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The Next Level

A distributor, five experts and the quest for growth

By Rebecca Trela

Somewhere on the list of happy accidents that changed everything, between penicillin and Post-its, there is a box of pocket folders Tim McClellan delivered four years ago. It would have been a simple, small order for many distributors, but the industry was lagging in the wake of 9/11 and any business was good business. McClellan was unemployed after 13 years of selling commercial print for a Virginia printing firm and considering a leap to the pharmaceuticals industry. Then the phone rang.

The client, a Washington, D.C.-based professional association, had worked with McClellan on a project months earlier. “I told them, ‘I’m sorry. I can’t take your order; I’m no longer working at that company,’” McClellan says. The client insisted they trusted only him to finish the job. He laughs at this point in the retelling: “That’s how I started my own business.”

While serendipity jumpstarted Tim’s four-year-old distributorship, Strategic Print Solutions, hard work and determination have helped him beat the odds—about half of all small businesses fail within the first five years, according to the U.S. Small Business Administration. Not quite an accident and not quite planned, this Fairfax, Va.-based one-man business generates $620,000 of 4-color commercial print sales a year. Now, Strategic Print Solutions is poised to make another quantum leap forward in the industry. The question is, how?

Tim articulated four goals he’d like to work on during 2007: add 10 new clients, get organized, decrease his dependency on a few big customers and have a more flexible schedule. He also strives to grow his distributorship to more than $1 million in annual revenue. Print Solutions asked a group of industry and non-industry veterans to act as Tim’s guides, navigating the business world with advice, suggestions and cautionary tales.

Meet Tim
The Washington, D.C. area is a competitive market, a region of six million people served by hundreds of print industry firms. Tim’s family has been in print for a long time—his grandfather managed an area print shop for 22 years, and his father managed an ink company branch in Richmond, Va. Tim made deliveries for a printer while in college, and has enjoyed a 16-year career thus far. “I remember watching the guys who sold print at that company,” he says. “They looked like they were making good money and having a darn good time, and I thought, I want to do that.”

Today, his business has grown to encompass 50 local clients, most of whom order brochures, newsletters and direct mail from him; ad specialties and other materials occasionally figure into program sales with big customers. Most of his work comes from associations, nonprofits, religious groups, and real estate groups in the region.

“I like being seen as an expert and a problem-solver by my clients,” Tim says. “I’m on their side of the desk, not the printer’s side.” He also likes that printing is a tangible, technology-driven product and that each day and each project provides variety and challenge.

Starting his own distributorship, Tim admits, wasn’t something he wanted to do. “But with hard work and a little faith,” the business has grown, he says. Firmly committed to print now, he looks to the industry for help in drawing a roadmap to the future.

Dividing Won’t Conquer
It’s noon on Friday, early in January and unseasonably warm, when Tim sits down for his first consultation. Sharing sandwiches and a basket of onion rings at the Capital Grille with Mike O’Hara, founder and former CEO of distributor AB&C Group, making friends and alliances becomes the theme of the afternoon.

Tim and O’Hara met briefly years before, while Tim was working as a manufacturer’s rep in Virginia, but this is their first occupational conversation. O’Hara doesn’t hesitate to lend Tim his expertise and enthusiasm for print and the world of business.
Initially, Tim considered splitting his business evenly with a partner, someone with expertise in a different product area. “A perfect fit would be a graphic designer who has his or her own company, but isn’t very familiar with the printing world,” Tim says. This would give him access to new clients, spread the concentration of his income, and both partners could answer phones and help clients while the other was out of town.

Not a good strategy, O’Hara says. “I would strongly suggest that you get a customer service person, as soon as
possible,” O’Hara says, knitting his brows. The savvy McLean, Va. businessman, who built a second-bedroom business into a $25 million dollar distributorship and 350,000 sq. ft. of warehouse space, admits he’s learned about hiring and partnering “the hard way” during his 34 years in the industry.

“I had a partner—a couple partners—and it wasn’t what I thought it was going to be,” O’Hara explains. It takes about six months to determine if a business relationship will work, and by that time, the company’s financial health may be on the line. His business partners may have helped him grow the distributorship to another level, he says, but if given the opportunity to go back in time, he wouldn’t have split AB&C in 50 percent shares.

“I just gave him a key to my apartment and introduced him to my wife,” he laughs, reflecting on his first partnership. After a while, the partners realized O’Hara’s sales were carrying the business. They parted ways. “I had to buy my way out of that one,” O’Hara says grimly.

Other industry experts concur with O’Hara’s assessment. “I’d be wary about getting a partner,” says Ray Silverstein, a small-business consultant in Chicago. “It’s kind of like getting married. If things go wrong, this person is very hard to get rid of—headspace-wise, but also emotionally and legally. Much like getting divorced.”

Tim knows that a lot of his revenue comes from a handful of his clients, and would like to add new accounts to ease his dependency on just a few big jobs. “Eventually, doesn’t almost every customer move on?” he asks. Although he doesn’t anticipate losing any trusted partners soon, he’s also planning for the future. A business partner, bringing existing accounts and familiarity with other vertical markets, would speed that process. He’s also unsure about the hiring and management process.

“He says he isn’t ready for an employee at this time, but the fact that he’s busy tells me he should be looking for help,” says Doug Traxler, executive VP of sales and marketing at Webb/Mason, Baltimore. “It may be that he gets somebody two days a week or three half days a week.” If Strategic has a lot of work now, Traxler theorizes, that amount could increase tremendously if Tim spent those other two days per week hunting for new clients.

A growing business needs support, Traxler says, and would weaken if he were to divide its revenues and assets. He needs to expand his income through internal structures, not external ones. “It’s only two days a week, but he spends all day not in front of a client. Is that the best use of his time? Could he outsource to an accounting firm?” In Webb/Mason’s early years, Traxler explains, the company employed a freelance accountant two days per month. In three years, the company brought the person in-house, and she’s now vice president of operations at the firm, with more than $75 million in annual revenue. “Tim will burn himself out if he doesn’t get help serving his clients,” Traxler says.

The energy crux of time and work is a typical situation for many small distributors, says Andy Kohn, the retired CEO of The Jerome Group, St. Louis. “He seems to have dismissed the CSR part of his business, which is okay if he’s selling mostly graphics-related products. But if he’s selling a variety of products—like almost everyone—that’s not the most logical step.”

In addition to in-house support, Tim needs to make allies with associations, O’Hara insists. Joining DMIA and other industry associations allowed AB&C to track the changing marketplace and try new ideas. There are lots of smart industry people in D.C., says O’Hara. “Meet them—the Direct Marketing Association, Promotional Products Association International, the Advertising Specialty Institute—all of them. Understand and follow the trends. You see where things like personalization, digital and on demand are taking your clients. And where they’re taking you.

“I don’t think I’m a genius at business,” O’Hara jokes, modestly. “In fact, I’m pretty dyslexic! But I was passionate about what we did, and I connected with the right people.” With that came success.

Never Travel Alone
Tim’s office is a sunny, spacious white room in the front of his house, liberally decorated with Post-it notes and stacked file folders, and peppered with photos of his family and notes from his wife. He spends most of his time in this space on the phone, emailing clients, managing file transfers, invoices and bills. A miniature putting green sits hopefully in the corner, but he admits his golf game has been lagging, neglected for work, family and faith. Tim works about 40 to 45 hours per week, he says, but spends about two days of that week—40 percent of his time—in the office, working on client and job maintenance.

“I don’t like to do it,” Tim says, “but unfortunately I must.” The paperwork is always the last priority, although he admits it should probably have a more prominent position. He surveys the divided stacks and boxes spread over the hardwood floors. “Organization is not my gift.”

Salesmen, of course, earn money because they can make and close deals. Any time spent away from this core competency constitutes expense, not income. In addition to jettisoning the partnership idea, our team of seasoned experts unanimously recommended that Tim hire a customer service representative.

“The first thing Tim needs to do is increase his internal support,” Silverstein says, firmly. “It’s clear that he’s very good at selling and he should stick to it, leaving someone in the office to do the bookkeeping.” Initially, Silverstein says, Tim won’t be able to cover the cost of an employee, but it’s a necessary step forward.

Hiring an employee could also address one of Tim’s other goals this year: spending some time off with his wife and three-month-old, Josh. If the McClellans decide to have a second child, time constraints will get even tighter for their family. If his customers were familiar and comfortable with an administrative person at Strategic, he could take time off without toting his laptop and cell phone to the beach. A business partner, Tim acknowledges, would be willing to answer the phone and take care of clients while he was out of town. But that person would be selling as well, and likely not accessible during the day.

“My gut, heart and head tell me he needs to grasp the reality that if he wants to grow, he needs a CSR,” says Mike Fisher, CDC, CEO of PrintConcepts in Allentown, Pa. Fisher, who is also DMIA Board treasurer, stressed that Tim is already clearly an expert at selling print. He has articulated, but not fully realized, that he needs other experts alongside him: technology gurus to help streamline his workflow and increase efficiency, addressing his third goal, and accounting and customer service experts to help him nurture clients.

To transition Strategic from a small company to a larger one, “he needs to work on the business, not in it,” Fisher says. “His goals are lofty but not realistic. How much can someone do in 40 hours a week?” The first goal, adding about 10 new clients, is Tim’s area of expertise and it’s what he should focus on. Tim should find someone else to take care of the other goals, Fisher says.

Clients Mark the Spot
Developing a company, from the larger perspective, also means paying attention to the ground-level view. Before Tim determines a new course for Strategic and takes off in that direction, he must decide a few things—who his customers are and what they want, and who he wants new customers to be.

“I think you’ve got a great company, and a great strategy,” O’Hara says, “but you can’t stop watching the market. I don’t have a crystal ball about where it’s going, but I do know that whatever comes, you’ve got to focus on building your relationships. And you have to pick your clients by what kind of future opportunity they represent.”

Tim knows that one of his greatest strengths is his expertise and experience with commercial printers and their equipment, which allows him to match the right project to the most appropriate machine and shop. Of the 70 vendors he uses, he’s visited 35, and he plans to use this strength as a strategy to win clients.

“I’ve dabbled a bit in labels, forms and a few promo items, but I don’t want to dilute what I do too much,” he says, mentioning that he’d like to partner with an experienced graphic designer and build off of their combined strengths.

Redefining and focusing is a good path to pursue, our experts agree, but with a different aim. First, Tim needs to determine who he wants for clients and what his ideal/key customers want from him. Then, he needs to revisit his value proposition. (See “Craft the value proposition” ) Why do people want to do business with him and no one else? What is his unique touch? That something will make sales, and pave the road ahead.

“He should try to understand what he’s doing right,” Kohn says. “It could be a whole host of things—his personal service, his timely and efficient manner, his price, his quality, but he needs to understand and grow that.” It seems that many of Tim’s clients pick him for his expertise and personable manner. He’s continued to identify and reach out to customers who can utilize his familiarity with commercial printers “You can’t do everything perfectly,” Kohn says. “You don’t want to be a back surgeon trying to be a dermatologist. Pick one thing and use it.”

Budgeting Wisely
Whether feast or famine, Tim says, he pays himself regularly. “I’m supporting my family,” he explains, which also dictates his health care spending and his savings arrangements. “At the end of the year, if there’s money left over I leave it in the business accounts for future need or put it away for retirement.” This casually conservative financial structure works for him now, but he admits that if he took on an employee or a partner, they would have to firm up some spending rules.

That’s a good plan, O’Hara says, clarifying that providing for his family has always been a top business goal. “And I like that he reinvests in the business, because you have to have that cushion there to grow.”

Last year, Tim allocated about $5,000 to marketing and acquiring new clients, some of which paid for a website designer to develop and optimize a new site for him. (The site is www.strategicprintsolutions.com; see “Whither The Website”) The marketing budget also covered a 4-color direct mail brochure that was sent to Washington-area prospects. From time to time, he says, he’ll take clients to lunch, but that amounts to less than $1,000 per year. Mostly, Tim relies on referrals to get new clients.

“I quit golf when I started AB&C,” O’Hara says, because it takes too much time out of the business day. “But I do lunches. They’re fast and efficient and I like to eat.” Spending time with the customer is one of the most important steps Tim can take.

Examining Tim’s goals and his spending, Traxler has a new question: How did he get his five biggest clients? “Did they come from a mailer or from direct client calling and networking?” In the printing industry, key clients are relationships. “It’s risky not to be in front of clients, and you’re already out of the picture a lot with emailing and other electronic communication. If he’s an army of one, he’s got to be eyeball to eyeball with the clients.”

“His strategy of getting referrals is a sound one and he should continue being proactive,” Silverstein says. “It’s a reliable, time-tested way to get jobs, but more importantly, it’s evidently working for his business model.” Silverstein suggests reorganizing Tim’s investment budget and diverting money from other projects or investments if necessary, because referrals are a strategy that has worked for Tim in the past.

Traxler concurs with that idea. “I don’t know too many people who choose their printer based on a postcard,” he says, but suggests Tim should determine for himself. “Where’s his kill ratio? Is it actually from the direct mail?” he asked, again stressing that the right solution for Tim might not be the right solution for everyone.

Additionally, a sound referral network could quickly address one of Tim’s other 2007 goals of diversifying his clientele. Referencing Pareto’s Law, Tim admits that 20 percent of his clients constitute 80 percent of his income, as is true for many small firms. Building up the relationship aspect of his business will also strengthen individual ties, so that when client contacts move from job to job, they will take Tim with them.

Tim also wants to invest in a software solution this year, addressing the pressing need of streamlining his processes and saving some time. A job process protocol will help keep Strategic organized with the advent of new employees. His first choice was the P3 Expeditor, a distributor-oriented product from P3 Software, Newton, Mass.

“It’s relatively inexpensive up front and a low per-month fee. I see it as big benefits but low risk,” Tim says. The Expeditor software organizes and groups back-end estimates, requests for proposal and product ordering. Currently, Tim coordinates three or four different programs to manage these functions, as well as a separate billing and accounting program.

“Tim definitely needs some help with his software,” Fisher says, approving the investment. “Some of the stuff he’s talking about, I’ve never even heard of. If it helps him save time, it’s great and that sounds simple, but the website software is a little more confusing and complicated.”

The Final Destination
As many in the industry struggle to diversify and provide turnkey solutions, Tim’s defining his unique benefit and approach. He also knows that by positioning himself in a consultative light, he can combat end users’ commoditization perspective, which has plagued much of the industry.

“There’s nothing wrong with being vertical, or sticking to one thing” Fisher says, “But you could grow quicker if you diversified. Each and every one of those 50 clients is buying products he’s not selling them. If he’s not providing them, someone else is. For a guy at his level, it’s easy to decide now if he’s going to diversify or not.” PrintConcepts, Fisher’s firm, sells not only print but also customer-driven add-ons; currently, it is distributing olive oil, chocolate and vinaigrette.

One of the most important steps to getting bigger, our guides agree, is having a passion for the business and developing a strategy to get there. The particulars can be shaped by client suggestions, industry trends and the experience of other distributors. Trial-and-error is sometimes necessary.

“There is never just one answer to our industry’s business problems,” Kohn says. “I might have all my right answers, but there are many right answers. So many people lack a plan, and they do business by accident and not on purpose.”

Tim’s inner desire and drive to grow are positives, Kohn says, and they will be the underlying factor in his future gains. “You can decide anything, right or wrong, and if you get behind it and get dedicated, you take destiny in your hands and make anything right.”

Rebecca Trela is assistant editor at Print Solutions magazine. Email comments to rtrela@PSDA.org.

For this industry profile, Print Solutions looked at a Northern Virginia distributor seeking to grow his sales volume from $620,000 to more than $1 million annually. We enlisted the help of industry experts, but welcome your two cents! Check future editions of Print Solutions to see what worked and what didn’t.

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On 18-Jun-07 Maryann Murphree wrote "Thank you very much for sharing this story of Tim's growth in the printing business. I worked with Tim as a fellow salesperson for many years before moving to Williamsburg, VA. We have lost touch and it is great to know he's doing well. I'm still selling at Taylored Printing in Yorktown, VA. Please give Tim my warm regards."

On 03-Jun-08 Mike wrote "I like to amuse myself by posting humorous fake comments while testing."