SOI Forms: A Passing Grade
St. Patrick's Day just passed. But business forms will need more than luck to secure a future filled with large orders and soaring profits.
It was the distributors' turn in November. While the decline in sales wasn't as dramatic, it was still present, nonetheless, only reaching $446.5 million in comparison to the previous year's numbers of $558.5 million. On a positive note, forms still put forth the highest showing among the various printed product sectors.
This information leaves many scratching their heads, wondering how long they will have before printed forms are phased out. Jeff Russell, president of Hillsborough, North Carolina-based Major Business Systems, admitted to falling on some hard times. The company is adapting its business model to survive.
"As we are celebrating our 44th year in the industry, our company has experienced the transition of the industry from a growth cycle to a maturity cycle as well as numerous economic cycles. I would say the last two years have presented the most challenging times that we have ever experienced," he noted. "The two-edged sword of the harsh economic downturn coupled with the continued technological erosion of core products has had a severe impact on those who have not pursued a course of diversification. This generally creates a survival mentality, which also leads to extreme price concessions. Those who have pursued the diversification strategy generally have a stronger foundation of product lines [that] have maintained a semblance of profitability."
Major Business Systems began its diversification process in the early '90s. Unfortunately, that isn't always enough to escape the impact of technology. Leadership and creativity will be tested.
"As a family-owned company, how much we can change will be driven by how much the economy will change which remains unknown. Because the manufacturing segment of the industry is so capital intensive with respect to re-tooling for change, this uncertainty has led to caps on re-investing by financial institutions which, in my opinion, continues to hinder an economic rebound and will be an impediment for those who want to evolve their companies into something different," he explained. "Quickly as we look at the options for changing or adapting our product line, our decisions are now based on which one may bring a quick return on investment. Where in the past, we would have been willing to extend that term a little longer."
But it's not all negative. Russell feels the recession was a bit of a wake-up call to help Americans re-think their bad habits. "Our country, our company and in our personal lives, we became complacent and were living, spending and developing business habits that were not conducive to long-term prosperity," he mentioned.
Russell went on to say that this has been a very educational period for his company and—while difficult at times—Major Business Systems has adjusted its policies to survive now and when the country begins to see more prosperous times. If suppliers stay determined, the payoff will be huge.
"I still have confidence in our industry and its necessity for efficiency in the business community. Although the proverbial slice of pie may be somewhat smaller, it still is a substantial market," Russell stated. "There is a need for paper-based solutions for business, but we all must dust off the best practice of systems selling versus order taking. If we can do this, I believe the future is still bright."
Mike Fleming, vice president of operations for Golden City, Missouri-based Golden Business Forms, already is seeing positive changes.
"The state of the forms industry today is vibrant—for the survivors. Quotes are up, orders are increasing, lead time shrinks, pricing is very competitive and pressure is great both internally and externally. Customers demand more. Credit risks are at an all-time high. And greatest of all, leadership is tested," he observed. "For those who have managed 'lean,' the recession is a bump in the road and it is business as usual. The plan is a) Be customer responsive, b) Be customer responsive and c) You guessed it, be customer responsive."
The volume is up from previous years at Golden Business Forms. Similar to Russell, Fleming said the remaining survivors will be pressured to adjust to the market. This can be accomplished if company executives enlist the ideas and synergy from their staff. Fleming stressed that positive returns will be experienced for both employee fulfillment and company success, which he described as a "win-win" situation.
He continued, "Ultimately, leadership in the organization will be severely tested to guide the organization, as a team, to succeed."
And Golden Business Forms is passing the test so far. Fleming said his company's reputation is "easy to do business with" and he credits his experienced staff for creating and maintaining that customer perception. He re-emphasized, "To earn that title, one must follow through … finish the job."
Finally, in today's market, pricing will be even more essential to stay one step ahead of the competition. "For those novice distributors [who] are on the edge—there are hundreds of customers looking for a better price [and] you may be the one they are looking for. Are you up to the challenge?" Fleming asked.
In the end, to be the best, one must excel at everything. This means being "a better communicator, a better organizer, a better operator, a better salesperson, a better shipper, a better estimator, a better listener, a better leader and a quicker decision maker," Fleming said.
For the remainder of 2011, certain analysts will dismiss printed forms as a dying breed, consolidations will occur and more companies will permanently close their doors. Suppliers and distributors can buy into the hype or do it right.￼