Date: Wed, 11 Sep 1996 10:56:20 -0400
Subject: It Doesn t Just Happen
Crouser Report OnLine Copyright 1996 Thomas P. Crouser, September 11, 1996 -
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It Doesn t Just Happen
Crouser Report September 1996
Transmitted from York, Pennsylvania
Dear Friends. . .
It doesn t just happen. Customers just don t leave. Cash just doesn t stop
flowing. Your best workers just don t up and quit. There are many warning
signs of predictable disasters that we sometimes ignore at our peril. Here s
a few situations I have come across recently by printers who usually begin by
I am in trouble because. . . . .
Customer Left I:
I am in trouble because my biggest customer was bought by
another company and moved.
There is obviously little one can do to stave off
corporate raiders from your best customers. However, there were still many
things this printer could have done. First, once you get a few significant
accounts, don t stop your sales activities. The selling function is to
printing what planting is to the farmer. Don t plant and you don t reap. But
don t sell and you will weep. Second, this corporate raid was no surprise to
anyone except the printer who stood idly by while it happened. This process
took about two years from start to finish. Not once during that time did the
printer try to sell something to anyone else. Warning Sign: Little or no
sales activities on the part of the owner who spends most of the time
enjoying the fruits of the income from one or two significant accounts (big
car, big house). Biggest Aftershock: learning they are not earning the money
they are taking from the business and having to go back to real work.
Customer Left, II:
I let one of my customers become 25% of my business and
then they left.
This is usually followed by the printer saying,
I ll never
let that happen to me again.
I actually know printers who are afraid to take
business for fear the customer will become too much a part of their business.
Had a printer in San Diego tell me in the early 1980 s that his big customer
left him after giving him $150,000 of business a year. I sympathized then
asked how long had he had the customer.
was the reply. Twenty
years times $150,000 is about $3 million in sales which the printer should
have earned about $600,000 in take home pay or $30,000 per year. Heck, the
company s employees don t last that long. We have no guarantees, but the
point isn t to be afraid of large customers. The point is to make yourself
less dependent on one account by growing others. That s the problem. We
didn t grow other accounts when we have the chance. Warning Sign: Same as
above. Little or no real sales activities on the part of the owner. Owner
seeing the big picture.
Customer Left, III: Same as the previous one except,
They went with another
printer because of price.
Well, that was the case, except it didn t happen
just that way. The printer got this customer when they walked through the
door about ten years ago and have been doing everything for them since. The
customer grew and became an obvious target for other printers who were
selling something to someone. Our printer did nothing. Our printer didn t
even visit the good customer to thank them for their business. Then, one day,
about six months ago, the buyer quit. Our printer didn t even know it because
the substitute buyer just kept doing things the way they were done in the
past and sending in orders. That was, until a new buyer was in place. She
arrived two months ago and it took her about a month to get settled. During
that time she had been visited by no less than five other printers who
suggested she review her printing relationships and they offered to assist
her since she was new to the area. She chose to do so and our printer was
extremely shocked and disheartened that such a good customer would send to
him a request for quotation which the buyer prepared with help from the other
printing salespeople. He, of course, stormed over to the customer and relayed
all the great things he had done for that company since it started and,
implicitly, demanded she keep doing business with him. She eventually went
with a printer who had a better price. Warning Sign: Owner has not personally
visited their top twenty-five accounts within the last six months to
personally thank them for the business. Additional Sign: owner has no idea
who top twenty-five customers really are. (Cash account, business cards, or
other miscellaneous accounts don t count.)
Customer Left, IV: Exactly the same as the previous one,
They went with
another printer because of price.
The only difference was they really did.
Our printer bought a lot of equipment based on desire, not need. He had nice
offices in a fancy building. He had most of everything, except common sense.
When he plugged his
into his computer, it gave him an extremely high
price. Add this to the fact the printer relied only on price as a
differentiation and you get a situation where the printer gripes about the
printer down the street who doesn t know their costs. Moral: If you are going
to rely on price only as a differentiation, you had better be the low cost
producer. Warning Sign: Owner spends the vast majority of their time
estimating jobs in search of the most perfect price which will maximize their
income without them having to sell (Note: this also generally degenerates
into the owner working for the outside salesperson they have hired to do what
they don t want to do). Additional Warning: Owner has too many printing
magazines in the bathroom and buys based on emotional desire to have a bigger
press than the boy down the street.
I m in trouble because of one customer went bankrupt and stuck
me with $5,000 of bad debts.
That wasn t the problem. The printer had sold
this customer $50,000 per year for five years or a total of $250,000 worth of
printing and all the printer is doing is focusing on the obvious $5,000 loss.
Sure, it hurts, but that s not the problem. This customer has been a great
customer over the years. The problem was the printer wasn t prepared to
absorb the shock of a significant bad debt because he was taking more out of
the company than he earned which kept the current ratio (current
assets/current liabilities) at less than 1:1. He also wasn t doing a very
good job at working his receivables which could have lessened the loss. It is
predictable you will have bad debts. They will amount to one or two percent
per year overall which is exactly what this printer was experiencing. Warning
Sign: Little, if any, accounts receivable controls and no sales activities on
the part of the owner.
Right Arm Ups and Quits:
I m in trouble because the guy I trusted to run
my business for all of these years, just up and quit.
We all run into some
variation of this theme. And, it obviously hurts most when it s our
However, generally, that s not the problem. The problem is people
become right arms because we don t delegate, we abdicate. The right arm
method of organization builds everything around a dedicated, true-blue person
who assumes authority by doing for you all of the stuff you don t want to do,
leaving you to dream up hair-brain schemes to impose on people who have work
to do. I ve done it and I know how good it feels. I ve seen it destroy many
businesses. All we have done is thrust the chaos down one level to a person
who is in charge, not so much of solving problems, but keeping problems from
the owner. End result, no one is in charge of getting jobs out (Right Arm
is!), no one is in charge of getting jobs in (Right Arm is!), and no one is
in charge of getting us paid (Right Arm is!). All we have done is, in this
case, hire people to stand around and watch Right Arm work. The real problem
is we are organized around people, not functions. And what s personally
disturbing about all of this to each of us in this position, it s not that
Right Arm quit (who by now is an ungrateful sob), but that we now have to do
real work. Warning Sign: Only one other person reports to the owner and that
person handles everything else. (Note: The owner, then, reports only to God.)
I m in trouble because I can t buy the things I need to keep
up with the technology that is out there.
Usually this is a printer who
doesn t have a lot of money (poor current ratio); isn t making any money now
(can t get the prices I need); and whose solution is to buy more equipment.
That s not the problem. The problem is you are not making money now. .
.today. . .where you are. It s the Peter Principle of Finance. Spend until no
one will give you more credit. The solution is to fix it. Assume that the
cash you have coming in is all you are going to get. Now, don t pay out more
than you have coming in. Budget. Warning Sign: Justifies one piece of
equipment at a time and never looks at all needs at once. Always needs one
more thing to make it right. Buys on emotion. Many times won t let the
workers play with the new toy until they become bored with it.
I m in trouble because I don t understand what I need to
know in order to keep up with the technology.
Usually this is a printer who
hires people to understand computers for them without ever trying it
themselves. You don t need to become a computer guru nor do I mean for you to
know everything. . . I do mean for you to know something. Take a computer
class. At least get online through America OnLine or some other easy service.
Don t spend all of your waking hours trying to master stuff, but, at least,
catch up with your customers. And, you have to know the basics before you can
cope with advanced questions (translation: when the computer guru you ve
hired wants some of your money to buy something). Warning Sign: Hires someone
else to load recently purchased computer programs for them.
I m in trouble because I understand too much about the new
Usually this is a printer who hides in the back room with a
computer and I dare any worker to disturb him (never seen a her do this). All
the answers lie somewhere in the next screen. These printers rarely make
money although they do make interesting and startling pronouncements on how
to really make money in the printing business through technology. Maybe, just
maybe, their profits will one day catch up with their pronouncements, but I
doubt it. Plan instead on buying some really neat gizmos cheap at auction.
Warning Sign: Too many computer magazines in the bathroom and no printing
magazines. Talks in jargon. Has little or no real life.
So, it just doesn t happen. We don t just get into trouble. Customers just
don t leave without reason. Cash just doesn t stop flowing without a cause.
Your best workers just don t up and quit without warning. Signs of
predictable disasters are there. However, we have got to want to see them.
For Print Shop Owners
Winter Retreat and Owner Training: Our winter retreat and training for owners
of print shops will take place January 15-18, 1997 in Fort Lauderdale,
Florida. We ll also be visiting the Graphics of the Americas trade show in
Miami as well as enjoy the sunshine in winter! (Remember last winter?)
Current clients are given priority for registration through October 31st. To
get on the list for conference information, call (304) 342-5100 or fax (304)
1997 Estimating Guide Renewal Season Begins
Included with this newsletter is an invoice for your 1997 Crouser Estimating
Guide. For those of you who have not done this, we run a renewal campaign
every year from September through November and then ship the books prior to
January 1st. That way, we re not having to bug you all year for renewals. As
always, we ship in order of receipt and shipments will begin in December.
Those who purchased the Estimating Guide for the first time in 1996 are
allowed to upgrade to the 1997 Guide at a pro-rated rate. For further
information, see the enclosed information or call our office at (304)
Look for These Features In Your 1997 Crouser Guide:
3% Increase In Your Overhead Costs; More Competitive Carbonless and Coated
Stock Prices; New Matching Letterhead Envelope Section; Increased Drill,
Fold, Number and Score Prices; Color Connectivity and Color Copy Prices; High
Speed Copy Price Grid; New Estimating Standards; Pleasing Process Color and
more. . .
Computer Program: We ve been getting great reviews on our accounting software
which seamlessly interfaces with Crouser s Quick Estimator. The receivables
have been out for some time, and the full package (networked of course) will
be in general release by the end of September and includes: accounts
receivable, accounts payable, general ledger, fixed assets, and payroll. Runs
on PC s, preferrably 486 s or better. For a free evaluation copy, contact
Clark Workman at (304) 342-5100, fax (304) 342-5198 or message (with your
names, address and telephone) to Crouser@aol.com.
Travel Log: Pamela and I will be headed to northern New Jersey and the
Pittsburgh area for on-sites during the first of September, then we will be
settling down for our fall Performance Group meetings, one in Pittsburgh and
two in Orlando. Our second Orlando group is now complete and has participants
from Iowa, Georgia, New York, New Jersey and Michigan. A tentative commitment
has been made to establish a new group in the spring, but to join, a current
on-site evaluation must be completed. If you have an interest, please call
Clark at (304) 342-5100.
And, if you have an internet address, but are not receiving the Crouser
Report OnLine each week, send me a message to TomCrouser@aol.com and say
It s free and it s fun. See you soon.
Good leaders resemble each other but each bad leader is bad in his own
way, just as there is only one kind of good health but many kinds of
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Tuesday, October 01, 1996 11:50:28 AM