2025 is just another year … or is it? Many people in our line of work are reporting that buying is down by 20%, which means sales are drastically down for many distributors, yet this doesn’t hold true for all companies. Often during a major election year, several companies slow down their buying to see how the results may help or hurt their company going into the new year.
So, what has happened in the past year? Several national companies have closed locations or gone out of business altogether and, on top of that, several smaller distributors have retired.
Another major shift we are seeing is larger companies in our industry buying each other out to acquire market share. When I look at all of this, I see the potential for massive holes in the market, and the possibility of many companies making major moves, and even several to fail if they do not pivot to the needs of the market.
Since our company opened in 2003, we have gone through the Great Recession when free trade opened up, the COVID-19 pandemic, and several major presidential elections. Still, we continue to adapt and overcome at each turn. Over the past two years, our company grew 42% in sales, which is above normal for companies in our line of work. This year, however, we are focused on maintaining our sales and not necessarily growing them.
Why? Because when you grow by that much you will hit growing pains along the way. You need to take time to evaluate and reset where any fixes or adjustments need to be. It does not matter how much you grow if you are throwing money and energy out the back door. You then create your own hamster wheel. It takes a lot of self-control to hit the pause button. You are better off taking one step back to make three moves forward.
Many in our industry are frozen right now and not sure what to do or when to do it. So what is everyone doing? The majority have stopped all spending and investing. Why? If you are good at what you do and you take care of your customers, then you keep moving.
What are you doing to prepare?
We are looking at all our supplies, determining what we buy the most of and working with our suppliers to create bulk-buying deals. Why do this now? Have you received email offers that some suppliers are dropping their pricing by 10% or more? This is the perfect time for you to buy stock on items you know you will need.
Now look at equipment purchases. When everyone slows down buying is when we, on the other hand, are investing. Many major equipment deals out there can save you $3,000 to $5,000 on average. On top of that, if you buy it this year you are again lowering your taxable income and helping yourself to expand. In the past two years, I have written several articles on direct-to-film (DTF) and UV printing and why every small or large company should be investing in it. It is basic math. Why would you want to invest in making changes when everything is at its peak pricing?
If you know you have a great customer base, and these lower prices will help you cover the cost and you can keep more work in house to control the turnaround time and quality, then this is a huge gain. So, which is easier? To promote to sell to a new customer or investing into a new process and sell to an existing customer? In my 21 years of experience, it has always been easier to build up a process by outsourcing it and then to later invest in bringing it in house and promoting it directly to existing clients. I would rather own the equipment and only run it three days a week than trust someone else to care about our customers as much as we do. Remember, a piece of an equipment is an asset and not a liability. It is only a liability if you are not making money with it.
Analyze customers
Look at your customer base and pay attention to buying habits. Over the years, companies that are financially sound and growing tend to spend the most when the markets are down. Why? Look at COVID-19. A lot of companies thrived during those times, and the companies that did not pivot either failed or went financially backwards and have still yet to recover. So, start researching new sources of customers now rather than later.
Remember, everything in business comes down to basic math, data analytics, logic, and drive. If you have all of this going for you, why would you worry as much as the next person when your company is running like a well-oiled machine? Make your investments and focus on your goals. If you are great at what you do, this is your time to shine!
