Transforming your business without getting lost in the process

I recently co-hosted a webinar for WhatTheyThink.com – aimed at helping printers to transform their businesses without getting lost in the process.

All too many companies have been stuck in making the transition from traditional printing into the world of value-added services.  (Our on-line poll reported that 58% of the attendees have begun to transform their businesses, but the process is going more slowly than they had hoped.)  Most companies have underestimated how long the transition would take, and how difficult it would be. Most are so occupied with looking for a new answer, that they take their eyes off the ball, and fail to preserve their existing sales.

There are two major issues that derail most companies. First, they’re waiting for a blinding flash of inspiration – some cosmic new idea that will turbo-charge their sales. Yet the most successful companies have found the answers within their present operations – penetrating an industry where they’ve already had success with one client or offering added-value services more broadly, after being successful in offering those services to an existing client.

In one case, a printer had done a wide range of work for a local college, and hired the college’s marketing director, who offered her experience and expertise to more than a dozen other local colleges. $100,000 in work for one school became $2.2 million for 14 schools – all in less than two years.

In another case, a printer had developed a print-on-demand portal for a client to fulfill dealer requests for sales literature, along with pick and pack fulfillment services. Why not offer those services to other clients? A $125,000 single client became a $1.5 million line of business – adding important connections to eight existing customers without adding any more capabilities or equipment. And just as important, those existing customers were now closely tied to the printer in ways that provide insulation from most competitive challenges.

Most printers have encountered a second major issue, when they try to redirect their existing salesforces to selling added-value services. It requires consultive selling skills that most traditional print salespeople don’t have. So they’re forced to do something uncomfortable and/or they do it badly. What’s worse, they’re diverted from holding on to their existing book of business. So they’re failing to develop new kinds of business while also permitting their current sales to suffer. This seems to afflict almost all the companies struggling with transforming their sales effort.

Most of the more successful companies have recruited new kinds of salespeople with entirely different skill sets – not much printing knowledge, but comfortable in new business prospecting, consultive selling approaches and dealing with higher-level corporate executives. They can discuss marketing challenges comfortably, without being discouraged by the longer selling cycle.

These companies have proven that you can have two different approaches to selling, with two types of salespeople selling their services at the same time. The established salespeople can defend their sales base while looking for new opportunities that they’re comfortable with. The newer salespeople can break new ground without being diverted by defending their installed base of business.

What’s the lesson in all this? Despite all the challenges you’re facing, transforming your business isn’t a mysterious process. But it’s easy to get stuck midway in the process, so you’ve got to aim your efforts in the right directions and pay unrelenting attention to the right issues.

The more successful companies make it look pretty simple. They don’t have any cosmic secrets, but none are required.

Posted in Articles, Uncategorized | Leave a comment

THE OWL AND THE CENTIPEDE… A Cautionary Tale for Printers

[This article originally appeared in American Printer magazine]

A mid-size printer closed a few months ago. No big news by itself, but their story was especially poignant, because Alonzo Printing had been recognized in the press for doing many of the right things – establishing a name as an environmentally responsible printer, and repositioning the company as a marketing services provider.

Alonzo’s closing reminded me of the story of the owl and the centipede.

One day, a centipede was complaining to the wise old owl. “My feet are killing me. Every day. All the time.”

The owl thought for a moment, blinked, and said “Well, if you were a sparrow, you’d have only two legs, and just think how much better you’d feel.”

The centipede was thrilled. “A sparrow….great. How do I become a sparrow?”

The owl blinked again, turned his head and said “Don’t ask ME. I just deal in concepts…”

It’s easy for commentators and journalists to tell printers how much better they’ll feel when they’ve become marketing services providers. But becoming a sparrow is no easy feat for a centipede and becoming a marketing services provider is not much easier for a printer.

Every day brings another story of a business failure – and in almost every case, the CEO is quoted as saying “We TRIED offering marketing services, and some clients went for it. But it was a long hard slog, and we just weren‘t prepared for how long it would take, and how difficult and expensive it would be to develop the new capabilities. It didn’t cost much for the equipment, it was the staffing in entirely new areas. Marketing people, designers, programmer/developers, and people to sell the new services, because most of our existing salespeople just couldn’t get comfortable with the higher-level sale.”

Alonzo’s story should serve as a warning sign to many CEOs whose companies are trying to make the transition from being traditional printers. Being successful in selling entirely new added-value services requires much more than calling yourself a “marketing services provider.” It requires an entirely new skill-set, a new way of thinking, and entirely new kinds of people who probably know very little (and care even less) about printing.

Getting comfortable in that new marketing role is not automatic, and getting clients to believe you’re a credible resource is even more of a challenge. Merely changing the tag-line on your business card isn’t enough. Nor is telling your existing salesforce “go out and sell marketing services.”

Choosing the right direction is difficult. It requires careful thinking about your company’s strengths – some of which you won’t even begin to develop until after you decide on the direction to pursue. You also must have a business proposition that is credible with customers – which can present a problem if you can’t yet do what you’re promising. So it’s no wonder that making the transition from being just a plain old printer to something grander takes a good deal of time, ingenuity and money.

The Alonzo story is a grim reminder of the realities of being caught in the midst of making such a difficult transition. It’s also a reminder that if you’ve decided to make the transition to a new business model – whatever that model may be – you must remember to pay even closer attention to your existing business, which will be paying the bills until the new business effort reaches critical mass.

If you’re moving into new territory, you must certainly commit yourself fully to making the necessary transition, but you can’t permit yourself to be so completely diverted by the new initiative that you stop fighting every day to extract every dollar of profit from your existing business – squeezing more sales out of the existing salesforce, producing the existing jobs more productively and cost-effectively in the plant, streamlining operations and adjusting staffing levels to a realistic level of sales. All of those steps can generate the profits required to fund the time-consuming, difficult and costly transition to whatever you’ve decided your company should become.

Meanwhile, our condolences to those CEOs who have gone off in search of greener pastures and run out of food before completing their journey. Becoming a sparrow is no easy task.

Posted in Articles | Leave a comment

A Recession Is a Terrible Thing to Waste

[This article originally appeared in American Printer magazine.]

It’s unclear whether our economy will recover its enthusiasm in the foreseeable future. But there’s one small bright spot in the continuing uncertainty – because the downturn has encouraged many printers to make long-overdue changes in their business.

Most traditional printers had seen their businesses steadily eroding over the past few years, yet somehow the alarm bells didn’t ring loudly enough. It took a sharp fall-off in sales to prove that their old approach to sales wouldn’t work any more.  That’s led to major changes in their sales approach – and in their salesforces. We’ll examine those sales-related changes in the next article

The seriousness of the downturn has given many CEOs permission to take a really hard look at their businesses, and many have made cost cuts that were long-overdue, revamping their organizations and eliminating some employees who hadn’t grown along with the business.

With the recession slowly coming to an end, it would be a shame to miss the opportunity to reshape your business. It’s not too late. Don’t wait. Look around and see if there are some things you would change if you had permission.

You can’t save your way to genuine profits, but…

In printing, you can’t save your way to profitability. Real profits can only come from having enough of the right kinds of sales. But you can become more productive and cost effective, and you can eliminate some of the extra baggage you’ve been carrying – lightening your load so you can spend more time figuring out where to get the new sales you need.

Economic downturns cause everyone to take a closer look at their employees, but most companies wait too long, and then over-react. They lop off jobs without figuring out what their company needs in order to meet customer needs. So why not take the opportunity to streamline your operations – making things work better, not just cutting costs.

The changing shape of your business may have left some employees with only parts of their old jobs. It’s not their fault, but your business may have changed enough for you to be able to combine or eliminate some jobs.

Order entry is becoming more automated, and pre-press has become vanishingly small in most companies. Customer service is less technical and more focused on project management. With improved MIS, the complexity of estimating has been reduced and many time-consuming financial functions have become more routine and less demanding.

Aren’t there some streamlining steps you can take to move the work more quickly, and have it touched by fewer hands? It’s not just about saving money. It’s about aligning your organization with the new ways you’re operating in today’s world.

Reshaping the way you organize your operations will be another topic for future discussion.  But for now, let’s address everyone’s least favorite topic: Do you have any consistently non-performing employees? Everyone does, and most people hide from making a tough decision. Let the lingering recession give you permission to face up to it.

I’ll bet you have at least a few employees who are long-time underperformers, or no longer fit your company’s needs. They grill the burgers at the company picnic and collect toys at Christmas, but they just don’t meet the standard for doing their jobs. They’re nice and dependable – that is, you can depend on them to do a mediocre job, or worse.

Maybe you’ve coached them, or invented new jobs for them. Maybe you feel guilty or sorry for them. Or maybe you’re worried you won’t find someone better, so you’ve permitted the failing employees to continue failing. We see this quite frequently with estimators, customer service and production people.

Many managers feel they’re being kind in permitting this to continue. But it’s not kind to let someone fail over a very long period of time. So ask yourself these questions, and give yourself permission to answer honestly:

  1. Is X performing his or her job as well as we need them to perform?
  2. Are their skills well-aligned with our company’s current needs?
  3. Do they have a full job that adds enough value?

When you’ve faced the facts, take action. If you feel badly about a termination, be helpful and generous, but do it anyway. You can’t save your way to real profitability, but you can get your company in shape to do the right kind of business in the right way.

Don’t wait. Give yourself permission to make those changes. It will be difficult at first, but a few months from now you’ll wonder why you waited so long. Take advantage of the downturn before it’s too late. After all, a recession is a terrible thing to waste.

Posted in Articles | Leave a comment

Don’t give away your productivity improvements — at least not by accident

When printers improve their productivity, lots of good things happen, but there’s one bad thing that often happens by accident. Prices come down even before customers have begun beating up the printer.

Here’s why: If you reduce your make-ready times or improve your running speeds, it’s logical to raise your production standards. But when you increase your production standard for estimating purposes, you can wind up giving the entire productivity increase away in the form of lower prices.

Let’s look at an example:
A printer selling a six-color press for $375 per hour cut his average make-ready time by fifteen minutes, cut his average wash-up time by ten minutes, and increased net running speed from 8,500 to 9,000 sheets per hour.

In a two-sided 7500 sheet work-and-turn form, this reduced average production time by almost exactly one half hour (twenty five minutes in set-up and wash-up, plus about five minutes in running time). When the shorter production time was used for estimating, the half-hour time saving was passed along to the customer – until the estimating hourly rate was increased to reflect the higher productivity.

At the old hourly rate of $375, the customers were accidentally saving $188 on the cost of presswork, because the time for producing the two-sided sheet was reduced from 3.5 hours to 3.0 hours. Only when the estimating hourly rate was raised to $440 did the price for the presswork stay the same – $1318.

We know that everyone is facing relentless pricing pressure, so if you have to lower your prices, go right ahead. And if your productivity has improved, you have plenty of room to lower prices. But be sure you’re doing it on purpose, not by accident!

After all, customers don’t need any additional help in forcing printers to lower prices, and printers need all the help they can get in building profitability.

If you’d like to have a tool for evaluating the effect of productivity changes on pricing, just e-mail us and we’ll send you a small easy-to-use EXCEL file that shows you how much you can (and should) charge for press time if you change your productivity standards. There’s no charge.

Posted in Brief Posts | Leave a comment

Winning More Bids

GET YOUR ESTIMATORS TO STOP PROTECTING THEMSELVES!

We can almost guarantee that many of your quotes are too high. Why? It’s not because you’ve decided to raise prices. It’s because your estimators think they’re protecting themselves (and the plant) by building a cost cushion on the jobs they’re quoting – especially large or complicated jobs.

Why are they doing it? One reason is that most estimators are risk-averse, and some jobs make them nervous. Another reason is that estimators only hear about their estimates when there’s a cost overrun on a tricky job. So if they always get whacked on the left side of the head, isn’t it normal for them to begin leaning just a little bit to the right?

The cushion may not hurt you on some jobs, but we can promise that you’re accidentally losing some really competitive jobs that you should be winning.

When your estimators play it safe to protect themselves, they’re not protecting the company. Quite the opposite, they’re costing you the opportunity to win some jobs that you should be getting. Yes, your cost sheets might look pretty good, because it’s hard to lose money on jobs you don’t get. But more to the point, it’s impossible to make money on a job you don’t get.

Yes, the estimators won’t get beaten up over cost overruns on those jobs you haven’t gotten, but your plant won’t be as busy as it should be, and your income statement will show a big hole…

The cure is simple: convince your estimators not to play it safe. Set a clear standard for them to follow:

  • Figure out the most likely costs to produce the job. Play it right down the middle: no cushions and no playing it safe.
  • You figure the costs, we’ll figure the price.

Then you have to act as if you believe what you said, and stop beating up your estimators over cost variations on individual jobs. Twenty years of experience has shown us that if you continue to beat them up, they’ll go right back to protecting themselves and hurting you.

Posted in Brief Posts | Leave a comment

Having Meaningful Discussions with your Managers

Most CEO’s don’t have a productive method for discussing operations with their senior managers. We’ve found that the secret to useful discussions lies in creating a structure that everyone understands – so everyone is prepared and no one is surprised.

  • What’s going on in sales? How’s quoting activity? How about orders booked, and sales projections for this month (and beyond)?
  • How’s the plant doing? How busy are we? Do we have enough work for the plant? Are we productive, or just looking busy?
  • What’s going on with our finances? How’s our billing? How about collections? What about borrowings against the line of credit? What do this month’s financial statements show?

We’ve developed four discussion outlines that CEO’s can use in structuring weekly and monthly discussions with their top executives in sales, manufacturing, production / customer service and finance. Dozens of our clients have put these discussion guides to use. The outlines are built around a few key pieces of information that virtually every company has lying around in some form or another.

We’ve also developed a series of discussion outlines specifically for the managers of your various plant departments.

If you’d like to get the outlines, just e-mail us a request. There’s no charge.

Posted in Brief Posts | Leave a comment

Want More business? Just Say YES to That Extra Job!

If you think you’re fully booked in the plant, just ask yourself these questions:

  • When did a job come in exactly when expected? Or earlier?
  • When did proofs come back exactly when expected? Or earlier?

That’s why your production manager has to have a simple rule:

Just say YES to that extra job

Here’s why: a hole will almost always open up in the schedule. It’s not random. It happens every day. After all, customers don’t have complete control of their own jobs. And if a hole doesn’t open up, it’s still pretty easy to fit in one more small job. What if that extra job is somewhat larger? Then it’s even more worthwhile figuring out how to staff some more hours or juggle schedules!

Of course, we’re not suggesting that you make irresponsible promises, or just pile problems on to the production manager. But you should have a bias for saying yesand working hard to figure out a way to do it without breaking other promises.

Even if you find yourself truly overloaded, when did anyone die from putting in some extra overtime to keep up with the workload? In Texas, that’s what they call a high-class problem!

Having worked with more than 550 companies, we’ve never seen a printer die from trying to fit in too much work. But we’ve seen lots of them shrivel from too little work.

So just say YES to that extra job. We promise you’ll figure it out.

Posted in Brief Posts | Leave a comment