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Note
from the publisher
Hard Lessons Learned |
 Looking back at 2002, perhaps the best that can be said is that our industry learned – of
necessity – that there’s more to running a successful promotional products business than “more business at any price.”
The picture that emerges in the State of the Industry report that follows isn’t necessarily a dreadful one. We didn’t lose huge numbers of distributor or supplier businesses that were forced out by the economy. In fact, total number of industry companies increased. Even the total industry sales dip of about 5.5% (compared to 2001) would be envied by many other advertising and sales promotion media and by businesses and industries in general that dropped in double digits.
You might say we held our own. For sure, we had to hold tight as we learned (for many of us, the first time) how to do business (not just make sales), even how to gain profitability in the face of adversity.
We learned, for instance, that “bigger isn’t always better.” I can’t envision, in the foreseeable future, a rush like what we experienced in the last decade – to big business stardom. For some, it was a public offering. For others, endless acquisitions. And for still others, it was expanding lines and hiring salespeople at the speed of light. And nothing would stand in the way.
Then the economy slowed and big business suddenly lost its glamour. Giant distributorships that fed on giant clientele found their heads where they never were before – on budget lines when the axe fell. Heck, before our industry became so widely known and accepted, we could hide in corners (called miscellaneous expense) when budgets were cut.
Those mainstay clients that didn’t cut us out entirely squeezed distributors for hardly profitable pricing and unimaginable service – paying both on unforgivable extended terms. Obviously, both demands wound up in the laps of our suppliers. And they too, were bit by the recession bug.
King size distributors who didn’t get chopped to pieces by Wall Street and Madison Avenue clientele, still had to make difficult decisions about their double and triple digit sales force.
Most had never before monitored sales productivity as closely as they should. “No problem that more sales can’t solve” had long been the war cry. Many know better now. They’ve learned that profitability isn’t an accident. It’s the outcome of careful and informed management that doesn’t allow itself to be blinded by the euphoria (or greed) of potential big orders – at any price the big boys demand.
For the most part, smaller and mid-size distributors stayed afloat in the troubled waters. They worked a little harder. And a little longer. Their overhead was modest. And their business didn’t come, as much, from Papa Bear customers whose dollar value entitled them to ask for deep discounts – or else! In fact, many suppliers tell me that, thankfully for smaller distributors and comparatively smaller orders, their profits and order numbers were modestly up even if the average order size was considerably down.
Back to basics. You have “x” square feet of facility, “x” machines, “x” workers and “x” raw materials – fixed expense that doesn’t change whether the orders are large or small. And the
smaller orders (if you have good order processing and management) often come at a much
higher per unit price than do the giant ones.
I’m not suggesting our industry shrink into the shell of a hermit crab. But I think 2002 (and the couple of poor economic years that led to it) had good lessons to be learned. Lessons that can help us all grow at a more meaningful and manageable pace that builds pride and profits today but helps us to be better prepared for the unknowns tomorrow.
We hope you enjoy and have frequent reference to this special bonus 13th issue which you receive, free, with your normal Counselor subscription. Thanks for being a Counselor reader. And for helping us to help you weather the storm. I’d love to get your feedback on the data, the conclusions and how they affect your promotional products business. E-mail me at
mspike@asicentral.com
or fax me at (215) 942-8733. |
Marvin
Spike
vice chairman/publisher |
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