LITHO, INC MUKILTEO WA
Advanced Printing Stuart FL
Advantage Business Forms Rialto CA
ADVANTAGE Marketing and Print Auburn CA
Aiea Copy Center Aiea HI
AIM Mail & Print Center Redondo Beach CA
Alachua Printing Alachua FL
Allegra Charlotte NC
Allegra Alpena Alpena MI
Allegra Hamilton Hamilton MI
ALLEGRA Marketing Print Mail Alsip IL
Allegra Marketing Print Mail Tampa FL
Allegra Marketing, Print & Mail Rolling Meadows IL
Allegra Naples Naples FL
Allegra Print Marketing and Mail Plymouth MI
Alphagraphics Plano TX
AlphaGraphics Mokena IL
AlphaGraphics San Antonio TX
Alphagraphics Alexandria VA
AlphaGraphics Roseville CA
Alphagraphics #16 Salt Lake City UT
Alphagraphics #450 Brentwood TN
AlphaGraphics 711 Dallas TX
AlphaGraphics Boston Boston MA
Alphagraphics Cleveland Cleveland OH
AlphaGraphics Downtown Raleigh Raleigh NC
AlphaGraphics Kansas City Kansas City MO
Alphagraphics Los Angeles Los Angeles CA
AlphaGraphics Mission Viejo Mission Viejo CA
Alphagraphics of Carmel Carmel IN
Alphagraphics of the Twin Cities Minneapolis MN
AlphaGraphics US333 Bannockburn IL
AlphaGraphics-Savannah Savannah, GA GA
Alta Systems Inc Gainesville FL
American Harwood hts IL
American Printing & Promotions Manassas VA
Amity Graphics, Inc. Bemidji MN
Apple Printing Co. Buford GA
Arc Reprographics, Inc. Absecon NJ
Arrow Printing LLC Waterford MI
Arrow Swift Printing & Office Supply Greenville MI
Arthur Printing Cape Coral FL
ASAP Printing Okemos MI
B & B printing kewanee IL
Bart Nay Printing Houston TX
Bayou Printing & Graphics, Inc. Houma LA
Belmonte Printing Co. Schaumburg IL
Bentley Printing & Graphics, Inc. Garden Grove CA
Blacksmith Printing & copy center, llc Wolfeboro NH
Bob’s Printing boynton beach FL
Boggs printing Hatboro PA
BOWLING GREEN PRINTING Bowling Green KY
Bozeman Printing Company Bozeman MT
Budget Print Clark  NJ
Campbell Print Center Harrisonburg VA
Canyon Copy Highland UT
Cascade Printing and Graphics Grand Rapids MI
Celestial Print & Design North East MD
Century Printing & Mailing El Reno OK
Cirrus Visual Tucson AZ
CJ Printing Highland IN
Clear Choice Printing Winchester VA
Cocheco PrintWorks Dover NH
Composite Forms Inc Port Chester NY
Copies Today Inc. Kelso WA
Copy Express Inc. Woodstock IL
Copy King Inc. Greensboro NC
copy stop/royal press white plains NY
Copycat Print Shop, Inc Wilmington NC
CopySetPrinting Des Plaines IL
COPYTWO INC. ANN ARBOR MI
CORTINEO CREATIVE DOYLESTOWN PA
CSE PRINT KALAMAZOO MI
Curry printing West Springfield MA
Curry Printing and Marketing Auburn ME
D&K Printing Boulder CO
DG Solutions  Conyers GA
Digital Printing Innovations Oshkosh WI
Dominick’s Quick Print, Inc. Ontario OR
Dsa Printing Chelmsford MA
DSIGNS Arlington Heights IL
Durel Mail & Imaging Technologies Lafayette LA
Econo Print Inc Pinckney MI
Edwards Printing Service, Inc. Dallas TX
Esprit Graphic Communications, Inc. Kennewick WA
Esterman Printing Services Cincinnati OH
Exclamarketing Miami FL
Express Printing Inc Hailey ID
Falcon Printing & Graphics, Inc. Freehold NJ
Fasprint Monticello IL
Fast Print, Inc. Fort Wayne IN
First Impressions Printing and Design Springfield MO
Fotorecord Print Center Greensburg  PA
Franklin Printing Co Inc Zanesville OH
Full Circle Printing Solutions Ellsworth ME
Furbush-Roberts Printing Co Bangor ME
Gerard Printing Elk Grove Village IL
GPI Farmington Hills MI
Graphic Information Systems Tualatin OR
Graphic Resources Woodbury MN
Gulf Business Printing San Antonio TX
Heartland Litho Monona WI
Henle Printing Company Marshall MN
Heritage Printing & Graphics, Inc. Waldorf MD
Highlight Printing Minneapolis MN
Holiday Print & Promotions Ltd London ONT
Holland Printing, Inc. South Holland IL
hudson printing carlsbad CA
Images Plus Madison WI
Impact Printing Thornton CO
Impression Printing Co., Inc. Seattle WA
Independence Press Aspen CO
Independence Press Aspen CO
Ink Spot Printing & Copy Center Inc. Frazer PA
Inklings Printing Company Lompoc CA
Instant Print Inc Inglewood CA
International Minute Press Charlotte NC
IPC Manchester MO
IPM Lithographics Inc San Diego CA
ISS Shirley MA
J & J Graphics and Design Canton MI
Jaz Press Norristown PA
J-M Printers, Inc. Crest Hill IL
John Latka & Co., Inc Westfield MA
 JS Printing   Franklin Park   IL 
JTCPrinting Needham MA
Kahny Printing, Inc. Cincinnati OH
ken’s printing co. smithfield RI
KEYSTONE QUALITY PRINTING RENO NV
KKP Printing Brampton OH
Kustom Kwik Print Owensboro KY
Kwik Kopy Frisco TX
Kwik Kopy Business Center 130 Evansville IN
Kwik Kopy Printing  Chicago IL
Kwik Kopy Printing Dallas Dallas TX
Kwik Kopy Spring Spring TX
Launch Printing and Promotions Saint Marys GA
LAXprint La Crosse WI
Lithtex Hillsboro OR
Local Copies Etc Santa Maria CA
MarketMailPrint Austin TX
Marlow Visual Communication Cornelius NC
marshall anchorage AK
Masthof Press Morgantown PA
McKinsey Printing Tryon NC
Mercersburg Printing  Mercersburg  PA
Merlin International Corp Rochester NY
Miller Printing Amstedam NY
Miller Sherwood Printing Burbank CA
Minuteman Press North Palm Beach FL
Mission Graphics Ludington MI
Modern Way Printing Ooltewah TN
Moonlight Graphics Inc Grand Rapids MI
MP Express Salinas CA
Mpress Digital, Inc. Santa Cruz  CA
n.e.w. printing appleton WI
National Media Services Inc Front Royal VA
North Delaware Printing Tonawanda NY
Paradise Printing Paso Robles CA
Partners Printing So Portland ME
PBR Graphics, Inc. Albany NY
Pel Hughes Printing New Orleans LA
Pinnacle Printing & Promtions Southfield MI
PIP Ridgeland MS
PIP Marketing/Signs/Print Iowa City IA
Plaza Graphic Associates, Inc. New Hyde Park NY
Porath Printsource cleveland  OH
Portage Printing Portage MI
PostNet Humble TX
PostNet Bentonville Bentonville AR
Precision Printing Inc Louisville KY
Premiere Business Printing & Graphics Arlington TX
Premiere Printing Rockville MD
Presto Prints Wausau WI
Print Basics, Inc Deerfield Beach FL
Print Bureau Dublin IRE
Print Digital, Inc. Stow OH
Print Factory, PLL North Lima OH
Print It Plus Royal Palm Beach FL
Print King Inc Williamsville NY
Print King Inc. Williamsville NY
Print Max The Woodlands TX
Print Plus Buffalo NY
Print Professionals, Inc. High Point NC
Print Solutions Englewood NJ
Print Source Corporation Bluffton IN
PrintFocus Phoenix AZ
Printing Arts Press Mount Vernon OH
Printing Creations Inc. Columbia KY
Printing Depot Oldsmar FL
Printing Etc Dallas TX
Printing Ideas Fairfax VA
Printing Impressions Martinsburg WV
Printing Sensations Miami Gardens FL
PrintPlus Stewartsville NJ
PrintRoc Rochester NY
PrintSource Newnan GA
Pro Printers Hudson NY
Professional Print & Mail Fresno CA
Prographics Inc. Annapolis MD
Progressive Printing Battle Creek MI
Promotions By Mail, Inc Hilltown PA
ProPrint Digital North kansas City MO
Pro-Type Printing, inc. Paxton IL
Pyramid Printing Missoula MT
QP Consulting Melbourne FL
Quality Printing Services Inc. Petaluma CA
QUALITYQUICKPRINT DELAND FL
Quick Solutions Jamestown NY
Rapid Press Printing Forest Lake MN
Redlands Blueprint Co Redlands CA
replica printing services poway CA
Reprint, Inc. Houston TX
Reskyu Honolulu HI
Richwood Graphics Franklin VA
 ROYAL PRINTING & SPECIALTIES   BROKEN ARROW   OK 
Royal Printing Company Sterling CO
Rutledge Printing Co. New Albany MS
Scott’s Discount Printing Fond du Lac WI
sd visual images marlborough MA
Service Printing of Lynchburg, Inc. Lynchburg VA
Shawnee Copy Center, Inc. Shawnee KS
SIR SPEEDY MIAMI FL
Sir Speedy Havertown PA
Sir Speedy Mercerville NJ
Sir Speedy Greensboro NC
Sir Speedy Nashville TN
Sir Speedy Cranston RI
SIR SPEEDY 4043 CARROLLTON TX
sir speedy printing orland park IL
Sir Speedy Printing 4072 Carrollton TX
Smellies Copy & Print Shop Bracebridge CAN
Solid Impressions Carol Stream IL
SOS Printing Port Townsend WA
South Shore Printing Scituate MA
Southbury Printing Centre, Inc. Southbury CT
Southern Printing  Hope AR
Southwest Printing & copying Dallas TX
Specialty Printing Shepherdstown WV
Speedy Printing Houston TX
Stallings Printing Co. Lenoir NC
Stone Mountain Printing Woodbridge NJ
Suncoast Printing New Port Richey FL
Sundance Printing Parker CO
Sunset Printing Gardena CA
Supreme Graphics Arcadia WI
Sycamore printing Muscatine IA
Systems Print & Mail Laguan Hills CA
TBL Print Clive IA
TechnaPrint, Inc. Eugene OR
the Copy Shop Wiscasset ME
The Copy Shoppe Springfield MO
The Foley Group Yorktown Heights NY
The Freedman Company Hurst TX
The Highland Press Athol MA
The Ink Spot Quincy MA
The Print Shop Naples FL
The Print Shop Marion AL
The Printers’ Printer Collegeville PA
The Printing Factory Mundelein IL
The Printing Spot Gilroy CA
The Responsive Mailroom Elgin IL
Towne Printer Kalispell MT
Tps Newton IL
Trademark Printing Cookeville TN
Triangle Reprocenter, Princeton Princeton NJ
Unique Litho, Inc Englewood CO
UpClose Printing Champaign IL
Volz Tucson AZ
Walter Printing Inc Albemarle NC
Wells Print & Digital Services Madison WI
Wolf Printing, LLC York PA
XPress Printing Sisters OR
Zip Graphick Cincinnati OH
Zoom Printing Syracuse NY