Crouser & Associates Performance Group program helps printers prosper through
on-site assistance and twice yearly group meetings. For more information by Email or call (304) 342-5100. Crouser Report OnLine is the Copyright Thomas P. Crouser. Material may not be reproduced in whole or in part without written consent. Current reports are on the WWW at http://www.printusa.com.

Letters: Working Capital; Partners; and More


Crouser Report OnLine April 5, 1996

Transmitted from Charleston, West Virginia

Dear Friends. . .

Okay, we give in. By popular demand, our only new Performance Group this year will open in Orlando, Florida instead of Chicago this fall. Our groups are a combination of on-site visitations and meetings which focus on creating a high level of performance. For more information, see the end of this message.

We spend a considerable amount of time in convincing printers of the need for working capital as expressed by a good (2.0+) current ratio. Many argue with me as if this is an academic debate. I don t see it that way. I see it as a matter of life and death. Here s a sad letter to make my point. Subj: closing my shop
To: TomCrouser


Dear Tom, I wish I had discovered you when I first became the owner of this franchise. Maybe I wouldn t be in the position of asking you the question I m asking today. I m in the process of shutting down my store and am in a quandary about what to ask for the customer list my competitors are clamoring to buy. I m hesitant to ask what I think it should bring for fear of turning them off completely. Neither do I want to come in lower than is realistic. I d rather come in a tad high and have room to dicker.

It may interest you to know that long ago I asked corporate for guidelines on what I should keep as a cushion against my receivables and payables and before I extended myself further on equipment purchases. I was told that they weren t aware of any such formula. Now I know better and wish I d known long ago. I would not have made some the stupid mistakes I did. In the end, cash flow killed me. I didn t have enough resources to hire an outside sales person which this business was crying for. No one was interested in commission only (gee, I wonder why!), and I couldn t afford to pay myself - much less pay an outside sales salary.

If you would like to use any of what I have said, please feel free. Maybe it will help another small printer, but please don t use my name. I feel like enough of a failure. Get the point? Only with a strong current position does any company have the opportunity to make it long term. Anyway, let s see about the specific request. How much is the customer list worth? Here s part of my response. Now, specifically to your question - - - -> Although usually the customer list brings little (most customers jump to another printer by the time a new printer buys the list and gets around to doing anything with it), could you not notify those who are clamoring to buy the list and ask them to make an offer? - - - -> In short, auction off the list to the highest bidder? Round one could establish the price - - - take the highest offer and circulate it to all others- - - -if you get higher offers repeat the same until you have a deal at a high price. Downside is some will not want to play this game, but if they are clamoring hard enough they will and it will guarantee you your best price.

Seems like this might be a good place to slip in this paragraph which is an extract from The Tom Silver Report, April 1, 1996 and published on the Family Business List. It is about Investment Policy. Tom Silver is a Financial Consultant/Senior Vice President and Senior Investment Management Consultant for Smith Barney, Inc.

Why is Investment Policy (a budget for investment-Tom s note) so important? Our answer is that it forces you to decide exactly what you hope to accomplish and how you plan to do so. In the absence of Policy, your investments may be haphazard, improperly diversified, outside your risk tolerance, and subject to frequent and possibly counterproductive change based on which way market winds are blowing. A good Policy will account for risk/volatility in advance, and thus improve your chances of staying a predetermined course. Without such a course, you may be subject to the day to day emotions which often are so destructive of long term success. Remember our discussion on Partners: Breaking Up Is Hard To Do ? I received several good additions to the advice given to the partners. Here s Earl with his personal experience.

From: earl@cdsnet.net (Earl Eyre)
To: TomCrouser@aol.com


Hi Tom, Having just gone through a breakup of a partnership, I can attest to all that you said about partnerships... My partner and I had know each other for 20 years so I KNEW we would have no problems!!! WRONG!!! I don t need to repeat all the warnings, you have already done so. The only thing that you didn t mention but was vital in our case was to see a good tax accountant. We were both shocked to see the amount of capital gains that we had to pay taxes on. The business was only five years old and while showing a profit, the profit was no where near what the government figured when it came to my partner selling her share. Both of our accountants (we each had our own) kept saying What benefits you will hurt the other--tax wise. In fact, the selling price may actually have to be adjusted to keep things equal. If I, the seller, pay the taxes on the capital gains, etc., then the buyer may need to reduce his asking price to keep all things equal. Or vise versa. The tax ramifications for even our small business were very complicated. We ended up with some of the sale in cash, some in five year payments, and some as a consultation fee--all so we would both be hurt the least by Uncle Sam.

Another word to the wise, though. While we need the accountants, they would have killed us in fees if we had not said enough is enough. They were willing to negotiate and re-figure and re-figure forever as long as we were willing to pay the bill.

And, yes, we did end up with an amicable divorce . But it was through sheer will power because both of our families wanted to remain friends.

Thanks, Earl. Here s Jim s take. Subj: Re: Partners: Breaking Up Is Hard To Do
From: PIPBAILEY
To: TomCrouser


I can only assume that when their partnership was formed that there was no buy-sell agreement written up at that time. Although our company is a C Corporation we did write up provisions to handle the departure of any of the founding partners and how the shares could be offered and sold. I guess if you are going to have partners in a business, the pre-nuptial agreement is a real must. Jim

Well, here s the real scoop from the person involved. Let s hear how it actually happened.

To: TomCrouser@aol.com


Thanks for your thoughts on breaking up our partnership. We actually are a corporation that each of us owns shares in and just like to call ourselves partners...I guess I would never think anybody would be crazy enough to create a substantial business that is truly a legal partnership.

We resolved it very amicably...he got his percentage of book value, paid out by the company over thirty months with 7% interest and an option to pay him off early...three months notice...his computer workstation...and we made a reserved list of 20 clients he is not allowed to work for 30 months. We go the right to continue to use his name in the company name for at least the 30 months too. We also gave the option to take copies of all the computer files and non-unique samples.

Well, thanks for the update. As you can see, corporation or partnership, breaking up is still hard to do. But it is easier for those who prepare. Now on to our next subject: Charging For Disk Storage. Who does? Who doesn t? Good idea or bad? Here s some of your feedback CHARGING FOR DISK STORAGE

From: InstyRambo
To: TomCrouser


Hi, Tom. About whether to charge for file storage on disk . . . I vote NO . . . we will not break it out as a separate line item. Here s why. We re better off giving customers the feeling we re providing free value-added service by maintaining files electronically. We want people to feel secure knowing their relationship with us includes our taking care of them. That means everything from remembering who they are to storing their artwork, whether it s in hard-copy form in a job jacket, or electronically on a computer disk. Why spoil such a critical component to a successful business relationship with a petty fee?

Of course, you ve got to recoup your costs. And you ve got to make a profit. So make sure you charge enough for the entire typesetting operation--and invisibly cover all those incidentals like opening files, faxing proofs, taking changes over the phone, storage, etc. You can pack a heck of a lot of customer satisfaction on a $19, 100-megabyte ZIP disk.

Best wishes, David Rambo, Insty-Prints of Sterling, VA Subj: Storage Charge
From: ATedeschi
To: TomCrouser


Tom: We are now charging clients $20.00 for a Zip Drive. We ask our clients if they would like us to archive the job for them. They almost always say yes . We inform them that we will keep a Zip Drive for them at the $20.00 price with no charge for putting the files on it. The Zips cost us about $17.00 and will hold 100 MB of data. In relation to the overall cost of the jobs this drive holds, $20.00 is extremely cheap. We tell our clients its their drive; they own it. This makes them feel comfortable and agreeable. As an alternative, they can own a $50.00 Syquest. Now they realize they ve got a bargain.

From: WingGirl
To: TomCrouser


Hi Tom. In response to your question about charging for storage on disk--we do not charge our customers for electronically storing their jobs that we run on our DocuTechs. As far as we are concerned, we are offering the service to secure their business. It s the same principal as giving our customers copies of Launch! for free, we are just trying to lock them in. However, we are strictly a copy shop--no presses--so we never were in the practice of charging for plates. I d be interested to see how other shops are handling electronic storage charges. Thanks for all the great info--Melissa

And, finally, this question from Carolyn.

From: Carolyn12
To: TomCrouser


While we re talking about storage on disk, what about charging for printout from disks? Does anyone charge if they are printing the job? I m not talking about printing out files for customers to use on a copier or take elsewhere or do with whatever. Carolyn Yorktown, IN

Well, okay, Carolyn. Let s see if we get feedback to your question. And speaking of questions, Hal from Southgate, Michigan (where it was still snowing last week) asks a good one for you. DIRECT TO PLATE

From: HalSan
To: TomCrouser


Dear Tom, I found the letters from Ray Andrews in Chicago very thought provoking, I m pleased that his LaserMaster is working very well for him, my experience is . . . .(it is a) so-so product coupled with the lousiest customer service I have ever been unlucky enough to be involved with. We have had four different units in three years.

Anyway, we would also like to make the jump to Direct to Plate. The questions I have been unable to get answered is what to do with camera ready jobs (we actually do get some once in a while). And how are jobs handled that only require a new or different logo, or perhaps just an address change?

Clearly it s not feasible to scan in 8-1/4 contracts printed in 7 point type in order to produce a photo-direct plate. What do the direct-to-plate shops do once they achieve a 75% or greater direct to plate flow? Are the RIP times actually fast enough to support a shop of any size at all? It s pretty darn quick to shoot 1/2 dozen photo direct plates in the dark room.

It s also going to be very wasteful to try to maintain both systems, what with much of the photo direct chemistry (in the darkroom) going bad every ten days from lack of use. Am I over complicating things? Am I making problems where problems don t exist? Thanks a lot.

Hal Wendt, International Minute Press, Southgate, Michigan. BTW-How much did you say those butter wrappers were?

Hummm. Let s see if we can get some responses on this. Is he overcomplicating things? Well, while we are on techie subjects, David Bailey has an observation on a question posed in a previous message. Subj: Rips/AGFA 9550
From: davidb@bips.com (David Bailey)
To: TomCrouser@aol.com


Having to deal with many different RIPS and Imagesetter products over the last 8 years, since Imagesetters were born (Remember the Linotype L-100) I have sold and supported many different brands of imagesetters. In response to Steve Scott s letter last week, a couple of things came to mind. 1. AGFA has not made the 9550 for over two years now, so his 9550 and the imaging speed are part of the problem. They have not made the 9000 SR for about the same period, and this being a Postscript level 1 device leads to some of the speed problems, and he cannot hook up a Viper 1.9 to the 9550, so don t waste the money.

And I would question the quality of the work that is being produced from the 9550 at a 150 Lines. The L330 does a fairly decent job with this kind of work, but the world is full of capstan devices quite capable of producing good quality 150 to 175 line screen color work. The problem is the Spot size on many of these machines is in the 20 to 30 micron spot size and you end up with dot overlap due to the DPI vs. Spot size on higher line screens. Quality and variable spot size is the reason that most companies either printers, trade shops, and service bureaus now have some sort of drum device for imaging.

Thank You, David Bailey davidb@bips.com

No, thank you, David for your observations on this technical question. Now, a competitive issue. Glen Fowler sends us this information from San Francisco. Subj: COPIER EQUIPMENT SUPPLIERS AS COMPETITION,br> From: GMFowler
To: TomCrouser


Dear Tom: I recently learned that Oce Corporation has made a National Agreement to give Alco Standard exclusive distribution rights to sell Copiers to the Print for Pay market. Now we are expected to do business with our competition. Alco Standard owns several office supply and services companies and competes directly with quick printers in many markets and market niches.

Companies owned by Alco include:
  1. NightRider Overnight Copying (70 locations nationwide)
  2. Taylor Made (distributor of Cannon and Oce in California and Nevada) Selling Facilities Management (in-house copying etc.) and retail color copying
  3. OMI (distributor of Sharp for California) Selling to the same market as Taylor Made
  4. A-Copy (Cannon distributor for New England)
  5. Unisource Paper Company
  6. Legal Copy international (formerly Atlanta Legal Copy)
  7. Reproduction Technologies in Chicago
All Quick printers should consider who they are helping to fund when making equipment purchases. I am drawn more to the aftermarket where I will not find myself bidding against my supplier. Xerox has drawn the anger of Quick Printers for years by competing through Xerox Business Services. Kodak had joined in to form Kodak Information Services. Caveat Emptor takes on new meaning.

Regards, Glen Fowler, Applied Solutions, Inc. - San Francisco

Thanks for the information, Glen. What are your thoughts or observations on this matter? Message me at TomCrouser@aol.com and we ll be glad to include your comments in a forthcoming message.

Here s Terry Montgomery s response to Melynda, the Clemson student who wanted to know how printers were using the internet to advantage.

Subj: How printers use the Internet
Date: 96-04-04 10:29:05 EST
From: sysop To: tomcrouser@aol.com


Melynda,

I read in a recent newsletter from Tom Crouser that you were looking at ways in which printers use the Internet. As possible assistance to you, I wanted you to know about PrinterNet ... an online network for the graphic arts industry that I operate.

PrinterNet was created primarily for printers, in that we provide a relevant collection of information sources that printers might need to do business, and make these sources available in an online mode. Our users don t have to be on the Internet; they can dial our network with their modems at 1.910.767.2622. However, if they are already there, they can use telnet to access PrinterNet at our IP address, printer-net.com. Soon, we ll have all of the PrinterNet services available directly from our web site at http://www.printer-net.com/printer-net/.

You are welcome to dial or telnet in to PrinterNet. Browsing is free. If you want to stay for a while, I will make a gratis Silver membership available to you. Just send me an email to that affect. I ve included our membership plans below. Sorry for the advertisement tone of this info; it was written for some ads that we have coming up.

BTW, I have just started a newsletter of my own, entitled I-Way or the Highway: A printer s guide to the Internet . It s intended to help printers and other graphic arts types use their computer and their Internet connection to make money, save time, and enhance their customer service. Oh, and it s free. If you want to be included on our email mailing list for this monthly piece, please let me know.

Best regards, Terry Montgomery, PrinterNet

Terry goes on to mention several of the services offered on Printer Net including electronic storefronts for the purchase of graphic arts materials, used graphic arts equipment database, Helene s Hotline, PrinterNet Classifieds, back issues of the Crouser Report Online, The New York Times, PC Catalog, Events Calendar, Company Showcases, File Libraries, Industry Forums, and PICA Online (Printing Industries of the Carolinas). There are three participation plans to choose from. Other products and services are also available. For more information contact: PrinterNet, the Online Network for the Graphic Arts Industry, Support: 1(800)341-6721; Fax: 1(910)767-2253, Modem: 1(910)767-2622; Telnet: printer-net.com or http://www.printer-net.com/printer-net/ or Email: sysop@printer-net.com And speaking of internet and all things electronic, Martin Turnbull had a request for women to write articles from their perspective. Doodledive, the only woman in the world to leave Florida to live in Alaska, wanted to know from Martin whether he meant the woman s perspective as an assistant or the woman s perspective as the person running the place. Martin responds to her and invites all women to give their perspective whatever it is.

Subj: Re: Women In Print
From: martin@usa.net (Martin L. Turnbull)
To: TomCrouser@aol.com


To Doodledive in care of Tom Crouser: Dear Doodledive: You can submit articles from any prospective of women in business working as owners, managers, slaves, frustrated, over worked, underpaid, not time off, no vacations, children do not care about the business, business management, customer relations, family relations, anything that deals with REAL LIFE. TELL IT LIKE IT IS.

Looking forward to your shots/articles. Jan & Martin at PrintUSA.com And, now, we end on a happy note from Stacy.

From: StacyM3497
To: TomCrouser


Dear Tom, I ve been getting your email newsletter for a few months now and just wanted to tell you how GREAT it is. I really appreciate this service and look forward to it every month. Keep up the good work,
Stacy Murray And all of youse guys keep up the good work out there. And, keep watching the front door. You never know when we might pop in. Today we leave for Tennessee and Kentucky. Then it s off to North Carolina, Florida, California, Iowa, Detroit and Atlanta. . .and that s in the next month or so. Anyway, Happy Trails till we meet again. Tom

For information on Performance Groups click here. Crouser & Associates - Helping Printers Prosper Since 1985

Crouser & Associates Performance Group program includes two on-site evaluations by Tom Crouser each year along with two group meetings. Management training is held during the group meetings along with participation in a meeting with non-competing printers. Join others who have decided to run their business instead of the business running them. Reply to by Email to Tom Crouser for more detailed information or call Clark Workman at (304) 342-5100. Or fax (304) 342-5187 or contact crouser@ibm.net.

Return to Crouser Index at http://www.printusa.com/articles/crouser.htm

Date inserted: Thursday, March 07, 1996 1:21:58 PM Return to PrintUSA home page WWW at http://www.printusa.com.