THE DATA FRONT

Labels&Labeling |39
the one at hand.
That said, here are some guidelines
that are working for your counterparts.
Keep in mind, however, there is no single
formula for success. Depending on your
label segment(s), customers, capabilities,
customers and vertical markets, your
particular action steps will vary. That's
where your critical judgment will come in
handy.
‘Cash is King’
This old saying has never been as true
as it is today. In the fast-changing label
industry, innovation, expansion, and R&D
are imperatives. Healthy cash flow is one
of the most critical factors in your getting
the equipment financing, acquisition
loans, and other capital to fuel growth.
Yet, in this tough economy, your trusted
lenders of just six months back may have
turned into some of your harshest critics.
You need to demonstrate your business's
ability to withstand the storms and keep
steady cash flow on the books.
Do everything you can to:
• Get every possible discount and
special payment term from
your suppliers. (If you don't ask, you don't
know.)
• Optimize inventory levels. (Don't order
anything you're not
going to use right away—from raw
materials to paper clips.)
• Work with key suppliers to extend cycle
times of your
Accounts Payable to match Accounts
Receivable.
• Check with your bank about expanding
your Line of Credit.
Make sure your current line remains in
place and consider
drawing down available cash for
investment opportunities.
• Lock in as best you can the terms of
any loan agreements.
Communicate, communicate,
communicate
The elements leading up to the economic
meltdown have yielded a huge crisis of
confidence. As deceit and corruption
abound, trust has become one of the
most valued assets. Share – openly
and honestly – your challenges with
employees, suppliers, lenders, and
other alliances. Tell them what you're
up against, and assure them with your
plans to remedy. Offer employees
incentives for creative problem solving.
Adjust compensation/wage plans to drive
sales to higher profit work. Having your
constituencies apprised and informed will
reduce their worries and keep them on
your side. They could offer some novel
solutions that just may surprise you.
Maintain banking covenants
The continued squeeze on the financial
community is making it imperative that
you stay within levels outlined. If you have
a seasonality issue, explain it to your
lenders, so that it's not construed as a
long-term hazard. Banks today have no
forgiveness and are taking dramatic steps
at the first sign of trouble. That said, if
there is a real issue, start examining your
options. A ‘sell’ decision will always be
better with you in charge.
Be positive
Everyone wants to be with companies
that are thriving. If you can't promote
recent successes, be the supplier offering
some sunshine. Perhaps a daily/weekly
email of positive tips, news, or advice?
Maybe a website-based contest that
can promote your brand and provide
goodwill at the same time? What about
sending out an ‘Economy Buster’ promo
pointing customers toward special paper
promos, stock photo discount codes, or
even great CD rates? Perhaps your own
customer ‘Bailout’ plan? At times like this,
an upbeat, positive attitude can draw far
more business than the hard sell.
Collaborate
Many companies are halting marketing
efforts as part of organizational cutbacks.
Don't let this be you. Rather than
abandoning marketing and promotion,
consider opportunities to share costs with
suppliers or customers. Can you and a
customer develop a joint case study and
distribute it to both publication forums?
Are there ways you and your suppliers
(paper merchants, finishing suppliers,
web developers, shippers, etc.) can
show your stuff and bear only a small
percentage of the effort? As others stop
campaigns, yours will be noticed that
much more.
Pre-plan cutbacks
Smart companies are developing
strategic plans now to address potential
future issues. What will you need to do if
business drops 10 percent, 20 percent,
or even 30 percent? Develop plans now
before it happens. Well-considered,
pre-planned strategies will be far more
effective than those made in the face of
extreme difficulty.
Reconsider your vertical
markets
The once vibrant retail segment, for
example, is at the worst it's been in 30
years, but what about your others? Find
ways to expand or grow your share in
healthcare, pharmaceuticals, specialty
foods, and others that continue to thrive
despite the downturn.
Check out the fire sales
If you have the cash/financing and your
balance sheet allows, there has never
been a better time to buy properties than
today. Is there a struggling competitor
you have your eye on? Is it time to move
past your current geographic territories?
The market is rich in opportunity.
Choose carefully, however, and evaluate
acquisitions rigorously. Every addition
does not inherently bring value; only
those with a true, complementary fit
to your enterprise are worth the effort.
Enlist the support of good advisors, and
confirm properties you select can reap
you the rewards you deserve.
And finally…
The blindsiding onset of the ‘tough
economy’ has left many label providers in
a stay-put, ‘wait and see’ mode. But let's
face it: we will always have challenges.
Just like any other time, we need to rise
up and tackle them head-on. Hopefully,
some of these suggestions can help you
build, regain, or drive value. For some
more, drop me an email at bobrcronin@
aol.com. Label companies' creativity,
ingenuity, and diligence are the hallmark
of our industry's success. These assets
too are key in this tough economy and
will be the critical factor in your emerging
even stronger than ever.
About the author
Bob Cronin is managing partner of
The Open Approach, an investment
banking/M&A firm focused exclusively
on the world of print. The firm's proven
results have made it the exclusive
member-recommended firm of PIA/
GATF and IPW. For more information,
visit www.theopenapproach.net, email
Bob Cronin at bobrcronin@aol.com,
or call +1 630 323 9700.
may 2009 | L&L