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Look to the Future

Determining the Right Business Plan for 2009

By Steve Aranoff

The last half of 2008 didnít meet expectations. Few print service providers (PSPs) seized on special purchase incentives offered by the government, leaving many suppliers in decline. Sales of capital equipment to printers dried up, credit disappeared, and printing jobs didnít materialize.

One prominent writer suggests capitalism should be described as creative destruction. Well, there was a lot of destruction in 2008. Now itís time to focus on creativity. How can a PSP succeed in this type of environment? They must change how they think. Stop dwelling on the past; it only reminds you of what happened, not what can be achieved. Develop a strong and creative business plan, not a new version of last yearís.

There isnít one plan that works for everyone. It might differ from PSP, dealer, supplier, or manufacturer. Here are suggestions for formulating a strategic plan personalized toward your company.

Migration in Business
Drought causes millions of animals to move vast distances in search of better living conditions. Businesses act similarly. When business is good everyone enjoys established market niches and high ROI. In such a glorified state they tend to stay put. For many, big changes occur out of desperation as opposed to hope and planning.

Last year, for example, high gasoline prices caused a massive reduction in RV sales. PSPs printing vinyl for RV applications likely lost a great deal of business. When an entire segment of the graphic arts severely declines, those specializing in that businessólike a herd of animalsóare bound to start moving into another business segment. Be cautious if this movement is heading in your direction.

Maybe your print niche fared better than average in the general economic downturn. Thatís great, but donít congratulate yourself yet. A PSP in a successful segment of the business will face new competitors soon. If the competitionís other opportunities dried up, your niche is looking good now. Presuming there are safe havens is irrational. Assuming you canít protect your segment in the market with a technological advantage, you need to be prepared for change.

There are things a PSP can do to prepare for migration. First, if another market is doing well, find out what theyíre doing rightóand wrong. Unseat them by doing a better job for their customers. Find new opportunities by utilizing technology to accomplish different types of print. This is one way for a PSP to move away from the pack. Properly support old clients so they arenít tempted to move to new players entering the market. By keeping them at the forefront, they are relatively safe from predators, even in bad times. Never move your business in the path of an industry giant.

On a practical level, engage your workforce to expedite your knowledge and create opportunities to bring in new business. Offer bonuses for setting new accounts or suggest new product ideas to stimulate creativity. Review the crispness of your organizational rules and regulations to streamline activities. Encourage ownership of small problems so they donít become larger ones.

Misfortune Breeds Opportunity
All economic conditions create new opportunities. Savvy PSPs are able to spot and seize them quicker than others. Consider the following scenarios and how you can take advantage of them. One or more competitors went out of business. Or, maybe they didnít go out of business, but a competitorís financial condition causes them to take shortcuts, reduce quality, and increase lead times. Such behavior makes their customers worry that they are no longer a reliable supplier.

Maybe there are customers ready to abandon a well-known PSP to save a few dollars by accepting lower quality or some other change in requirements. Perhaps customers are willing to reduce waste by cutting inventory and pay more for quick, smaller runs, with just-in-time deliveries that werenít important when they were prosperous. Maybe your current customers cut payroll and are forced to outsource more services. Who better to supply them than an existing supplier whose services are welcomed?

Recognizing these shifts in competitive forces and market needs affect your business model. The key to exploiting new opportunities is to pounce on them before someone else.

Economic downturns can jump start a businessí gradual slide into oblivion. On the other hand, such a fall isnít inevitable. Decisions made now position you to be more competitive in good times. The difference between a company on the way up and one on the way down may not appear in statistics during a downturn.

Predator vs. Prey
Donít expect that dusting off and re-using your 2008 plan will bring success in 2009. Take a proactive stance. Build knowledge about what is happening in the industry, your community, and throughout the world. Even though resources may be scarce, whatever time and money is spent on getting up-to-date information about market changes and analyzing how they affect your company will pay off big. Change how you react based upon what you learn. Understand the trends and move with them, donít hope they disappear.

2009 looks like another tough year. Now is the time to decide whether you are the predator or the prey and act accordingly.

Apr2009, Digital Output

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