Farquharson/Tedesco on Business Development: Mimic How the Octopus Adapts

Let's start off with a quick printing history lesson from a couple of ex-print-sales guys. During the past 30-odd years, what's been required for sustained growth in our industry has changed repeatedly.

The progression has gone something like this:

1. Back in the 1980s, simply offering a quality product and adopting the right technology (e.g., electronic prepress) consistently put dinero in the banco for printers.
2. By the '90s, quality had become ordinary, but printers with fast turnaround speeds stood apart from the crowd.
3. In the 2000s, the goalposts moved again: only printers that had complete value propositions—with perhaps a smidgen of digital marketing excellence on the side—were growing.

Printers today need to nail items 1, 2, and 3 to even have a shot at growing in the traditional, organic way. Just one problem: we're no longer a growth industry. In other words, executing in all the areas above to squeeze out market share growth will likely get you… about back to baseline. Whoopee!

Now, an even quicker economics lesson. Since 2006, the number of U.S. printing facilities has declined about 40 percent. And total printing industry output has declined from the mid-$170 billion range to around $140 billion. You don't have to be the Freakonomics guys to figure out this has been a TOUGH situation for us.

Darwin was right: only the strongest printers have survived. And this presents yet another challenge for survivors. Since most of us have it together on items 1, 2, and 3—let's be honest, those that didn't are resting in peace for the most part—these attributes are no longer exceptional in our industry. A well-run printing business will survive, but that's about it.

Surviving isn't enough. Your printing business should strive for significant, sustainable growth. And you can do it! As long as you think and plan differently.

Traditional organic growth strategies will help your company survive as the business version of a housecat—docile and neutered. Something tells us you'd rather be a lion. And lions pounce on today's real growth opportunities, which lie in a different realm: acquisitions, different niche markets, and new capabilities. Although the term is a bit awkward, call this "inorganic" growth.

Let's make it real. Here's a peek at a few graphic arts companies that have grown using inorganic strategies. See what your business can learn from them.

Be an Elephant (or a Bird). Look for Symbiosis. Elephants and birds have a good thing going. In their symbiotic relationship, the bird perches on the elephant and cleans it of bugs and parasites. The elephant gets a free cleaning service, while the bird gets lunch. Nature is a beautiful thing!

Birds are small and elephants are massive, but this fact has never deterred the two animals from helping each other. Nor should it deter you. Look for smaller companies in your market—ideally with capabilities that enhance or complement yours—that are open to being acquired. The right acquisition can provide your business with a vital shot of revenue growth… and help it run more efficiently.

Just ask HBP, a 110-year-old printing, graphics and communications business based in Hagerstown, MD. Nearly three years ago, HBP acquired Balmar, a printer with two locations. One facility did similar work to HBP and was merged into HBP's Hagerstown operations, boosting revenues and production efficiencies. The other had different core competencies and a complementary northern Virginia location. (Today it remains a standalone, highly productive manufacturing facility.)

Last year, HBP expanded again by purchasing the assets of Whitmore Print and Imaging, another local printing business. HBP took over the lease on Whitmore's facility and maintained its entire sales staff.

The results of these acquisitions? Top and bottom line growth, significant employee size growth (200 employees today, up from 130 pre-acquisition), product line diversity, and geographic expansion…all accomplished during an uncertain business environment.

This isn't the first non-organic growth in HBP's history. For its first 60 years, HBP was primarily a bindery, but gradually morphed into a commercial printer during the 1970s and '80s.

Be an Octopus: Change in Response to Your Environment. Consider the octopus. This funky sea creature changes the color and pattern of its skin to match its environment. Predators pass the octopus by, and it goes on to spawn many more little octopus babies.

Learn from the octopus. When your environment changes, change with it.

For most of its history, Bridgeport National Bindery (BNB) in central Massachusetts has served traditional library bindery clients. In 2003, the company began meeting the short-run book production needs of a rapidly growing on-demand customer base.

A few years later, complete on-demand book production has become a big part of BNB's business. Today, 85 percent of BNB's business is on-demand. The company produces on-demand book projects for a varied customer base, from on-demand publishers to consumer products businesses.

Getting into digital book production has helped BNB thrive while many of its old library-binding peers have floundered. During the past year, BNB's digital printing business has grown 38 percent. Its digital printing segment has also experienced a year-over-year sales increase every year since 2003. And, this past year, BNB's overall year-over-year sales grew 44 percent.

Like BNB, Challenge Machinery, a western Michigan-based manufacturer of postpress equipment, has done well during the past few years by diving headfirst into the on-demand segment of the commercial printing industry.

As the digital/on-demand market has expanded, Challenge Machinery has developed lines of cutters, trimmers and other postpress equipment geared toward the needs of traditional and non-traditional printers. In the past few years, Challenge Machinery has developed and launched a new line of trimmers that plugs an on-demand market need for instant, automatic makereadies, including on-the-fly book size changes. By meeting the rapidly evolving demands of today's digital market, Challenge has prospered, while many other machinery companies are barely staying afloat.

A graphic arts equipment manufacturer growing almost 5 percent a year since 2009 in a mature/declining market? It can happen when the right inorganic growth strategies are executed.

For printers, inorganic growth will be the next stage in your evolution. It's time to invite finance folks to the table: they'll be crucial in helping your printing company implement the inorganic growth strategies similar to the companies highlighted in this article.

So where does this leave sales and marketing—i.e., your faithful columnists? Like opposable thumbs, sales and marketing are adaptations that most of your competitors now have too. If anything, consistently executing in sales and marketing is more important today. Sales and marketing excellence isn't a luxury for companies that can afford it—it's a necessity for those who want to survive. PI

About the Authors

T.J. Tedesco is team leader of Grow Sales, a marketing and PR services company that has served graphic arts companies since 1996. He wrote "Direct Mail Pal 2012" and seven other books. Contact Tedesco at (301) 294-9900 or e-mail tj@growsales.com. Bill Farquharson is the president of Aspire For. Through his Sales Challenge and Tuesday eWorkshop training programs, Farquharson can help drive your sales. Visit his Website at www.aspirefor.com or call him at (781) 934-7036.