How Much Debt Is Enough for a pPrinting Company? Too Much? -Carl Gerhard

By Carl Gerhardt

How much debt is too much? Should you ever be debt free? What are some good guidelines for how much a business should be leveraged?

Over the years and after working with many different print shops, I have come up with what I believe are some good guidelines.

First, let me point out that I am expressing these guidelines or ratios as a percentage of sales. Further, I am defining these costs as debt/loan payments the business must service. This would include any loan payments to lending institutions and/or any lease payments. This does not reflect any depreciation since it is not a cash expense.

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Companies:
Allegra Network

Carl Gerhardt Author's page 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.

How Much Debt Is Enough? Too Much?