Earlier this year, the National Association for Printing Leadership (NAPL) introduced the NAPL Quick and Small Commercial Printers Trends Report. The report, sponsored by Xerox and published quarterly, investigates the performance, prospects, and defining issues of that critical segment of our industry. Here’s some of what we’ve learned so far:
Quick and small commercial printers have a lot on their plate, including a business environment that “varies drastically from week to week and month to month,” rising costs in markets that are very resistant to price increases, and the challenge of building a labor force that’s lean—but not so lean that “opportunities are missed.”
Despite a harsh, uncertain business climate, nearly two-thirds of the companies we surveyed expected to increase their sales in 2011, with over half expecting to grow at least 5% and nearly one-quarter expecting to grow at least 10%. The group as a whole expects to grow 5.1% this year; more than double last year’s 2.1% gain.
Although 56% expect to benefit from the failure of competitors and 49.6% from an upturn in the economy, just 2.9% are counting exclusively on those factors. All the others plan to create their own growth by acquiring clients (76.3% ), gaining work from current clients (61.2% ), gaining market share from competitors (48.2%), and acquiring/merging with other companies (16.5%). As one owner told us, “We will grow our business by taking market share. No success we have will have anything to do with our government or the economy.”
The cost of goods sold is running well ahead of last year’s pace, as paper and material costs continue to rise. Payroll costs are rising too; not because hiring and hours worked are up, but because the cost of employment—particularly health care—is rising. In fact, quick and small commercial printers rate health-care costs as their biggest obstacle to profitability, followed by a weak economy/markets and limited ability to raise prices.
The large majority of our survey group plans to grow by getting more productive rather than by hiring or increasing hours. Training employees to help them get better at their jobs and cross-training to help them get better at several jobs will be key. So will streamlining workflow by minimizing touches, steps, and time between steps. Early results are encouraging: Sales per employee are up, on average, to $124,196 so far this year, from $119,234 last year.
Cost vs. value
How to communicate price increases? Just do it! “If you warn people, they may look around for other printers. If you just do it, a customer is less likely to look around.” Others prefer to give clients a heads-up by explaining the reasons for the increases—“the increase is based on increased costs, as well as ‘recession pricing’ previously”—and by “letting clients know up front if we anticipate higher prices.” And others prepare clients for price increases by taking the discussion beyond price and cost by “stressing value and return on investment” and “reviewing the value they receive when they do business with us.” All sides of the price debate agree that cost trends must be monitored carefully to minimize surprises and pricing programs must be “kept as up to date as possible.”
The current issue of the NAPL Quick and Small Commercial Printer Trends Report takes a first look at 2012, including services expected to grow fastest and in a section titled “In Their Own Words”—because numbers never tell the whole story—frank commentary from company owners about what they see ahead and what they plan to do about it. For more information about Quick and Small Commercial Printer Trends or any of NAPL’s other products and services, please visit booth 3649 or www.napl.org.