Guiding Your Printing Company to Profitability Post COVID-19
As the U.S. continues to feel the effects of the COVID-19 shutdown, there are signs that the economy is beginning a path toward recovery. The following economic indicators offer signs of hope as larger portions of the economy continue to open, but all can be thrown off course if there is a second wave of infections and deaths that result in additional shutdowns.
- The Bureau of Labor Statistics’ latest unemployment rate is 13.3%, much lower than anticipated.
- Prices for raw materials such as oil and copper have rebounded significantly, which typically signals global growth.
- Regional manufacturing surveys from the New York, Philadelphia, and Kansas City Federal Reserve show rising optimism.
- S. retail sales rose nearly 18% from a month earlier in May.
- Personal Consumption – how much Americans spent on goods and services – rose by a record breaking 8.2% in May
- Consumer sentiment rose by 8% in June which is important as consumer spending is the anchor of our economy.
While indicators are telling a more positive economic story, the staggered reopening of businesses and local economies may hinder the return of some print provider’s production volumes. While you can’t predict the future in terms of exactly what recovery will look like, preparing your business for what lies ahead is always a good strategy.
A recently released NAPCO Research report, The Top 10 Trends Influencing Profitability in 2020, offers essential trends and strategies to help print service providers (PSPs) drive profitability into 2021 and beyond. Four key trends from that report are highlighted below. Click the link above to download the full report.
- Innovations in digital printing technology will open up new opportunities
Findings in a recent NAPCO Research study, “Adding Value to Digital Printing,” indicate that 55% of brand owners/marketers prefer to work with PSPs that offer printing enhancement or special effect options, while 55% chose their PSPs based on their abilities to provide unique ideas to enhance print
Offering these enhancements not only gives a competitive advantage in terms of providing a product that the majority doesn’t, but it also gives PSPs the opportunity to charge a premium for these products. Most print providers indicated that they were able to charge between 20 and 40% more depending on the type of enhancement provided. If priced correctly, this can obviously lead to a significant increase in profitability.
Of those who do not offer these enhancements, nearly two-thirds (63%), cited lack of customer demand as their reason for not providing these services. Although this appears to contradict the demand shown above, it is likely that many customers aren’t aware of the value and availability of these enhancements and must be educated on them. This ties in directly to our next action that can drive profitability in the near future:
- Customer education is an essential business differentiator as customers look for salespeople to offer them insights they can’t find on their own
When brand owners/ marketers surveyed for NAPCO’s Adding Value to Digital Printing study were asked about the characteristics the looked for in selecting printing providers, the clear preference was to work with companies that were proactive and educated them on new ideas that could enhance their printed materials (Figure 1). This finding shows that it is important to keep an ongoing dialogue with customers and actually understand the goals that they are trying to accomplish with print.
Print is such a wide ranging and complex industry that it is hard to keep up with all of the latest information, technology and trends. PRINTING United Alliance’s iLearning Center is a great resource with a ton of educational resources provided by industry experts to help.
- Operational efficiency is an essential component to profitability
When evaluating your business in a bubble, it is hard to know if you are operating as efficiently as possible. That is why it is integral to benchmark your operations against other similar firms within the industry. Profit leaders have significant profit advantages over the average printer (6%-8% higher), so it is useful to compare your key performance metrics with theirs in order to try and close the profit gap. Inefficiencies can be found by comparing operational, employee, liquidity, and balance sheet ratios which can all be done with PRINTING United Alliance’s Performance Ratios. For more information on the program including pricing, please visit performanceratios.com
- Finding creative ways to recruit staff will be essential to profitable growth – today and beyond
As recovery continues, you will most likely need to fill open positions that were lost during the pandemic or you will simply need to add more employees as your capacity increases or workers retire. Finding qualified and experienced employees is often much more difficult than it seems. In a recently released NAPCO Research study, “Recruiting and Retaining Workforce Talent,” 45% of PSPs said that they had a hard time filling some or all positions, while in another workforce study, 54% of respondents indicated that the biggest challenge their company faces is finding new sales staff. According to the research, the most commonly used, as well as the most effective, method of recruiting production staff came from employee referrals. While this old school method can be successful in finding new employees, it is not always available. It is important to cast a wider net and use newer methods such as online jobsites, personal networks, classified ads, social networks, internships and others to hire and recruit staff. If you are a firm that is looking to bring in younger talent, an internship program may be one of your best routes and it gives you a chance to evaluate the job candidates before hiring.
Although COVID-19 cooled down a hot job market, the printing industry’s ongoing challenges in hiring will return with the recovery. Industry staffing is key challenge and our previously mentioned research reports provide good examples of what firms are doing to bring in the type of workers that will be assets for years to come.
David Wilaj reports on economic and industry trends which aim to help printers navigate an ever-changing business environment
He joins the Printing United Alliance research team after beginning his career at Printing Industries of America where he analyzed, reported and spoke on key trends in commercial print and aided in the revitalization of the historic Performance Ratios program.