3 Ways to Grow Your Print Business in 2016: [3 Part Series]
3 Ways to Grow Your Print Business in 2016: Growth Through Merger & Acquisition (part 3)
Originally Published February 1st, 2016
I started writing this series three weeks ago to outline the strategies my team used to grow two bankrupt printers 400% over the last five years. My hope was to add value for those printers looking to take their business to the next level in a rapidly evolving and shrinking industry. Part 1 focused on a minimal prerequisite of developing a digital strategy around your print business. Part 2 outlined a strategy we use to leverage the creation of unique brands to grow print to get out of the commodity driven sales approach used by most in the industry. The third and final segment focuses on the strategy we utilized to create CPG, mergers and acquisition.
CPG was born through the acquisition of two bankrupt commercial printers. Over the past five years I have led several acquisitions, mergers and tuck-ins. Print industry M&A activity has been on the rise since 2009. We are even starting to see interest from the private equity world as industry performance improves. There are endless resources out there for researching, consulting and reporting; New Direction Partners and The Target Report are just a couple I would recommend. My goal is to always add value through inspiration and real-world perspective so here are a few reasons for, and considerations, when you dive into M&A.
“We had a $5 million operation and they had a $5 million operation so we were confident we would create a more efficient $10 million operation…we ended up with a less efficient $5 million operation.”
This is an actual quote from an opportunity we were pursuing in another market. In a previous transaction, two owners fell under the common misconception that if we just combine our two operations we will grow revenues and find efficiency in redundancies between our two operations that should lower expenses. This is the first and most fatal mistake you can make when exploring M&A opportunities.
There are two primary drivers behind M&A; investment and strategic. Investment M&A focuses on opportunities in which you feel you can generate a return on investment through the purchase and eventual sell of an operation. Strategic M&A focuses on opportunities to grow an existing company through the merger or acquisition of another company. For the purpose of this article, I will focus on strategic acquisitions.
Why Pursue an M&A Strategy?
Book of Business
This is the most common driver behind most print M&A activity. This can also be the most dangerous as the assumption that you can automatically convert that book is not accurate. You need to spend most of your due diligence understanding the clients, their pricing, and the relationship with individuals at the existing provider, payment performance and product mix. Any one of these issues could cause the client to flee post-transaction. This also doesn’t immediately kill the deal as there are multiple ways you can structure the transaction to protect your exposure to these activities. You should never pursue any opportunity without the support of an experienced M&A attorney.
An often underutilized strategy when performing M&A around an existing book of business is seasonality. All printers face some sort of seasonality challenge which results in inconsistent sales and cash flow over the course of the year. What if you found an industry who’s busy during your traditionally slow times? What would it look like if you acquired such a company?
An acquisition doesn’t always have to directly increase revenue through a new book of business. A great strategy for growth and increased efficiency is asset acquisition. I’m not just referring to equipment acquisition. Given the fear of the looming talent chasm and the pace with which technology is changing, our strategy is focusing on talent and technology. Strategic acquisitions that allow you to increase the quality of your talent or technology will have long-term impact on your growth and profitability. After all, you are making these moves to build a long-term sustainable firm not to patch leaks in a sinking ship.
Strategic acquisitions that allow you to increase the quality of your talent or technology will have long-term impact on your growth and profitability.
As you are building the greatest print organization known to man you will indefinitely run into geography and service limitations. You will be surprised how quickly this will happen. A new client that you target or absorb will either want you to serve a geography or provide a service you currently don’t offer. Of course, you can build out these services and ship into a new geography but will that be the most efficient approach?
We are inundated with requests for support on West Coast production. The industry has a large concentration on the East Coast and Mid-West. As clients move to a print on demand model, they are looking for their products faster and shipped cheaper. A strategic acquisition to offer regional expansion can be a boom for new business and even new found efficiencies.
The same applies to service expansion. Is it cheaper to start your own large-format, mailing or fulfillment department or buy one? The answer may surprise you, especially if you consider the impact of existing revenue and the time-value cost of getting up and running. In these types of acquisitions, you are purchasing the learning from the mistakes they’ve made not the learnings they will have. Don’t underestimate this.
Whether you are a buyer or a seller M&A is a great strategy to find new opportunities for growth. I hope I added value, and if nothing more, I hope you are focused on a proactive approach to growth and aren’t sitting around waiting for the economy or the industry to do it for you. I can promise those days are over.
I hope you enjoyed this series and if you would like to discuss any of the topics covered or would like insight on anything else feel free to reach out to me at jacobmwalker.com.
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Continue Reading for Parts 2 & 1.
3 Ways to Grow Your Print Business in 2016: Development of Unique Brands (part 2)
Originally Published January 25th, 2016
In part 1 of this series we talked about the importance of a digital strategy for commercial printers. This week, I want to introduce the concept of growing your print business through the creation of unique brands. Most printers are familiar with brands like Shutterfly, Moo and Minted. In fact, many commercial printers are vendor partners with several of these brands. The appeal of the volume of work created by these providers can be very alluring but many times creates a leveraged situation where printers may be leaving margin and cash on the table. So why wouldn’t you create a brand and drive your own high volume, strong margin business?
Slow down for a minute. I’m going to go out on a limb and assume you don’t have the resources to launch an all-encompassing print site and throw down a 6 figure SEO and digital ad budget to compete with the big boys. Do you have a niche product or industry in your existing book of business? Do you have the ability to design and produce a unique product? If so, you have the core of a unique brand. Shutterfly started with holiday cards and calendars. Moo simply created a thick, luxe business card.
I will give you a look under the hood of one of CPG’s brands, Scoreboardwhiz.com. Go ahead and check it out. On the surface, SBW is the leading source for custom score sheets for high profile clients in the golf industry. If a printer saw the operation, they would see a pretty basic large-format print shop. Both observations are accurate. The only difference between the large-format shop that the printer sees and the customer-facing brand is the marketing message and the aforementioned digital strategy. Advantages created by this positioning include:
- Set Product Offering
- Clearly Defined Target
- Less Competition
- Higher Margins
- Cross-Selling Opportunities
All of these advantages drive higher-margin work by increasing production efficiency and creating a product offering which is much easier to sell, faster with both traditional and digital strategies. More importantly, you are able to demand higher prices and get out of the commodity trap because the value proposition to the client is something beyond print.
Now that I have you ready to launch your new brand, there are a few technical things I highly recommend you put some thought into if you already haven’t.
1. Marketing Plan – You need to take this seriously and create a formal marketing plan. This plan at a minimum should include a deep dive on your target market and positioning. If you think you can just launch a brand and they will come, you are dead wrong. You need a solid plan for marketing your new brand to the target audience. You will be amazed how powerful a digital strategy using e-mail and social marketing can be when you have a clearly defined target.
2. Web 2 Print Solution – You are going to need a reliable, easy to use W2P platform to launch your new brand. There are thousands of options. W2P finder is a cool tool to start your research.
3. Customer Support Strategy – This is the least exciting and easiest to forget. You need to make sure you are able to provide clients the proper support for ordering and delivery. That first experience will either kill or launch your brand. How will you handle customer service calls? 24 hours? How will you take payments? How will you confirm order and delivery? These are just a few questions you need to ask and plan for when launching. Here is a great check list from ecommerce platforms for your launch.
I hope I created some value and some inspiration for you! Now get out there and create a kick-ass new brand to drive high margin volume into your operation! Part 1 and Part 2 of this series should give you some serious momentum to take into 2016 and make sure to check out Part 3 next week on growing your print business through mergers and acquisition!
Continue reading for part 1.
3 Ways to Grow Your Print Business in 2016: Implement a Digital Strategy (part 1)
Originally Published January 18th, 2016
Five years ago I lead the acquisition of two bankrupt commercial printers. In 5 years we have grown the CPG family of brands over 400%. Over the next three weeks I am going to share the three key business development strategies we used to accomplish this goal. I’ll show you three ways to grow your commercial print business through:
- Implementing a Digital Strategy
- Creation of Unique Brands
- Growth Through Merger and Acquisition
Implementing a Digital Strategy
I know… I know… I know you are a printer but if you think you can have a thriving business in today’s world without a digital strategy, do us a favor, quit. As printers we constantly sell the importance of what the quality of your printed material says about your brand. Well, your digital presence as a printer is no different. In today’s market, purchasing decisions are 57% complete before the buyer ever contacts you. That due diligence is done in a digital environment and if your presence doesn’t represent your brand, or worse doesn’t exist, you are not competing.
I’m not here to bust your chops, I’m here to help. Here is an outline of the key components you should include in a digital strategy. Don’t forget you are a printer so please use your skills with direct mail and other print marketing resources, that you know like the back of your hand, to complement this strategy.
Your website should be actively managed. It clearly outlines your products and services and why you do what you do. Notice I didn’t say why a potential client should buy from you. This is an important distinction as digital is designed to let the client make the decision. Tell a potential client why you do what you do and let them decide. Don’t feel as if you have to tell the whole story on your site and create endless pages of text. No one will read them and it’s a turn-off. The design and imagery should be fresh, current and relevant. Potential buyers should be able to quickly understand what you do, why you do it, and if you want to go a step further, who you work with. I highly recommend including a blog focused on content relevant to your client. This is an easy way to establish credibility, position your company as a knowledge expert and help with SEO.
In all these scenarios don’t be afraid to hire an expert. Do not expect your in-house print designer to be the best resource for designing a website. You know the frustration you experience when you work with a designer who doesn’t know how to design for print? That’s the exact reason you should work with a professional web designer.
Again, I know you are a printer so this one may sting a bit, but you need to have an e-mail strategy. This is the easiest way to stay in front of your client base and a great way to cross sell new products and services. The strategy should include a database segmented into existing clients and targets. Please make sure that the messaging is relevant to the target and just don’t spam the same message to everyone. There are plenty of tools out there to help you execute a solid strategy. My favorite is MailChimp. It is also important that you understand and follow regulations around spam rules. Any e-mail automation tool like Mail Chimp will clearly spell out the rules of the game.
If you don’t have a presence on social media yet, please, please make it a priority. The power of social for targeting potential clients and presenting your brand to the ideal buyer is like nothing the marketing world has ever seen. At a minimum you should have a presence on Facebook, Twitter, LinkedIn and Instagram. Given your comfort level and strategy, Pinterest, Snapchat and YouTube are very strong networks that are getting more and more attention. Your strategy should be specific to each social network. Simply sharing the same content across all platforms with the same message is not an effective strategy.
If you are new to social this can be rather intimidating. There are a ton of cost-effective and even free resources to help you develop and manage a solid strategy. Our brands use Sprout Social. I would also recommend exploring an intern who is knowledgeable to help you develop and manage your new social strategy. If you are up for it, you may even want to reach out to a digital agency in your market. They will have much more experience and there may be a strategic opportunity for you to work together.
Bonus: Video and PR
Video and PR are two very strong resources to help grow your brand and communicate a very specific message directly to potential clients 24 hours a day, 7 days a week. These two methods take a little more work and I would highly recommend hiring a professional. A poorly produced video or press release could actually do more damage than good. Find the best at either in your market and put them to work as you sit back and watch your brand grow!
You now have the core elements to a solid digital strategy that integrates your website, e-mail and social. Congrats, this is a great start! There are some amazing marketing software solutions out there and I would recommend exploring some of these options to integrate and automate your strategy.
Check out my blog next week for the 2nd part of the series focused on growing your commercial print business through the creation of unique brands.