Wages In Printing Industry

I was driving home the other day and it occurred to me that if I really wanted to sell a lot of Wage and Benefit Studies in the printing industry all I would have to do would be to market directly to employees rather than owners.. I am sure such an approach would not be looked upon favorably by many printers!

Fortunately, I am publishing the  NAQP/NAPL 2012-2013 Wage and Benefits Study on behalf of NAQP/NAPL, and thus I will not be in a position to be selling the study directly.

Nonetheless, think about the value such a study might have to a general manager, or senior graphic artist or maybe a press operator. Let's say that individual plans on making this job their career and they plan on spending most of their life in the business, so long as they are rewarded favorably.

While for many employees it may not be all about "money," it is still an important consideration.

Just musing for right now... would spending $155-$179 be a wise move for an employee just to check out how competitive his hourly wage is compared to someone else with similar skills?

The answer is a "no brainer." Let's say a person is currently earning $14.50 an hour and after thoroughly analyzing the study determines that $16 per hour is more realistic, and he approaches the owner. An increase of $1.50 per hour amounts to $3,120... even a $1 increase amounts to $2,080!

One owner pleaded with me recently not to use the company's email address because he didn't want his employees to know anything about current wages! Wow, I thought... do they not read or talk to each other or know friends that work for other printers? Of course they do, so trying to keep info about wages a "dark" secret is a fruitless and impractical goal.

New Wage Study Will Shock Many

SPECIAL NOTE: I am having problems with the table data provided below... I cannot get tabs to work, but I wanted to share with you the data, even though it is a bit difficult to read. The first column is from the 2007-08 Wage Study and the second column is the latest from the 2012 Wage Study (Preliminary.). I will try to get this corrected ASAP. I think it is fixed now.

The 2012-13 NAPL/NAQP Wage and Benefits Survey is well underway. I suspect that when the final study is published it will be a shock to many.

Excluding companies reporting sales greater than $10 million, the average sales of the first 150 participants is $1,658,299 and the median sales is $850,000.

This compares with the 2007-2008 average sales of $1,370,000 and median sales of $850,000.

Looking at just three positions we find that:

I suspect many owners are going to be wringing their hands together wondering what they are going to do and whether their employees will ever read about some of this data. Unfortunately, as for the latter question, the answer is "Yes." You can't keep determined employees from finding out what competitors are charging whether it's in the same town or across the country.

All I can tell you at this point is that the response rate has been great so far, and in fact the deadline has been moved up to Feb. 5 to submit your own data.

If you want to participate and get your own free copy go here:

www.surveyadvantage.com/2012NAPLWWages

Visiting Bank - A Funny Story

This is probably admitting my advancing age, but I have a funny story to tell.

A couple of months ago I drove to the bank to make a deposit or cash a check, not sure I remember!

Anyway, nothing special about the visit and I only had to wait for one or two cars ahead of me. I finally pulled up to the teller window and before the teller could even come to the window or push the deposit drawer in my direction, I hit the "down" button on the driver's side.

Nothing happened immediately, and I hit it again, and again, two or three more times. Knowing the teller would soon be coming to the window, I tried to figure if the other windows were working and they were... the passenger side window worked fine, going up and down as I commanded it to do with my button. The windows in the back worked as well. Only my window was stuck.

I tried again with my button. Nothing happened. I checked the window lock button and clicked it a couple of times but nothing would happen. My window was still in the up position. I am really getting to panic. I know it's only a matter of a few seconds before the teller shows up and pushes the drawer out in my direction.

What the hell am I going to do? How am I going to communicate my predicament? My window is up and how, I wonder, am I going to use hand signals to let her know my window is suddenly not working. I am already thinking ahead and wondering whether I should pull forward or back up, because I am so close to the wall and the drawer that I couldn't open my door if I wanted to.... how the hell was I going to tell the teller about my plight. Could I back up and somehow edge the door open slightly, squeeze out and then walk up to the window?

Well, the teller comes to the window and I am starting to make stupid hand gestures to indicate that I can't get my window down. I put one or both hands up to the glass to start this sign language crap when one of my hands suddenly pierced the plane of the window. My hand shot right through what I thought was the pane of glass.

Oh my God, my window had been down the entire time. My button had worked. The window had been down the entire time. You can't imagine how stupid I felt thinking all the time that the window was up0 when ir was really all the way down!

I will say it was really clean and I will stick to that until my death. I hope this incident at least brought a smile to your face.

Client Reports Digital vs. Offset

One of my long-time clients contacted me the other day with some info his manager had gathered. According to the memo, sales in 2011 had increased 8% over 2010 and was the best sales of record.

Most interesting of all was the manager's report that for the first time every sales from digital copying 31.8% had slightly exceeded those coming from offset printing at 31.0%.

Since we will be conducting a new Operating Ratio Survey within the next couple of months I will be extra curious to find out if this trend is representative of the industry. I suspect it is, but I can't be sure until I analyze the numbers.

If you have any similar data you would like to share I would like to hear from you, confidentially or not.
John Stewart

Threats by UPS Store owner

Boy, some things really piss me off. I've been conducting studies in this industry for more than 25 years... in the past few years, I have come to rely almost solely on email blasts to get to the largest possible audience.


If someone asks to be removed we offer the typical "remove" options at the bottom of every email. If someone decides instead to respond with a "Please Remove" in the subject line I forward it on immediately to my list managers.


I rarely get a disgruntled recipient. I realize that not everyone who receives an email fits our survey parameters nor do we fit theirs. We do the best we can with the lists we have. A couple of days ago I sent out 40M notices as to how someone could get a FREE copy of the upcoming Wage & Benefits Study.... just complete a survey!


Today, I received the following from an owner/manager of a UPS Store #4085... his one line response to one of our emails was:


Do not contact us again. Any further SPAM will be reported to the FCC.


I responded almost immediately, trying to keep my famous temper in check. I advised him I would do the best I could, and also advised that the most automated and simplest process was to use the "Please Remove" feature at the bottom. I also added that I don't take very kindly to threats, no matter who they come from. I've had run-ins with the best... the FBI, FAA and even Homeland Security (TSA)... and I mean in person with agents, so threatening to contact the FCC with a complaint about SPAM is almost humorous - Especially so when these emails do not qualify as SPAM - all this does is bring my blood to a boil.


About five minutes after sending my response I get a CC copy from him containing some reference number to an FCC complaint form.


One minute after that I responded with the a "F*** Y**." If he thought he was going to intimidate me he was quite mistaken. I proceeded to write a letter to UPS World Headquarters in Atlanta describing this guy's attitude and the threat to turn me in for a simple email invitation! As I told UPS, "you've got to be kidding."


Anyway, I repeated the statement that I really didn't like being threatened by one of their store owners and I was holding them responsible for disciplining this owner and asking him to cease his "childish" behavior.


Of course, as I always do, I sent it out Priority Mail with a subject line on the mailing label, highlighted in yellow that said: "Threats and harassment by a UPS Store Manager/Owner."


Well, that should get someone's attention. What a jackass.

ASI - Trade Association Hypocrisy

ASI - What a bunch of hypocrites!

Yesterday, Timothy Andrews, president of the Advertising Specialty Institute (ASI), issued a news release attacking President Obama's recently issued mandate to cut 20% from federal agency spending on "plaques, clothing and other unnecessary promotional items."

I'll bet if you had interviewed the officers and members of this association just two weeks ago about the federal budget you would have heard almost a unanimous chorus suggesting or demanding that the government needs to reduce spending across the board.

So what happens when the President takes such a move? ASI issues a news release pleading for its members to take up arms and fight this move by the president.

The ASI news release said, "We are undertaking an aggressive PR campaign to immediately educate the media and others... why our industry's output and value shouldn't be called 'wasteful spending.'"

So let me get this straight, ASI and its members (I assume this to be true) want the federal government to reduce spending wherever possible, but they object (at least Mr. Andrews does) to the President's mandate urging a reduction in agency spending on pens, cups, plaques and other advertising specialties?

Actually, I don't know how anyone can seriously attack such a modest mandate and still maintain a straight face!

Mr. Andrews I fully support private industry choosing to buy pens, mugs and plaques from your industry. In fact my own company has purchased advertising specialties. However, please don't expect a lot of sympathy from taxpayers like myself when the government makes a move to reduce its purchase of advertising specialties and you urge your members to fight such a move!

The bottom line is that Mr. Andrews wants the government to continue spending money on advertising specialities because it will help "the industry bounce back." So you want taxpayers such as myself to help your members by encouraging the government to continue its spending practices?

I really don't know how Mr. Andrews can keep a straight face when he urges his members to contact members of congress and urge them to keep spending money on imprinted mugs, mouse pads, pens, plaques and lots of trophies.

Valuations - Polar Opposites

I have sitting before me on my desk valuation folders for two different printing firms. One is green and the other yellow. The colors themselves don't mean anything, but the contrast between what they each contain inside is simply shocking.

I finished both valuations late last week.

The Green Folder represents a company projected to do almost $700,000 in 2011. Two years ago their sales were $820,000 but the drop in sales doesn't concern me. It is typical in this industry. What does concern me is that this company's final valuation came in at less than $50,000! That doesn't mean they can't sell the business for more or that the customer list itself might have a higher value, but from a strict valuation standpoint, based upon actual financial performance, the business has little value.

How does that possibly happen? Well the owner will make less than $18,000 in total owner's compensation this year - that's less than all of the six remaining employees will earn this year. With that low a salary, this company doesn't even come close to the threshold we set for a fair market salary for an owner, thus it is producing no "excess earnings."

Without excess earnings, the company has virtually no value. It assets are old and total $89,000 but even that amount is penalized by the significant negative excess earnings. This company may sell for more than our estimated value, but not by much, and only because a new buyer may be willing to certain risks above and beyond what our formula suggests.

What about the Yellow Folder? The yellow folder represents a polar opposite of the prior company. This company did $1,218,902 in sales in 2010. The sales for this company have remained strikingly similar for the past four years, despite the recession. Interesting that this company employs a total of only seven employees (including the owner) which is only one employee more than our previous company - thus producing a Sales Per Employee of $174,000! Total owner's compensation for this company in 2010 was $280,000 which results in a 23% OC ratio.

Combined with a solid list of productive assets, the valuation on this company came in between - $910,000 and $1,122,000! The only problem is that it is almost too profitable! While in our sound judgment the business can easily fund its own purhcase, at that high a purchase price there are simpmly far fewer qualified buyers, especially buyers with printing experience.

One more thing about this company. Although the company is very valuable, I have told the owner that his facility, in terms of general appearance and cleanliness, comes across as sort of a "pig sty" and it needs a major clean-up or it could result in offers being $100,000 to $200,000 lower based on that "first impression."

Four New Videos Posted

Well, for those who are interested, I have just posted four videos on my website at http://www.quickconsultant.com/. These videos, part of a series I have produced under the "Checklist for Survival" banner, are not for owners with short attention spans, since they average 11-19 minute in length.

The subjects covered in these new videos include:

• Sales Per Employee



• Critical Financial Ratios



• Your Chart of Accounts



• And one titled simply, "Money"

Since they are FREE, I can't give you a discount , but I would appreciate any and all feedback, good or bad. Just be gentle on me. It is a lot easier speaking in front of a live audience than it is looking into the lens of a camera that never seems to nod, laugh, or raise its hand with a question!

Anyway, I hope you enjoy them.

Sitting in the Buyer's Chair

Many of the business valuations that I prepare for owners come in much lower than what they were expecting.

I am always curious as to why so many of them think their business is worth so much more? Many appear to have pulled numbers out of the air. Others end-up mis-applying what otherwise are sound valuation formulas. Still others simply forget that all of the liabilities on the balance sheet need to be cleaned up or eliminated in order for the business to be sold "free and clear."

If you are expecting the buyer to assume all of those notes and other liabilities you are mistaken. Too many owners think selling their business at their price should be simple. They expect that someone else will take over all of their headaches and that in the end they will be able to walk away with a fistful of cash. That's just not going to happen.

Imagine sitting across the desk from a seller and trying to decide whether this purchase is a wise one or not. The buyer is ready to commit what $250,000, $400,000 or some other amount. In the simplest of terms, he expects that this investment should produce some type of return on his investment, just as he would if he invested in the equity market.

By the way, if the buyer is buying the business as an on-going entity, then the equipment you are selling has to be sold free and clear. Remember, you can't sell what you don't own.

If the buyer is going to takeover the functions of a working owner, he (or she) also expects that the business should be able to pay themselves a fair market salary for managing the business on a daily basis, as well as generate enough excess money to pay the seller each month.

Can you explain to a potential buyer how this can be done? Can you justify your asking price based upon the above scenarios?

P.S. I have only known of two businesses that have sold for more than one year's worth of gross sales. Most businesses end up selling for somewhere between 25-60% of gross sales. Some valuations are higher and many more tend to be at the lower end of the spectrum.

New Chart on Ratios 1983 vs. 2009

The chart below is one of a number of informative charts and tables used in an upcoming video dealing with the industry's Chart of Accounts as well as a video dealing with key financial ratios.

In a sense, the chart is self-explanatory. What I want readers to note more than anything else is that, contrary to popular opinion, only one single major expense category has increased in the past 27 years in this industry!

New Chart of Accounts Video

I am excited about my new, second video titled, "Chart of Accounts." I just viewed a rough cut and with only minor changes it is ready to post. I am hoping that it will be available before the end of this week.

If you haven't had a chance to view my first video on "Sales Per Employee" I encourage you to visit my website at: www.quickconsultant.com.

I have another video in the works that deals with "Key Financial Ratios," and a fourth video titled simply "Cash." This video takes a somewhat light-hearted, humorous approach at how a stack of $1,000 dollar bills is distributed to pay all the bills in a "profit leader" firm versus how these bills are paid by a "profit laggard" firm.

Regulations Are Not Job Killer Says Report

My October 2011 Quick Consultant column challenged the notion that government regulations are the cause of many of our problems.

Now, a new CNNMoney report affirms that statement. The article disputes the claim made by many Republicans, especially those in the Tea Party, that government regulations are not the major reasons for the problems being faced by small business.

The claim that the Obama administration and a wave of new government regulations are strangling the economy are not true, according to the report. Citing both private and government sources, the article notes that "Only a small percentage of employers report regulation as a reason for laying off workers."

Of the 55,000+ new unemployment claims filed in the first eight months of this year, only 2,085 were attributed to government regulations, according to the Bureau of Labor Statistics.

Even the National Federation of Independent Business (NFIB) noted that less than 20% of small business owners cite government regulations as their most important problem.

"Poor sales, for example, were a much bigger worry," notes the CNN article.

"And a CNNMoney survey ofr economists conducted in the second quarter delivered similar results. Only a couple of the 16 economists questioned said government regulation was the biggest drag on the labor market."

According to the article, Economist Gary Burless, a labor economist at the Brookings Institution, said "there is little evidence to suggest that government regulations are killing jobs."

Owner's Business Under Water

In too many situations, owner's still owe far more than they will receive from the sale of their business. This is not an unusual situation, yet it nonetheless shocks many potential sellers.

I recently analyzed a firm from the west coast with annual sales of about $550,000. Unfortunately, he was making only slightly more than what our formula specifies for a working owner. Thus, there wasn't much left over. What is left over, if any, is called excess earnings. These earnings are typically subjected to a multiplier between 3-5 and the result of that is then added to the total value of all net assets being transferred or sold.

The problem is, however, that you can't sell assets you don't own. You need to pay off all notes and loans to transfer the equipment free and clear.

In this specific situation, even giving the owner the benefit of the doubt in many areas, his business came in with a very modest valuation of $150,000. BUT wait! After the owner takes out all the cash in the business, collects the receivables AND pays off all the short and long-term obligations of the business there is a negative amount of -$(354,000) to be settled up on the balance sheet.

That means even if someone is willing to pay the seller $150-$175,000 for the business he is still going to be "under water" in the sense that he will owe more than he will receive from the sale. Meaning in many cases he will have to loan the company more personal funds as he has done in the past.

How did this ever happen? Well, there are lots of reasons but this owner over invested in equipment and never generated the sales he expected. He wanted his shop to be an all-digital operation and it is, just a very expensive one!

His current equipment could easily produce $1.5 million in sales, but at present and for the past few years it has been doing about 60% less than it should.

Ipad helps with shooting three more videos

Well, it rained cats and dogs on Saturday, but that was Ok because I was planning on spending all Saturday morning shooting three new videos. Previously I went out and bought the light stands, the tripod, wireless mike set-up and the camera, but I ended up hiring a local videographer to do all the filming, editing, etc. It has been both fun and nerve-wracking at the same time. Trying to get it all in one take, keeping them short, and yet interesting through the use of key charts and graphs has been a challenge.

I have fallen in love with my ipad II and while I first got it because of a great flight planning software program (which has revolutionized the paperwork part of flying), I now find myself using it extensively for reading, checking my email and as a very useful tool in helping me make these videos.

I use the Ipad and a program called Notetaker. The program was developed by Dan Bricklin... if you are 50 years or older you should recognize that name because he developed the very first spreadsheet program called Visicalc. He is often referred to as the father of personal computing because he actually came up with a spreadsheet program that could be used on personal computers to do real work, rather than just play games.

We then connect the Ipad to a video capture card and capture all of the penstrokes and drawing that I use while demonstrating the various slides. It has worked out great.

Anyway, I should have these three new videos uploaded within the next 7-10 day. The subjects cover:

• "Chart of Accounts"


• "Critical Financial Ratios,"


• and one I simply call the "Money Video."

Lots of editing required to put these videos into final form but I hope they help those who choose to view them.

New Video on SPE

Good news, at least for me! I just finished the first of what I hope to be a series of short videos on specific topics of interest in the quick printing industry.

The first video is a bit longer than I had planned, but it deals with Sales Per Employee - what it is and how to improve it. Right now, it is available on my website at: www.quickconsultant.com.

I haven't figured out a way for it to just show up here. Sorry! Feedback is always welcome. I intend to shorten the intro part, or possibly eliminate it completely on future videos. Let me know what you think. Thanks.

Shockingly Low SPE

I'm currently working on a valuation for a company with 2010 sales of $600,000 and operating losses of almost $80,000. The company's payroll is running 51% and that does not include any wages or benefits paid to the owner.

Of course the company has been losing so much money since he bought it in 2006 that he not only has been unable to withdraw a salary, but he has been forced to plug almost $900,000 of his own funds just to keep the business afloat!

This is the classic example of ingorance is bliss. Had this owner made any attempt to seek sources for key industry ratios he would have discovered that most of his, especially his payroll percent, was totally out of whack and sooner rather than later would destroy him.

To be candid, I am surprised he has lasted this long, but he apparently has been successful enough in the past that he feels that if he just keeps loaning the business money it will somehow turn around!

NOT A CHANCE - It is statistically impossible to have payroll costs anywhere near 50% and still produce a profit, no matter how low your COG and Overhead Expenses might be.
Worse, however, is that I didn't even need to see the financials... all I needed to hear was that their sales were $580,000 and he was employing an equivalent of 8.25 FT employees - that works out to a shocking, almost "off the chart" $70,300!

By the way, if you loan your company money you better find a way to pay it back to yourself because no sane buyer is going to take that type of liability when you go to sell your business.

Payroll vs. Owner's Compensation

Payroll Costs Vs. Owner's Compensation

I've talked about the correlation between payroll costs and owner's compensation many times in the past. Payroll costs play a greater role in determining bottom line profitability than any other major expense category. If you're having trouble in your business the chances are very good that many of those problems can be traced to payroll costs that have gotten out of hand.

Believe it or not, key expense categories such as cost of goods or general overhead expenses have remained, as a percent of sales, almost the same as they were 30 years ago in this industry. While COG and Overhead Expenses have remained the same, owners have allowed payroll expenses to continue to increase. I've provided the chart below to illustrate my point.

Note the difference in total payroll costs for those companies in the bottom 25% of the industry (0-25%) against those in the top 2quartile (76-100%).

By the way, contrary to popular opinion, companies with the lowest payroll costs typically pay the highest wages, they just employ far fewer people to do the work and the people they do employ are far more productive due to their skill levels and the equipment they are asked to operate.

Gov. Perry Believes in Noah's Ark

BEDFORD, N.H. (AP) — GOP presidential candidate Rick Perry told New Hampshire voters Wednesday that he does not believe in manmade global warming, calling it a scientific theory that has not been proven.

"I think we're seeing almost weekly, or even daily, scientists that are coming forward and questioning the original idea that manmade global warming is what is causing the climate to change," the Texas governor said on the first stop of a two-day trip to the first-in-the-nation primary state.

According to insiders attending the meeting, Gov. Perry also went on to staunchly support the Biblical account of Noah and his Ark, as well as his believe that a whale did indeed swallow and later spit out Jonah! He said that while their is ample scientific proof of the latter, scientists are coming up far short in proving that "Global Warming" really exists.

One New Hampshire resident, after attending the early morning breakfast meeting, noted that aftger hearing Gov. Perry speak, it became quite evident why so many who surround the governor wear tall leather boots when in his presence. "You have to wade through a lot more than tall grass when you're around this guy."

Gov. Perry, Rep. Bachmann, etc. Have It All Wrong!

Conservative Republicans, especially members of the Tea Party, all seem to be parroting the same line about the economy, and that is that small business owners are staying on the sidelines and aren't hiring because of all the government regulations and the impact of what they like to refer to as "Obamacare."

Ok, let me tell you something - I think these folks are full of crap, don't know what they are talking about and most of them haven't the faintest idea about how to run and prosper in a small business. When they speak, they are catering to the lowest common denominator of the electorate and unfortunately they have found a large number of listeners.

I have spent more than 30 years conducting research, publishing financial studies and providing individualized consulting services for small businesses - specifically printing firms ranging in size from $400,000 to more than $5 million in annual sales.

I have published more than 30 statistical studies in this industry dealing with profitability, pricing, wages & benefits, etc., etc. You name it, and I've probably published it!

I know the big players and the little guys in this industry and I know them by name. I know the firms that fall in the top quartile in terms of profitability and those at the bottom.

And you know what? I have never met nor confronted a print shop owner who was holding off making a major decisions because of "Obamacare." I also have never heard a print shop owner blame government regulations for the reasons he is having trouble surviving.

I don't know of a single owner who could look me straight in the face and blame either Obamacare or government regulations as a major cause for the problems they are currently facing! And yet, to hear politicians like Perry and Bachmann talk, these are the very reasons for our current economic crisis! What a bunch of crap!

I know firms that continue to grow and prosper in this current economy, and they don't give a rat's ass about future healthcare regulations and what the govenment might do next month or six months from now. Why? Because they know in the scheme of things they can't control the outcome so they don't let it interfere with what they can do and that is manage their businesses the best they can. They leave all the other stuff up to the politicians.

If your experiences are truly different that what I have noted please contact me. I would love to hear your story.

Anonymous Posts (arrrgh!)

In more than three years of publishing a blog, the comment I received to my post regarding Rep. Posey was the very first anonymous post I have ever received. To be blunt, I have little if any respect for anyone who will not stand behind their comments with a signature. That's just plain gutless.

As to the specifics of the comment, while the listener may have heard me speak at one or more seminars or conferences, he has have never, never heard me suggest that the way to higher profits was by avoiding paying expenses you have already incurred.

If you want to change your buying habits in the future then go ahead and do so, but don't decide to suddenly not pay for the copier you leased two years ago or the paper you ordered last month. The speaker clearly did not understand what raising the debt ceiling was all about.... it had nothing to do with future spending but rather with paying past and current obligations.

While the author's business might be failingor in trouble I must tell him that others are doing quite well. Not everyone is quite as ready as the author of the comment to place all the blame for all the country's problems on Obama's shoulders, there's lots of that to go around.

It just infuriates me that people like this author don't have the guts to identify themselves and choose instead to hide behind "anonymous." Please note that I allowed that post to remain.