3 Strategic Opportunities and Challenges for Printers in 2019
The printing industry has come off of another strong year, buoyed by the performance of the general economy and leading most manufacturing segments in terms of growth. And while Printing Industries of America believes the industry should continue to perform well in 2019, printers should brace themselves for opportunities and challenges during the year.
Here are three to consider:
Opportunity/Challenge No. 1 – Be as Strategic as Possible
You should take a look under the proverbial hood of your business and assess the current status of your assets, equipment base, talent, customers, margins and verticals so that if the economy takes a dip you can react swiftly.
You should engage in formal strategic planning by goal setting with measurable metrics to stay ahead of the competition. Analytics should be undertaken on your best customers to see how these can be replicated in identifiable verticals with concrete business plans. Annual customer reviews should be undertaken to shore up accounts and identify opportunities to broaden product offerings.
Opportunity/Challenge No. 2 – Practice the 3Cs of Pricing
Pricing is one of the most difficult decisions you have to make. Price too low and leave money on the table. Price too high and lose business.
Start with the right MIS system so that you can cost and track your jobs. PIA can provide guidance in this regard with its annual MIS survey. PIA’s Performance Ratios can also provide an effective cost tracking system for profit leaders. The lower your costs are relative to your competitors, the greater flexibility you have to price. One area in particular to focus on is waste and spoilage.
One size should not fit all when it comes to pricing your work. Each customer should be evaluated on price elasticity (the percentage change in quantity demanded that the results from a given price change). Key factors in price elasticity include quantity and quality of available substitutes, customer perception of whether a product or service is a necessity or luxury and the relative budget impact on the customer from a price change. Make your offerings as inelastic as possible.
Know your competition and benchmark yourself against profit leaders.
Opportunity/Challenge No. 3 – Manage Your ROP: Return on People
Profit leaders score significantly better when it comes to managing people (40% of typical costs). And people make up 53 percent of all profit gaps. Measure your ROP as Before Tax Dollar Profits divided by Total Dollar Costs of Wages, Salaries, Benefits and Payroll Taxes.
PIA’s recent Management Alert found that profit leaders had an ROP of 26.4 versus all printers (6.71) and profit laggards (0.15).
Another performance metric is Sales per Employee ($179,500 for profit leaders versus $154,100 for profit laggards). Another is number of employees per $1 million in sales. Profit challengers employ 6.3 employees versus profit leaders at 5.8.
Track ROP on a regular basis.
Finally, profit metrics reveal that employers who invest in the education and training of their workforce are more profitable than those that don’t. And employees love to learn.
Being aware of these three Ps — Planning, Pricing and People — will help keep your business on track and running smoothly through 2019. I invite you to join us at the 2019 President’s Conference March 3-5 in Phoenix, Ariz. Co-presented with SGIA, we have a great lineup of keynotes and sessions on tapping into the Millennial mind, growing your business, strengthening your leadership skills, building a better sales team, implementing change and innovation, and much more. www.presidentsconfere.com
Michael Makin was appointed President and CEO of Printing Industries of America on August 1, 2002. Born and raised in Montreal, Makin attended Carleton University in Ottawa where graduated with honors with a degree in Journalism in 1986. He also holds an MBA from the University of Phoenix. After a brief stint as a reporter and public affairs officer with the Canadian government, he began his career in association management 20 years ago. Prior to joining Printing Industries of America, Makin was President of the Canadian Printing Industries Association and for almost 10 years served as an executive with the Canadian Construction Association.