From: TomCrouser@aol.com
Date: Sun, 12 May 1996 23:13:23 -0400
Subject: More Xerox Comments and Other Things
Content-Length: 26564
X-UIDL: 832010997.002

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***** ***** ***** ***** ***** ***** *****

More Xerox Comments and Other Things
Transmitted from Atlanta, Georgia

Xerox isn t the only one after our customers writes Jim Ullrich from
Tennessee. Edie Goldberg chimes in from Connecticut. Then Bill Ternes gets
his chance followed by Mickey Evans from New Orleans. Here s their words.
*****

Subj:	Where is the competition coming from?
From:	UllrichJim
To:	TomCrouser

Received a  5 x 7 process color piece in with my AT&T bill that says 

Any
Size, Shape, or Form 20% off. NEBS. Inside page says 

Take 20% off your next
Printing Order. The other two panels talk about AT&T 888 numbers & there
 program AT&T Extras. Feels nice to be in the AT&T extras business. 

I Called George Rounds at NAQP to see if he would get a name at AT&T I could
call (not a clerk or service rep) to give them my policy of not buying from
competitors. He told me that Apple is putting Kinko s coupons in with their
equipment now. 

I know how Mona feels about Xerox. That is one of the reasons I have never
dealt with them. Remember the old saying 

Never wrestle with a pig: You both
get all dirty, and the pig likes it. 

We submitted a bid for some printing to the county government (we usually
don t do bid work) and the bids were as follows: $2471, $2339, $2217, $1598,
$1580, $1316, and $1074. The top five bids were local (our bid was $1598) the
bottom two bids were from Memphis (400 miles away) and Florida. I asked how
the non-local businesses got to bid and the answer was they place all bids on
the Bidnet which goes all over the country. Of course my comment was I am
sure the bottom 2 bidders pay a lot of taxes locally.

The local Ricoh dealer I have dealt with and also have printed for over the
years is getting into the graphic business - digital. They called me the
other day to see if I would do business cards for them wholesale because
their customers are asking for them.

Is there anything we can do about it ? I think so. Everything on learning how
to ethically compete, control our greed, find out and influence what is being
taught or not taught in marketing courses, to get some support from our
associations, etc. And to think that we  are being told government is the
enemy! 
*****

Subj:	Re: Letters: Mad As Hell And Not Gonna Take It In Boston!
Date:	96-05-09 14:51:58 EDT
From:  	EdieSG
To:	TomCrouser

By the way, in yesterday s Newsweek there was an from Deluxe check printers
about their new program called Printovation which gets you all your printing
without leaving your pad.  You can buy their software for $39.95 which gives
you access to their catalogue of services, instant price quotes on all jobs.
 Printing, copying, design work ---it s all there.
 
I don t think the larger commercial accounts we have will be attracted to
this type of program, but certainly the smaller offices, home or office
building may be attracted to this kind of instant response time and mail
order service.  This is just one more company with  a very large budget for
marketing to chip away at pieces of our pie. Even more frustrated in
Connecticut
Edie
*****

Subj:	Re: Love Letters To Xerox #2
Date:	96-05-10 19:16:14 EDT
From:	Willieee
To:	TomCrouser

Howdy Tom. . . .Just when you get really tired of Xerox doing the same old
stuff for more years than we can count, you get an outside perspective...
    
Today I had lunch with a long time friend who sells blueprint supplies (diazo
paper). At lunch he asked me quite honestly, 

Why do so many of my customers
hate Xerox... really hate them?


    
His customers are not generally Xerox customers. Yet they have decided
attitudes about The Company.  I think that Xerox will soon begin to pay a
much bigger price for the deep disaffection that they have with their
non-customers and their customers. From the print-on-demand electronic
printers I have started to hear that there is a backlash in the CEO / COO
community regarding the DocuTech.  Many of them put those machines in the
last two years after promises from Xerox of cost savings and productivity.
Some now feel they were duped and are dumping their DocuTechs on the used
market.

At a speech I gave recently at the Explore Electronic Document Conference in
Orlando I pointed out that current business requires that we have real
information sharing partnerships with our vendors.  The  sweet spot  of
cooperation we get when we are buying a 

box

 is not enough. If we are to be
successful in using the technology productively we must have ongoing support,
cooperation and in effect a partnership. If fact many of the major users of
DocuTech systems report that they have had to insist on having technical
support from Xerox labs in order to continue to tackle the myriad types of
files and jobs that come to every print for pay businessman. 

The time is now for Xerox to come through on real partnership - one that does
not hold a marketing attitude of 

We want it all.

 and a sales attitude of


We will do what ever it takes.

  We just don t believe it anymore - - - Bill
Ternes
*****

Subj:	Re: Love Letters To Xerox and More
Date:	96-05-10 12:52:58 EDT
From:	PrintgPlus
To:	TomCrouser

Tom,

A lot of sound and fury about Xerox s latest marketing campaign, but I think
you ll agree that not much has changed.  Small press printers (I still like
your terminology) cry that it s wrong, immoral, etc.  But that probably
doesn t make it illegal.  Larry Hunt, NAQP, etc. went through all this a year
or so ago, and came to the conclusion there was not very much they could do
about it.  But we ve got a slightly different situation; Xerox won a
Government contract in March with their low bid (we were 2nd bidder) of $1.77
per THOUSAND, 8.5 x 11

 copies.  We wrote to XBS and the Xerox Vice President
for this region, requesting they withdraw their bid, as an error, because it
is obviously below their cost.  We said if they did not withdraw, we would
consider it an effort to drive competition out of business by pricing below
cost.  Our understanding is that is clearly illegal.

Xerox has not withdrawn their bid and, to date, has not responded to our
letters.  We are considering a lawsuit.  If anyone else has knowledge of a
Xerox specific, illegal act, and wants to talk about joining a suit, please
E-Mail to PrintgPlus @ aol.com.

Mickey Evans
*****

And, now a word from Mona in Boston. Seems she takes exception to the comment
that she was 

moaning.

. . . . (get it. . . . . .Mona 

moaning

). . . .all
right, anymore comments like that and we ll drop you from the list. Now, pay
attention. Here s Mona.
*****

Subj:	xerox
From:	MSQP1
To:	TomCrouser

Dear Tom. . . .In response to the man who thought I was whining.  I am not
whining I am working hard to make other printers aware of what is going on
around them.  Because I too believe a number of printers are going to be out
of business because they do not know what they are going to be competing with
in the next few years, they do not go out and sell anything to anyone and
they do not plan for the future.  I have 
been in this industry for 24 years (I do not look like I could possibly have
been around that long, huh!) and I have always been aware of Xerox s
presence.  I see them being even more aggressive and competitive and I want
other printers to start thinking about how they  are going to compete in this
industry. Mona
*****

Thanks, Mona. In the same edition, Gary Atwood of Richmond, Virginia asked
about a full list of subsidiary companies of Alco Standard. Leonard Factor
tells you where you can get it.
*****

Subj:	Gary Atwood s request
From:	LenPrntPlu
To:	TomCrouser, crouser@ibm.net

ASN (Alco-Standard) s 10-K filed w/SEC should have a full list of
subsidiaries unless that has changed since my wall street days (last
century.) I believe these forms are available on-line but have no idea where
to find them. Hope this helps.
Leonard Factor

P.S. Alco gives a lot of this info in their Annual Report & Proxy.  
*****

Well, enough of Xerox. Let s get back to our other challenges. Here s Paul
Polomski from Redwood City near San Francisco, California. PJ has a question
about an insurance claim.
*****

Subj:	Questions re: Cost of Materials & Profit
From:	polomski@hooked.net (pj polomski)
To:	TomCrouser@aol.com

Tom - I am trying to settle an insurance claim. I was hit by an uninsured
driver last August 21 and was treated by a chiropractor . . . Previous to
this our sales had been significantly above the previous years. After the
accident our sales dropped to below the previous years sales. . . the
insurance company (is) asking me to calculate my lost wages/profit. Can you
tell me what the average cost of materials is for  average print jobs? My
guess is it ranges from 13%-25% with 20% being average.

If I estimate lost sales . . . and then figure that 20% of that would have
been cost of materials then I (can) figure (my specific loss). It doesn t
seem to me to matter what this money would have been spent on (overhead or my
compensation) I did not receive that much cash. . .Is this reasonable and
does this make sense? I want to present my best case to them in order to get
the best settlement without hiring an attorney and going to court. Thanks for
any info on this situation.

Paul  - P.S. - My wife and I really enjoyed your presentation in San
Francisco. Hope you got to spend some of that beautiful day sightseeing.

Thanks again, Paul
*****

Hey, Paul. Pamela and I sure did get to see some sights. We put the top down
on the car (fortunately, it was a convertible) and took off. Actually we
ended up near Redwood City. . . .but Pamela was getting a little blue around
the gills. . . . think it was something she ate the night before. So, we had
to turn back early.

To your question. . . .25% would be a better direct materials estimate and in
some cases it would be 30%. However, instead of looking to industry averages,
you would have a much better case if you just calculated your own experience
with direct materials and used that in the scenario your describe.

So, yes, I think the approach of taking your sales loss minus direct
materials as a claim would be reasonable and understandable to the insurance
company. Hope things work out well.
*****

And here is proof that folks do read my Case Study articles in Quick Printing
magazine. One Arizona printer wrote:
*****

Subj:	response to magazine article
To:	TomCrouser@aol.com

Dear Tom . . . .I just got done reading your article 

Two owners, Two
Systems

 in QP magazines May 1996 edition. After reading the article I
couldn t believe how our situation seems so similar. We own two (shops) . . .
. .(and) we ve been in business since 1978, our two stores do approx. $1
million a year in sales and we are a family operated business. We are going
through sort of a transition period because my parents are slowly trying to
get out of the business. There is a fair amount of management


disorganization

 not only because of the fact that 

dad

 is slowing down and
doesn t want to let go, but also because of differences in management style.
We don t have anyone accountable as you described in the article, When we ve
discussed it, Dad usually says 

don t worry about the way its run, just get
more customers/sales and that will make up for it

.  Financially we are in
pretty good shape. As in most companies, cash flow gets tight sometimes, but
we are very stable. I ve tried to get the point across that someone needs to
be 

president

,  

vice-president

 etc. but he doesn t think it s that
important. I think it s extremely important. . . . .
*****

Thanks for your message and your kind words. The short answer is: time and
result problems (slipping sales, negative cash flow, jobs not getting out on
time, etc.) are usually because of disorganization. Who does what to whom? If
I were to ask your workers to whom they reported - - - - -would they be able
to tell me? Are the three gettin s being done everyday? Gettin  jobs out,
getting jobs in, gettin  paid? If production doesn t get out - what
management person do you fire? If sales calls (not counter contact) are being
done, who do you fire? If money isn t being collected and/or statements not
being sent, who do you fire? These are some of the basic questions which
begin to probe the issue of disorganization.

Anyway, keep the faith. The good news in your scenario is that you should
have enough sales in order to make changes necessary to transition the
business. However, generally, the transition won t be done until Dad is ready
to do it. Actually, I had a case up in New England which was somewhat similar
to what you are discussing. We were able to arrange for a sale of the
business from the father to the son. Now, son is running the company and
things are back on the upswing.

So, one technique which I prefer, is for the younger generation to buy the
business from the older generation. By the way, I ll be discussing this
during the National Association of Quick Printer s Family Business (Next
Generation) meeting which immediately follows the NAQP meeting in Chicago
this July. So, thanks for the message and stay tuned for more articles on
similar topics.
*****

Now, let s talk about selling print shops. We hear from Laser Ted who use to
live in Alaska (did you hear that Alaskan readers?)
*****

Subj:	Selling Printshops
From:	LaserTed
To:	TomCrouser

Tom . . . .I read Jay s comments in your 

periodical

 about selling the print
shop and found them very interesting.  I am not ready to do that yet, having
been in business for only  6 years, however I may be in that position
someday.  Jay suggested you write a series of articles on the subject.  Tom,
I would love to see the two of you collaborate on a series of articles on
this topic.  With your grasp of pricing theory and concepts and Jay s
real-world experience it would be an exciting piece of work.

As you ve written before anything (business or product) is only worth what an
able buyer is willing to pay - no matter what we may wish and dream - so the
trick is to increase it s value in the mind of able buyers.

I lived in Alaska for a couple decades once and observed the difficulty and
regularity with which the highway lodges and roadside business were sold,
repossessed and resold again.  Individuals started these businesses 30 or 40
 or more years ago - in many cases as homestead-type developments.  All along
they have been a subsistence operation - barely eking out a living to support
themselves and their family, buying equipment piecemeal, bit at a time, and
increasing the business slowly with sweat and tears.

Upon reaching retirement they want to sell.  They get an appraisal on the
acreage and business and look for a buyer.  In almost all cases they carry
the paper - no bank will touch most of these deals.

We now have a new owner with a mortgage.  We still have a subsistence
business, but instead of just meeting the needs of his family the new owner
must now make a monthly payment.  It just doesn t work.  The new owner slaves
away with the antiquated and worn-out equipment and buildings, trying to make
a go of it, but the business never has thrown off the kind of cash he is
hoping he can grow it into.  So after a couple years of fruitless labor, he
limps off, dreams dashed, bank account depleted, to try to find work back in
the city.  And the owner, now even older, is forced to take the business back
to retain the small value it does have on the marketplace.

I ve seen it time and time and time again.  Eventually the owner just gives
up or dies and everyone realizes the facts of the situation and the place is
abandoned to the wolves and weeds.  In my opinion, about the only way to get
out of one of these places is to get as much cash as you can up front and
just let the buyer have it - never expecting another penny.

Does this sound like print shops you have worked with.  
:) later,    Ted...
*****

Yea, Ted, it does have a familiar ring to it. Left untrained, many print shop
owners will be in the exact scenario that you depict. In the transitioning
businesses I work with, we assure that there is a positive cash flow and a
real organization. In short, we try to make sure there is something to sell
other than the equipment and some inventory for that does not make a going
concern. Next, we try to assure the buyer has a grip on what they are doing
and an understanding of what is important. This, plus other covenants, won t
guarantee a safe sale, but it will help give to the financier (the seller) a
better opportunity to stay out of the situation you describe.

Additionally, I have many times described this as a life-style business which
has an impact on your scenario. We must get out of this business now, the
time and the money and not rely on the pot of gold at the end of the rainbow.
If that is done and our retirement planned without having to rely on the sale
of the business, then we are less likely to have to pick up the pieces if a
deal does go bad.

And, finally, I have worked with a number of folks who felt like they didn t
want to finance the sale either. What they found was that they usually could
only attract a cash price of about 25% of a financed price. Add that to the
fact that practically all businesses are sold with the seller taking some
paper and we end up with some sort of compromise. . . .or the owner keeps on
working. Thanks for writing.
*****

And, here s Bob who thinks I may have been a bit harsh on Post Pre-press.
Let s hear him out.
*****

Subj:	Customer responsibility
From:	rstor@panix.com (Robert Stor)
To:	TomCrouser@aol.com

Tom. . . I think you may have been a bit harsh in your response to Post
Pre-press. Even though he (and you) talk about the legalities of customer
sign-offs on work, there is really another issue at stake. We are a very
customer-oriented company. We have no-questions-asked guarantees on the
quality of our work and on-time or free policies. The first rule we teach our
employees is that if the client leaves our shops not completely satisfied, we
have not done our job properly.

Based on this philosophy we have had excellent sales growth in our retail
sales - we do over $2 million/year. But our profitability is not what I want
it to be. In the last year or so we have been re-evaluating the direction
that our company has taken. This has led us to take many steps like seriously
investing in technology, establishing a strong outside sales effort, etc. I
won t bore you with the details.

The point of this is that one of the things that we ve realized was that in
our eagerness to make the customers king, we have been willing to absorb all
their errors, changes of mind, inability to prepare their 
work, etc. And this was one of the main reasons why our bottom line is
hurting.

Our wastage is very high despite strict quality controls, we run lots of O/T
because of customer-caused re-dos and emergencies. Furthermore, because we
are the only people around who accept total responsibility for the jobs, we
have created a permanent client base of irresponsible clients who have no
incentive to learn and change. And this, by necessity, displaces other
clients who might be easier to service.

We are now starting to shift some of the job responsibility to clients. When
faced with impossible deadlines, we don t just blindly say 

Yes

. We tell
them what they need to do to help us meet these deadlines. When they are
unwilling to do it we ensure that we are well compensated for the risk that
we take in doing this work.

Despite what all the customer-service gurus say, you need to work-with-your
clients. That means that they need to share responsibility for the success of
the job. You are correct in stating that if you focus only on limiting your
liability you will not have enough clients to stay in business. Please
realize, however, that there can be such a thing as taking too much
responsibility.

Bob Stor, Copycats
*****

Thanks for your letter, Bob. Your letter brings up a whole range of
operational issues. In fact the whole issue of 

Meeting Impossible Deadlines


has brought me a lot of work for most try to meet these demands through
heroics instead of improving operations. Many printers try to 

make the
customer king

 by absorbing customer errors, etc. But that s not the point.
The point is to change the system so less errors occur in the first place.

If one does have high wastage because of overtime due to 

customer-caused
re-dos

 and 

emergencies

 
then I would look to the people who convert customer requirements to
production specifications: our sales people and our customer service
representatives. No production system can or should 

blindly say  yes. 

 If
that is occurring now, then it would be my guess that we truly don t have one
person in command of production who makes and meets customer commitments. In
short, I see an operations and organizational issue.

While I agree that customers must share responsibility for the relationship,
I don t agree that there can be such a thing as the printer taking too much
responsibility. That s because I don t think we mean the same thing. I think
you mean cash and I mean responsibility. While it is commendable for printers
to 

make the customer king,

 this does not mean that you can do anything the
customer wants nor is that what Total Quality Management is all about.
Quality Management is knowing what the customers requires and then providing
that. That is not the same as doing anything the customer wants. For
instance,  ask Federal Express to get a package across the country for you in
one hour. Get a steak at McDonalds. Or get a new Ford Explorer in PMS235 or
some other off standard color. My opinion on what you are saying: its
operational issues vexing your bottom line which may be directly related to


making the customer king,

 if, in fact, that means doing anything the
customer wants and bearing the full cost yourself.
*****

And here s a few words about our issue on Depreciation. First, Mattie Burtt
in Colorado.
*****

Subj:	Depreciation
From:	AUNTMATTIE
To:	TomCrouser

Dear Tom. . . .I agree with you 1003% on your Depreciation report.  (The
1000% is for your sound business principles and the 3% is for friendship.)
 Ask anyone who has a brain for business - if they are contemplating buying a
piece of equipment to make money on ----do they allow something for that
equipment expense in how they price their product or service?  Sure they do
and they don t allow the whole $20,000 (i.e. your example) in each of their
bids but what they do allow is a portion of this cost.  Just another way to
look at depreciation/amortization/interest expense.

Is it okay if I download your reports and keep in a binder?  Or is this
against the copyright?   
*****

Thanks, Mattie. You may always download, print out, think about or throw
darts at our on line newsletter. After all, I don t belong to the publisher s
group. Actually, we copyright the material so it will not be reproduced for
gain. So, have at it. And speaking of depreciation. . . . here s Gregg.
***** 

Subj:	Re: Depreciation - Crouser Report, May 1996 
From:	MacMillanG
To:	TomCrouser

You wrote:


Assume then that we make 12 payments of $500 or a total of $6,000 in year
one. What shows up on our income statement as an expense? The payments of
$6,000. No. What shows up is our year one depreciation expense of $3,000.
Hey. We pay out $6,000 of cash and get to deduct only $3,000! Yes, and this
is why we have to be so careful in our equipment purchases. However, the
$6,000 payout stops at the end of year three and the depreciation expense
goes on for two more years at a rate of $3,000 per year, eventually catching
up.


------------
Just the principal on the loan is not deductable--the interest is and shows
on the income statement.

Great newsletter! Really enjoy it and have gotten loads of useful info and
tips. I don t know how you do it, but it is refreshing to read such an
error/typo free newsletter. Whoever does the proofreading does a great job!
Keep up the good work--Gregg MacMillan
*****

Correct amundo, Gregg. Somehow, I think I was using an example without
considering interest, but you are right: the amount which doesn t show on the
income statement would be the principal repayment of the loan. As for
proofing, well. . . . ..(drum roll). . . . . 

Whoever does the proofreading
does a great job!

. . . .I do it, of course. Well, thaaaannnnkkk you
verrrrry much. Actually, I do the newsletter from scratch on my trusty
computer which has developed a problem with the keys in the center that it
keeps dropping. . . . .so I have to keep working on it a lot harder than I
should and have had the fleeting thought that I bet I have dropped a lot of


n s

 and 

y s

 and 

h s

 and characters like that. Well, anyway, thanks for
your message and the kind words. (I will forward this message to my wife,
Blondie and Clark, in our office, who always proofs everything I do in hard
copy but not my email stuff. . . .they will be proud of me).

And, to all of you, Happy Trails from Atlanta

Tom and Lefty (Blondie s new name since she injured her right hand today).