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Carl Gerhardt

Business Sense & Sensibility

By Carl Gerhardt

About Carl

Carl Gerhardt is the chairman of Alliance Franchise Brands LLC, the parent company of Allegra Network LLC and Sign & Graphics Operations LCC, and a world leader in marketing, visual and graphics communications, linking more than 600 locations in the United States, Canada and United Kingdom. The company’s Marketing & Print Division, headquartered in Plymouth, MI, is comprised of Allegra, American Speedy Printing, Insty-Prints, Speedy Printing and Zippy Print brands of marketing, printing, mailing and Web services providers. Its Sign & Graphics Division, headquartered in Columbia, MD, is comprised of Image360, Signs By Tomorrow and Signs Now brands of sign and graphics communications providers.

Carl and his wife, Judy, owned and operated their own successful Allegra franchise for nearly 20 years before selling the $2.3 million operation in 2003. He is a PrintImage International/NAQP Honorary Lifetime Member and was inducted into NAPL’s prestigious Soderstrom Society in 2010 in recognition of his contribution to the industry.

 

Shrinking Your Way to Prosperity

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Can you shrink your way to prosperity? Since 2007, our industry has shrunk well over 20 percent. (Dr. Joe would say a lot more if you count inflation.) So if you are “average,” your firm is a lot smaller today than it was then. Since the start of that recession in 2007, many firms have “shrunk” their expense structure in order to maintain profitability or even to survive. You can only go so far with that plan or at some point, you get below critical mass to have a sustainable business model. If you are near retirement, are financially secure and not counting on any value for your business, this might not be an issue. However, if you are not financially secure or you want to leave a larger estate, many us are in a dilemma.
 
Stating the obvious
I know this is stating the obvious, so let’s focus on some answers. Growing is tough! Most recent data suggest that print shipments are down about 5 percent in the first two months of this year compared to the same months in 2013. And that trend is likely to continue irrespective of the economy. So if we rely only on print and we are no different than the rest of the pack, we start out behind the proverbial eight ball again. Again, stating the obvious.
 
Diversify

We have all heard about the need to diversify until we are blue in the face. Become a marketing services provider, add wide-format/sign capability, mailing services, promotional products, etc. Many are trying this; some are succeeding. It’s a definite strategy that makes sense, but it is no quick fix and it takes investment and time to build sales with new products/services. And for most, it requires getting outside professional help to add the production capability and especially marketing expertise. In the franchise world, we are helping our members with all of these efforts and it’s working.
 
Hire a sales person

Hire a sales person? The industry is awash with sales people that didn’t work out. The failure rate is at best 50 percent. This is one action to take, and I don’t want to discourage anyone from hiring salespeople. You simply have to be realistic, understand the risks and by all means get professional help from qualified sales consultants. We have a major initiative called “sales manager for hire” where we help our franchise members with sales management. If you can’t or won’t be a diligent sales manager, I would hire an outside help.
 
Consolidate your way to prosperity

What about the rest of us? Strategic planners would say that if you are in a shrinking, consolidating market either get out or get in bigger. Get in bigger by becoming a champion consolidator. Buying or merging with a competitor is not possible for many of us.  Still, many firms have grown dramatically by buying competitors. On the larger side, look at Consolidated Graphics and their success. On the smaller end, there are many $1 million firms that have grown to $2 to $3 million and many that have grown to $5 million or more with this strategy. Back in the mid 1990’s, I grew my center from $1 million to over $2 million in one year by absorbing three smaller, weaker firms.

This was just at the beginning of the industry consolidation. I came from the farm equipment industry that had gone through rapid consolidation in the 1980’s and saw the same trends early in the quick/small commercial printing industry. I was fortunate to get in early as a consolidator. During the last 10 years, we have helped our Alliance Franchise Brands members acquire over 250 competitors as a consolidation strategy. It has paid big dividends for those fortunate to find a good acquisition.
 
Grow your way to prosperity

I have said often that I think there is more fun and opportunity in this industry now than when I started in 1985; it’s just different. It’s definitely no fun to shrink your firm. Pick one or all of the growth opportunities mentioned, and go for it. You have a big advantage in owning your own business and understanding this market. It simply takes action, hard work and the willingness to get some help and to think differently than in the past. Go for growth...it’s the only thing that makes business sense. This may be self-serving, but if you are facing many of the issues above, you might take a look at joining a franchise. One of our fastest-growing centers joined us through our Advantage Program just three years ago. Whatever way you choose, remember that your best days are ahead of you if you fall in love with your business again.

Industry Centers:

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