eight imperatives to grow your business… during a...
TRANSCRIPT
Eight Imperatives to Grow Your Business…
During a Challenging Environment
Peter Schaefer, New Direction Partners
Shift_018
Packaging and Print Innovation Asia
May 2, 2018
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• Today’s Environment
• Growth
• Why is Growing Market Share Important
• Growing Market Share Imperatives
Agenda
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• Over last 10 years (and likely over the next 20) Packagers and Printers need to
have two focuses…
✓Be Efficient; and
✓Grow.
Don’t Forget, because…
Today’s Environment
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• Over last 10 years (and likely over the next 20) Packagers and Printers need to
have two focuses…
✓Be Efficient; and
✓Grow.
Don’t Forget, because…
Today’s Environment
“In a maturing to aging market if you don’t grow,
you will run out of business to be more efficient”.
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• Ways to be more efficient:
✓ Technology, workflow, automation, flexible labor, quality, outsource, etc.
• Ways to grow:
✓ Quality, price, manage sales force, innovation/differentiation, new
markets, acquisitions, new products and services.
Today’s Environment
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• Slower market growth (if any)
• Price competition:
✓ excess capacity;
✓ consolidating customer base; and
✓ aggregators.
• Rising costs:
✓ healthcare;
✓ wages; and
✓ utilities.
Why is Growing Market Share Important?
The Printing World is “Different” Today
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Your
Firm
Cost
IncreaseSubtotal
Market
Growth
(5%)
Pro
Forma
Results
Sales $15.0 $0.0 $15.0 $0.8 $15.8
Materials $5.0 $0.0 $5.0 $0.3 $5.3
Fixed Factory $4.5 $0.1 $4.6 $0.0 $4.6
Variable Factory $1.9 $0.1 $2.0 $0.1 $2.1
Gross Profit $3.6 ($0.2) $3.4 $0.4 $3.8
Fixed S,G&A $1.5 $0.0 $1.5 $0.0 $1.5
Variable S,G&A $1.4 $0.0 $1.4 $0.1 $1.5
Operating Income $0.7 ($0.2) $0.5 $0.3 $0.8
Interest $0.2 $0.0 $0.2 $0.0 $0.2
Pretax Income $0.5 ($0.2) $0.3 $0.3 $0.6
3.3% 2.0% 4.0%
EBITDA $1.5 ($0.2) $1.3 $0.3 $1.6
10.0% 8.7% 10.4%
The Old Days
Growing Market Share
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Growing Market Share
Your
Firm
Cost
Increase
Lower
Prices
(0.5%)
Subtotal
Market
Growth
(2%)
Pro
Forma
Results
Sales $15.0 $0.0 ($0.1) $14.9 $0.3 $15.2
Materials $5.0 $0.0 $0.0 $5.0 $0.1 $5.1
Fixed Factory $4.5 $0.1 $0.0 $4.6 $0.0 $4.6
Variable Factory $1.9 $0.1 $0.0 $2.0 $0.0 $2.0
Gross Profit $3.6 ($0.2) ($0.1) $3.3 $0.2 $3.5
Fixed S,G&A $1.5 $0.0 $0.0 $1.5 $0.0 $1.5
Variable S,G&A $1.4 $0.0 $0.0 $1.4 $0.0 $1.4
Operating Income $0.7 ($0.2) ($0.1) $0.4 $0.1 $0.6
Interest $0.2 $0.0 $0.0 $0.2 $0.0 $0.2
Pretax Income $0.5 ($0.2) ($0.1) $0.2 $0.1 $0.4
3.3% 1.5% 2.4%
EBITDA $1.5 ($0.2) ($0.1) $1.2 $0.1 $1.4
10.0% 8.2% 8.9%© New Direction Partners, LLC 2018
Today
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Printing Economics – Old Days vs. Today
The
Old DaysToday
Revenue Growth $0.8 $0.2
EBITDA Growth +$0.1 ($0.1)
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What is This?
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What is This?
ANSWER:
How a
Packager/Printer
looks to its
customers
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The Role of the Sales Executive is Changing
• Buyers’ motives, practices and behaviors are changing.
• Competition is different:
✓ Social media; and
✓ Email.
Realities of Today
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Customers are Different
• Individual customers have different needs.
• One size does not fit all.
• Specific customer strategies are required.
Realities of Today
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EIGHT IMPERATIVES
How Do You Grow Market Share?
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1 - Measure Sales Activity with the Same Passion
you Measure Production Activity
How Do You Grow Market Share?
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PRINTING FIRM
ANALYSIS OF SALES GROWTH
As Planned Actual Comment
Total Sales Last Period $850,000 $850,000
Increased Sales:
Target Customers
Strategy $ 20,000 $ 10,000 Cust. #2 delayed decision
System Solution
Strategy $ 45,000 $ 46,000
New sales exec hire $ 7,000
Customer / Market One-time Retail
Growth $ 40,000 $ 55,000 customer promotion
Sub-total $955,000 $963,000
Lost Sales:
Customer #5 lost
Prior year $ 35,000 $ 35,000 Lost on price
Customer #11 lost $ 5,000 Lost on spoiled job
Total Sales This Period $920,000 $923,000
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2 - Set a Target, Plan, Act, Measure and Adjust
Better than Your Competition
How Do You Grow Market Share?
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3 - Become a Product Focus Strategy or Customer
Focus Strategy Printing Firm
How Do You Grow Market Share?
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3 - Become a Product Focus Strategy or Customer
Focus Strategy Printing Firm
How Do You Grow Market Share?
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Customer / Product Focus
- Customer Focus +
-P
rod
uct
Fo
cu
s
+
FAILURE
Attributes –
Views Customer Profitability,
Customer Concentration, Solution
Provider, Sales / Customer
Orientation, High Cost of
Switching, Succeeds via Progress
up the Customer Learning Curve
Attributes –
Views Product
Profitability,
Manufacturing
Orientation,
Succeeds via
Progress up
the Product
Learning Curve
SUCCESS
SUCCESS
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Objective“We will make everything required by a left handed heart
surgeon”.
StrategyProvide whatever customer wants, outsource, transfer
risk from customer.
Structure Strong sales and marketing organization.
Pricing
Measure customer profitability but not every order,
Defend, but if successful, cost of switching provides
room.
SystemsCustomer service teams, customer reporting,
customized web interfaces, fulfillment.
Style (Culture)Customer focus orientation, sales service
empowerment, “Can do”, listens to customers.
RisksCustomer and/or sales exec concentration, customer
only wants discounts, forever rising expectations.
Customer Focus
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Objective“We will provide you a Ford in any color as long as it is
black”.
StrategyMake and deliver a product or service better than any
competitor.
Structure Strong manufacturing and most likely IT departments.
PricingMeasure product and order profitability, may low price
for plant fill for non-core products.
SystemsDrives efficiency and functionality, measure product
activity, standard cost systems.
StyleManufacturing / process orientation, usually low cost
producer.
RisksPotential product obsolescence, low cost of switching
unless system hook.
Product Focus
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4 – Develop a Growth Plan with Those Required to
Execute Them Responsible for Its Implementation
How Do You Grow Market Share?
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4 – Develop a Growth Plan with Those Required to
Execute Them Responsible for Its Implementation
How Do You Grow Market Share?
THIS IS THE MOST IMPORTANT IMPERATIVE
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Basics of a Plan
• Plan and Measure What ACTIONS You Can Hold Employees Responsible For:
✓ Management – New hires, sales meetings, customer visits, sales executive reviews, training.
✓ Sales Executives – Prospect visits, customer presentations, plant tours.
How Do You Grow Market Share?
RESULTS – We are not in the Happiness Business!
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5 – Monitor Plan Results and Adjust Actions Where
Required
How Do You Grow Market Share?
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6 – Be Different!
How Do You Grow Market Share?
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7 – Target High Growth Industries
How Do You Grow Market Share?
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8 – Purchase Competitor Firms
How Do You Grow Market Share?
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Successful Acquirers are Implementing Solutions to the Three
Strategic Imperatives Confronting Printers:
• Replace sales from mature markets.
• Drive efficiencies to mitigate/enable lower pricing.
• Reposition into growing (less mature) markets.
Acquisition Strategies
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Premium Segments
Printing
• Large Format
• Retail POP
• Program vs. Transactional
• Web-to-Print
• Conventional Direct Mail
• Customized Direct Marketing
• Digital
• Data Analytics/Creative
Packaging
• Flexible Packaging
• Labels
• Pharmaceutical Packaging
• Folding Cartons
• Corrugated
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• Do it with help
✓Helpful to have an independent third party;
✓Increases likelihood of success; and
✓You already have a full time job.
• Do not purchase a troubled firm for product, service or geographical
expansion.
• Do not change manufacturing location and customer service at the same
time.
What to Do - Acquisitions
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1 - Measure Sales Activity with the Same Passion you Measure Production Activity.
2 - Set a Target, Plan, Act, Measure and Adjust Better than Your Competition.
3 - Become a Product Focus Strategy or Customer Focus Strategy Printing Firm.
4 - Develop a Growth Plan with Those Required to Execute Them Responsible for Its
Implementation.
5 - Monitor Plan Results and Adjust Actions Where Required.
6 - Be Different!
7 - Target High Growth Industries.
8 - Purchase Competitor Firms.
How Do You Grow?
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What is This?
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What is This?
ANSWER:
How a Printer
wants to look
because it
represents
Customer
Success!
ANSWER:
A successful
Packager/Printer
© New Direction Partners, LLC 2018
Questions?
Peter Schaefer, New Direction Partners
P.O. Box 496
Valley Forge, PA 19481-0496
Tel: (610) 935-1000
Email: [email protected]
Peter Schaefer
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Peter Schaefer is a Partner with New Direction Partners. Peter is an
experienced dealmaker with twenty years of investment banking and valuation
experience. He has closed more than one hundred transactions in virtually
every segment of the printing and packaging industries as well as the sale of
a $75 million helicopter company and a $10 million bread manufacturer.
In addition, Peter has performed hundreds of valuations for ESOPs, estate
and gift tax planning and strategic planning purposes.
Other recent transactions have included the sale of Midnight Oil to Oak Hill Partners, Popular Ink to
Highlander Partners, Classic Graphics to Imagine! Print Solutions, the divestiture of Transcontinental’s
Rastar division to Sun Litho, the sale of Meisel to R.R. Donnelley, the sale of Vectra Corporation to
Taylor Corporation, the sale of Express Label to Cenveo, the purchase of Journal Communications’ IPC
Print Services by Walsworth Publishing, and the purchase of National Graphic Supply by Pitman.
Prior to New Direction Partners, Peter worked for fifteen years at Compass Capital Partners having
served most recently as its President. Prior to that, he worked in the investment banking departments of
KPMG Peat Marwick and Coopers & Lybrand. He received a BS in Economics and Political Science
from Trinity College and an MBA from Villanova University. He is a Candidate Member of the American
Society of Appraisers and is a member of the printing industry’s prestigious NAPL Soderstrom and PIA
Ben Franklin Societies and has served on several Advisory Boards within the printing/packaging
industries. Peter is married to Kathleen and they have six children.