posted August 02, 2009 06:06 PM
This is fairly long, so bear with me.
Yesterday I stopped off for a beer and ran into an old friend, Paul, a former customer who recently retired from the construction business. In the course of conversation about business and surviving in a competitive market, he asked me this startling question: "How do sign shops survive, sellng what they do so cheap?"
Now I have to say that having done, over the years, six or seven trucks and at least that many high-end job site signs (his signs were always 2'x3' framed MDO with his logo, for which he paid $600 a piece) I was a little taken aback by this. I told him that frankly, I had always been glad to see him come in, because he liked quality work and paid promptly.
He said his question was primarily about other sign shops; he mentioned that several of his subcontractors and other contractors had, over the years, asked him why he paid my "high" prices - which he said he always thought were fair, for the quality and service. What he'd always wondered about, he said, was the developers he dealt with, and the big site signs (the 4x8's) they would buy for subdivisions and condo projects.
Since this was just this week the subject of a thread here, needless to say, my ears perked right up. He said one development company in particular came to mind, for whom he had worked, on and off, over fifteen years. He said the developer had asked him how much he paid for his job-site signs and who had done them; when he told him, the developer laughed, saying he had never paid more than $500 for a 4x8, and that had been years ago "when they did them by hand". Since then, he'd been going to one of the biggest shops in the area, who digitally printed his signs for under $300. I told Paul that was common in the industry, and he shook his head.
"That's what I've always wondered," he said. "How the hell do these sign guys stay in business like that?" I asked him what he meant. He said, "Look, I know what material costs, I know what labor costs, and I know what vehicles and insurance and utilities and all that stuff costs. What I don't get is how does a sign shop design and produce these big signs for such low prices and stay in business?"
He went on to talk about some of the variables and cost issues in home construction. "Here's a simple fact of math," he said. "In the twenty-seven years I've been in business, the cost of building a new home, in labor and materials, has almost doubled - but the selling price of those homes has gone up over five times. Yet you guys (the sign industry) sell signs for the same price or less than you did twenty years ago. How the hell do you do it?"
I talked about the demise of hand-lettering and how vinyl, and now large-format printers, had changed the industry. He shook his head. "I still don't get it. Twenty years ago we used a framing hammer that cost about twenty bucks. Now we use nail guns that cost $300. But a framer STILL has to know what he's doing, and even though jobs go faster, I still have to cover the cost of buying and maintaining equipment."
His last words on this dispiriting subject were this: "The developers I worked with tell me they don't know if sign guys are geniuses who defy the laws of basic economics, or just morons who have no idea what they are doing or what their work is worth. All they know is, no matter how much everything else goes up in price, the signs they buy to advertise their developments go down. So tell me: How the hell do you guys stay in business?"
-------------------- "A wise man concerns himself with the truth, not with what people believe." - Aristotle
Cam Bortz Finest Kind Signs Pondside Iron works 256 S. Broad St. Pawcatuck, Ct. 06379 "Award winning Signs since 1988" Posts: 3051 | From: Pawcatuck,Connecticut USA | Registered: Nov 1998
| IP: Logged |
That should be printed in a national magazine that goes to all those cut-throat shops, also.
-------------------- "Stewey" on chat
"...there are no limits when you aim for perfection..." Jonathan Livingston Seagull Posts: 7014 | From: Highgrove via Toowoomba, Queensland, Australia | Registered: Dec 2002
| IP: Logged |
posted August 02, 2009 06:46 PM
To be clear with him I hope you answered his query, "morons who have no idea what they are doing or what their work is worth. "
-------------------- Wright Signs Wyandotte, Michigan Posts: 2785 | From: Wyandotte, MI USA | Registered: Jan 1999
| IP: Logged |
posted August 02, 2009 10:54 PM
This is probably one of the most important posts this year. I know that we sometimes get tempted to blur the lines on pricing, especially when the rent is due or when we can read a customer well enough to know they will walk if we price on the high end, but this post says it all. Our customers know what our product is worth and what it costs to make it. I have nothing against the vinyl shops, but there is a certain percentage of them that have ruined the market with giveaway pricing and poor workmanship.
posted August 02, 2009 11:22 PM
the sad truth is that those who are undercutting the market will never get the message.
-------------------- Kent Smith Smith Sign Studio P.O.Box 2385, Estes Park, CO 80517-2385 kent@smithsignstudio.com Posts: 1025 | From: Estes Park, CO | Registered: Nov 1998
| IP: Logged |
posted August 02, 2009 11:47 PM
From a competitor's site.........
quote: The best logos we produce come from your ideas. You may want to search the internet for an image or concept you would like to use; you can even use a combination of different concepts and images. Do you want all capital letters, letters in an arc, block or cursive fonts, one color or several colors? How about an outline around the text or a shadowed effect? Give xxxx your ideas, and we will make a proof based on the ideas that you provide and our creativeness. Logos generally cost less than $100 to design, and if you don't like what we do, you pay nothing! While some graphic artists charge hundreds or even thousands for a logo concept, xxxx can create a fantastic, effective logo for your business for a great price.
posted August 03, 2009 07:25 AM
I was talking to a customer last Friday that has been in the trucking industry his whole life and now has a garage and a couple tow trucks. He always had my Grandfather letter his trucks, well towards the end he wasn't making as much money so he would just buy the vinyl from us and put it on himself. He said that is was around $150 for just the vinyl. He was apologizing to me for having his ramp truck lettered somewhere else but the guy came to his shop and did both doors with shadows and outlines for $75.00. I told him I couldn't compete with than and probably wouldn't have to for long, he asked why and I told him at that rate you wouldn't be able to keep the lights on in my shop for to long, he agreed and is having me make a new sign for in front of his shop.
-------------------- Jake Lyman Lyman Signs 45 State Road Phillipston, MA 01331 Posts: 635 | From: Phillipston, MA | Registered: Sep 2002
| IP: Logged |
posted August 03, 2009 07:30 AM
...(if there any thing good about it,) The recession will wipe out most of the MORONS! We hope so anyway... they had no 'business' being in the sign business.
posted August 03, 2009 09:48 AM
I really wasn't sure what kind of reaction I would get to this post - I'm gratified by the positive comments. The conversation itself was too important not to repeat the essentials of it.
My answer to Paul's question about "how do you stay in business" was to remind him that I have always operated my business on my terms, not the terms set by my competitors OR my customers. I asked him, "if you were one of these builders who only wanted cheap coro yard signs, never lettered your vehicles or used magnetics, would we have ever had the business relationship that would lead to having this conversation?" He guessed not. Then I asked him how he responds to a customer that calls and says "Hey pal, I wanna get a deck built. How much you gonna charge me?" He laughed out loud, and said he sent those jobs to other builders... "You mean the guys with the coroplast yard signs?"
The point was, both of us stayed in business by working with customers who respected our professionalism and paid our prices, not by trying to "compete" in a self-defeating downward price war.
He had one other important insight. "Builders have to adhere to building codes, and the inspectors know who the hacks are. That weeds out some of the worst offenders. But you guys are an unregulated industry - there's nobody to keep the bottom-feeders honest, or set any standard." That comment pretty much says it all.
-------------------- "A wise man concerns himself with the truth, not with what people believe." - Aristotle
Cam Bortz Finest Kind Signs Pondside Iron works 256 S. Broad St. Pawcatuck, Ct. 06379 "Award winning Signs since 1988" Posts: 3051 | From: Pawcatuck,Connecticut USA | Registered: Nov 1998
| IP: Logged |
posted August 03, 2009 10:52 AM
Thank you Cam! I have to agree with Kent Smith - those undercutting the market will never get the message. Example: I called a franchise sign shop to get a quote on a digital print for perf.vinyl for car window, then I called another franchise sign shop, and two owner/operator sign shops - just to compare prices. All shops were within 25 miles of me. The first shop's price was a quarter of what the other three shop prices were - A QUARTER! So, I called the first sign shop back and told him, rather frankly, "Man, your prices are TOO cheap - don't do that! It's bad for our trade!" He made the excuse that his price was so cheap because he was giving me a deal. I didn't believe him. He's still barely in business, and selling cheap signs.
-------------------- Kathy Weeks Weeks-End Signs & Graphics Lake Elmo, Minnesota Posts: 249 | From: Lake Elmo, Minnesota | Registered: Mar 2009
| IP: Logged |
posted August 03, 2009 11:15 AM
Thanks Cam. You have a gift for writing and telling your story.
Kent is right. The ones that need to hear your message the most never will. In the workshops that I teach on design there will always be a few that get up and leave withing the first ten minutes because they are wanting the "secret formula" that will make them rich over night rather than the principles of good layout and design that they must apply.
Right now Mike is driving fifty miles to another city to put up a simple vinyl sign on a glass door. We have done work for this local company for years and when they asked for their name to be put on the door of their new branch I gave them a price but suggested that they find a local shop there to do the job since we would have to charge for driving up and down the road.
Their answer was that they had done business with some of the local shops there and had bad experiences with each...and were willing to pay us extra to get it right. Sad. It was just a simple white, vinyl logo that anyone could reproduce.
Unfortunately, there doesn't seem to be any change in the downward spiral. More and more are entering our craft with no idea what constitutes good design or quality workmanship.
-------------------- Chapman Sign Studio Temple, Texas chapmanstudio@sbcglobal.net Posts: 6306 | From: Temple, Texas, USA | Registered: Nov 1998
| IP: Logged |
posted August 03, 2009 12:09 PM
Technology - in a word - cut our production times. That's part of the problem . . . it allowed anyone with fingers to be a sign designer/vinyl cutter (or so they think) - and the price of the work came down with the 'new entries' in the market.
As Billy said, this economic 'flushing' should drive a lot of those birds out as too many were surviving on average quality (or lesser) work . . . but they WILL be back. Same goes for many businesses - and that's why inflation will be a testy thing for the next few years.
As Joe C. said, I don't compete with them and offer a different product line.
No technology comes with a 'good design' package . . . and when you find customers who know the difference, treat them like you're married to 'em . . . or better.
Thanks, Cam . . . for bringing this subject up. Good customers ARE out there . . .
-------------------- Jay Allen ShawCraft Sign Co. Machesney Park, IL jallen222@aol.com http://www.shawcraft.com/
"The object of the superior man is truth." -Confucius Posts: 1285 | From: Machesney Park, IL, USA | Registered: Nov 1998
| IP: Logged |
posted August 03, 2009 12:56 PM
Although there is little regulation within the pinstriper's world (I don't think it can be defined as an industry)most stripers worth their salt always went for the brass ring. The client base usually had mucho disposable income and knew not to ask about pricing. Although on occasion some would want to know how much cash to bring. Those with discretionary income would ask and rarely came back to take advantage of our inflated pricing. I do recall during years of union shops and the independent folks too that ran their business to make coin and expand a little with the latest ladder jacks etc.,There seemed to be some kind of ongoing word on the street about turf and respect for specific types of the craft that some were best at. In this economy there probably is no way now to gauge a formula, divided by specialty format that would hold water. Seems to be based on Comme sei,Comme sa. I have purchased the overnite banner from a thousand miles away and inflated my costs to a one time client by 5 to 600 percent with the end result of seeing filet mignon on my plate rather than White Castles. As Bob, says "ya gotta serve somebody"...
Jack
[ August 03, 2009, 12:57 PM: Message edited by: jack wills ]
-------------------- Jack Wills Studio Design Works 1465 E.Hidalgo Circle Nye Beach / Newport, OR Posts: 2914 | From: Rocklin, CA. USA | Registered: Dec 1998
| IP: Logged |
posted August 03, 2009 01:27 PM
It's been my personal finding that generally if a customer has been using you for awhile, then decides to try a cheaper place, they figure out why the other place is cheaper in a real hurry.
If they don't figure it out, they need to stick to the new place. Because good stuff simply isn't a high priority.
No different than me trying a no name brand of something because I want to 'see' if the cheaper variety will do the job equally well. If I'm fussy enough, I'll go back to paying top dollar.
posted August 03, 2009 02:05 PM
We've seen this discussion a thousand times over the years. Whether it centers around clueless signmakers who torpedo the price structure in an area or the customers who will go down the street to the next shop to save five bucks or the brain-dead customers who don't know or appreciate the value of good design and layout, the subject keeps resurfacing on a regular basis.
There is (or seems to be) a neverending supply of any of the above. And as long as I've been in this business, they've been there. They are never going away for good. Ever. So run your business to the best of your ability to make the money you need and don't bother waiting for a poor economy to shake out the losers. Ain't gonna happen.
On a related note, if prices on everything has gone up over the years, how is it possible that McDonald's et.al. can still have a dollar menu? Same with Walmart. Their cheap prices keep getting cheaper and yet they are enormously successful. I guess to answer Cam's former customer, I'd guess that technology and a business model based on volume and tolerable quality would factor into the answer.
By the way, I've adopted the same model as Joe C.: give the customer something they can't find at the other cheap-o shops.
One more thing, Cam: did you ask your friend why he stayed with you and paid your prices when he could've saved money by going to one of those other shops? I'm sure he appreciated much about you and your professionalism, but when so many of his associates were saving money where they could, why didn't he? His answer might be valuable insight into how to more successfully target your marketing efforts.
[ August 03, 2009, 02:35 PM: Message edited by: Brian Oliver ]
-------------------- Brian Oliver Paxton Signs Fort Collins, CO paxton@peakpeak.com www.paxtonsignsofcolorado.com Posts: 237 | From: ft. collins, colorado,usa | Registered: Mar 2001
| IP: Logged |
posted August 03, 2009 03:16 PM
I always knew why he kept coming back. 1. I had designed his first jobsite sign back in 1992. At the time, he specifically said he wanted to differentiate himself from other builders who, in his view, all looked the same. 2. Because I made a profit from his purchases, I was happy to see him when he came back. He always got the same level of quality, and because of that, he never quibbled about price (most of the time he didn't even ask). 3. I would see his signs in front of the projects he did, all over the area. He was justly proud of his work and wanted the public to know what he was building. And because of him, I did other high-end project signs for several other builders. (We didn't call them "jobsite signs"; that designation was for other builder's smaller, ordinary signs.) 4. Because of all the above, we like and respect each other. I won't say we were close friends; but this was a productive business relationship for both of us.
Knowing that there are decent, thoughtful, loyal customers like that out there has made it a lot easier to wade through the price-shopping shmucks that have come my way. I don't have a magic bullet, and while admittedly this part of New England is better off, economically, than some other parts of the country, we have the all the same problems in the sign industry that everyone else has. The difference is I would rather do business with three good clients, than drive myself insane trying to compete for work from fifty customers who don't care about anything but price. That's not rocket science, but it IS a deliberate, conscious business decision on my part.
And yes, it has all been said before. But as long as the issue exists, it's worth discussing.
-------------------- "A wise man concerns himself with the truth, not with what people believe." - Aristotle
Cam Bortz Finest Kind Signs Pondside Iron works 256 S. Broad St. Pawcatuck, Ct. 06379 "Award winning Signs since 1988" Posts: 3051 | From: Pawcatuck,Connecticut USA | Registered: Nov 1998
| IP: Logged |
posted August 03, 2009 03:45 PM
what i do here when i see a NEW PRINT SIGN SHOP, i go in with a business card, name of my business, HAND PAINTED, ART WORK, phone number. what these places have done is taken the walk in trade, the cheapies and once in a while they will get a REQUEST for hand painted work, wala, and since they have the store front, rent, electric, and the tire kickers lookin for low ball prices on most things.............I GET THE WORK THEY CANT DO!!!!! and i get paid well for it. right now i have 4 front panels(2 1950's gas pumps)and i have to PAINT 4 sinclair H-C gasoline logos on them. and there was never a question as to HOW MUCH WILL THEY COST!!!! I also have 2 old local beer company signs i have to reproduce from the 1950's, that was painted on masonite then. now the masonite is falling apart and i am to make 2 copies of each sign(3'x6') as original as i can.............AGAIN HOW MUCH IT WILL COST........was never asked. for me, these lowballer printers have served me well. they send me work THEY HAVE NO IDEA of how to produce, and they have raised the prices i can get for PAINTED WORK. so iam still making money.......in work others CANT DO. this is a little "all paint" job i did month or so ago. i got MORE for this, then most charge for 2 doors on a truck in vinyl. and it was less time.
[ August 03, 2009, 03:51 PM: Message edited by: old paint ]
-------------------- joe pribish-A SIGN MINT 2811 longleaf Dr. pensacola, fl 32526 850-637-1519 BEWARE THE TRUTH.....YOU MAY NOT LIKE WHAT YOU FIND Posts: 11582 | From: pensacola, fl. usa | Registered: Nov 1998
| IP: Logged |
posted August 04, 2009 08:42 AM
Any comparison to a Walmart-type business model is completely misplaced. Walmart is in the business of selling an extremely high volume of mass-market commodities. We are not.
Imagine this scenario - you need a pair of socks. Your socks have to be designed to the exact size to fit your feet, you want them in a specific color and pattern, out of a specific material that is only used for socks. Then those socks are made for you, one at a time; they are only useful to you because they don't fit anyone else's feet. These socks are no longer a mass-market consumer commodity, they are now a custom-made single-use item. You would never expect to get those socks at Walmart at $5.95 for three pairs, would you?
Fortunately, socks aren't made like that - they are mass-produced in some Chinese or Indonesian factory. Walmart does a great job at retailing socks; buying them in bulk and keeping the margin low, and selling millions of socks at a small profit on each pair.
Yet our industry keeps stumbling over itself trying to sell signs as though they were socks. It's just not a comparable business model.
-------------------- "A wise man concerns himself with the truth, not with what people believe." - Aristotle
Cam Bortz Finest Kind Signs Pondside Iron works 256 S. Broad St. Pawcatuck, Ct. 06379 "Award winning Signs since 1988" Posts: 3051 | From: Pawcatuck,Connecticut USA | Registered: Nov 1998
| IP: Logged |
posted August 04, 2009 11:45 AM
Cam, with all due respect...kindly keep my socks out of this discussion.
[ August 04, 2009, 11:47 AM: Message edited by: Brian Oliver ]
-------------------- Brian Oliver Paxton Signs Fort Collins, CO paxton@peakpeak.com www.paxtonsignsofcolorado.com Posts: 237 | From: ft. collins, colorado,usa | Registered: Mar 2001
| IP: Logged |
posted August 04, 2009 04:08 PM
The recession will wipe out most of the MORONS! We hope so anyway... they had no 'business' being in the sign business.
Sadly in a recession the cheapest price often wins as there are plenty of morons looking for the cheapest job.
Here's a case in point, I make dolls, they are all individual, one of a kind and unique. Each takes me about 5 hours to complete and there's about $10 worth of material in each.
I have them on my market stall at $40 each. It's not a flash hourly rate but I'm sure you'll believe how many people say "Why are they so expensive". My theory is that there's been so much crud imported from overseas where the workers are paid peanuts that now everything is viewed with the same jaded price guide. I haven't dropped my prices, they will sell, just slowly to people who appreciate workmanship.
-------------------- Anne McDonald 17 Karnak Crescent Russley Christchurch 8042 New Zealand
"I used to be indecisive, now I'm not so sure" Posts: 877 | From: Christchurch | Registered: Sep 2006
| IP: Logged |
posted August 04, 2009 04:19 PM
I agree with Anne. With the recession, I'm finding people to be more price conscious making 3-tier pricing and salesmanship more important than ever.
Double your price on the dolls. Maybe triple. Do it now. The people who appreciate the uniqueness, the craftsmanship, the *specialness* of your dolls will still pay the price.
To the people who ask why they cost so much, you can reply with something like "Really? I was thinking that I was practically giving them away because they're going to appreciate so much in value."
It's worth a try, isn't it?
-------------------- Brian Oliver Paxton Signs Fort Collins, CO paxton@peakpeak.com www.paxtonsignsofcolorado.com Posts: 237 | From: ft. collins, colorado,usa | Registered: Mar 2001
| IP: Logged |
posted August 05, 2009 06:04 AM
Back in 94, I was asked to do a presentation to the Rotary club of a small town near where I live. I had muriel call me on my cell & pretend she was a customer & started the conversation by asking what was our cheapest price for a sign. I Had made up a sign from the last 2 feet on a roll of toilet paper that read,from top to bottom, OUR BOTTOM PRICE. I told my fantasy customer that these signs were done with a black felt-tipped marker & would cost $1.49. If they wanted another color it would be 10 cents more. If they were not happy with the sign they could use it for it's intended purpose & that way they didn't loose their investment. At the end of my presentation, after showing white on white, black on white, two colors,a drop shadow &3 layer vinyl, the customer asked who in hell was doing the fancy sandblasted,hand carved gold leaf signs in this area. I had just finished doing my own shop sign with all these elements & had it on an easel, covered with a piece of satin material & I unveiled it & replied "that would be me". Since those days, I look back & think how cheap I did some of the signs for. I also look back & think how little equipment & sign knowledge I had. Since then I have learned & expanded my shop & kept a very good customer base. Other sign companies have come & gone & I honestly believe there will be good times ahead. We came this far & will continue to prosper because we have set the standards for many others. We have given quality.We have given the service required & have climbed the ladder to a position where we can be looked up to. I am now in Australia & have visited 6 sign shops in Colandra. They are great people over here. Their favorite expression seems to be," don't worry mate". I hope you out there going through these hard times will always see the light at the end of the tunnel & as days go by you notice it becoming brighter. G day mate
posted August 05, 2009 05:34 PM
thank you cam! personally, i can't for the life of me figure out why the sign industry has the worst business model there is! wtf is wrong with people who want to work for free...and i don't wanna hear...i do it for the love of art. screw that, we are in business to make $.
the fact that technology has made things cheaper is total bullshyt too....these machines cost $$, so why should the price go down? can't even begin to figure out the logic there either. are sign people that stupid? i mean, come on, why do we work 60+ hrs a week, yet are NOT able to buy health insurance or save for retirement. that's a poor business model, plain and simple!!
i don't know anymore....i'm at the end of my patience rope. i have 20 yrs before retirement, and i need to make real money, not just scrape by.
i feel i give 110%, bend over backwards for people, always buy quality products but its just never enough. i've never worked so hard for so little money...and i'm smarter than that. so recently, i've had to change a few things in my life:
for starters, i am so glad i made the decision to go back to accounting part time. i'll take $40/hr for the use of my brain, with no product failure or cost of goods sold.
i don't dick around with things i can't do myself. i got nothing to prove. oh you need post work....sorry call the other sign company. it's not worth the headache to try to find someone with a clue...that's dependable...so i'll pass. no one wants to pay for a phd anyway. lol.
oh a carved gold leaf sign, ya say? soooorrry....gotta pass on that too. for me, i don't make a dime on these things...no one wants to pay what they are really worth. done my share, they are puuurty and all, but i make more $$ puking out a digital print and applying it on dibond. it's a matter of choice for me.
i have no desire to do the small stuff that eats my time....like house signs...yuck! just a time waster for me.
i have several large clients that i love, though! i'm just going to concentrate on them and weed out the others...like the deadbeats who take forever to pay.
my goal is to just work about 25 hrs in the sign biz and do my accounting for 12-15 hrs/wk....and actually take a day or 2 off a week....like normal people.
it's definitely tough being a one person show... no one wants to be in the sign business right now... hell there's 3 for sale within a 5 to 45 mile radius...that i know of...maybe more?
am i having a bad day? lol maybe where's my bag of m&ms.................
-------------------- Karyn Bush Simply Not Ordinary, LLC Bartlett, NH 603-383-9955 www.snosigns.com info@snosigns.com Posts: 3516 | From: Bartlett, NH USA | Registered: Jan 2001
| IP: Logged |
posted August 05, 2009 05:51 PM
Karyn...Thanks for posting your thoughts... I agree totally!!
"i have several large clients that i love, though! i'm just going to concentrate on them and weed out the others"
I preached that attitude for years. It worked for me and it'll work for you. (Thanks for that phrase Monte!!! )
-------------------- Dave Grundy retired in Chelem,Yucatan,Mexico/Hensall,Ontario,Canada 1-519-262-3651 Canada 011-52-1-999-102-2923 Mexico cell 1-226-785-8957 Canada/Mexico home
posted August 06, 2009 10:12 AM
Like many, we are also having a very difficult year and are facing some difficult decisions regarding our future direction. Karyn summed up my opinion exactly. The business model for a small scale local sign shop doesn’t work well and continues to decline. Like Karyn, I like to think I’m smarter than this; tying up all my money and years of my life in a business with a very small chance for success.
I’ve also had help from some very successful business people and they’ve reached very similar conclusions. The business model is declining for very much the same reasons other small business industries have declined before us. The technology that has allowed less skilled workers to produce signs acceptable to the large majority of customers means that a business that is well capitalized has a much greater chance of success than an underfunded business run by a technically skilled craftsman. You can only compete effectively if you have the money to keep up with technology.
Many of us think we are keeping up with technology by buying computers and digital printers and software et al. But we are buying yesterday’s technology today and competing with companies that can afford tomorrow’s technology today. We buy $30,000 54 inch solvent printers at about the time photo labs are buying $300,000 UV 3 meter wide direct print flatbeds. This keeps pressure on our margins and keeps us ranting about customer’s lack of quality concerns and competitor’s low ball prices.
We complain about the “sticker” company’s low ball pricing, but our real problem is the very low prices of the very large format printers. They are not as stupid as we think and they are capable of producing a very high quality product.
On the other end of the scale are the dedicated sign shop franchises. They may generally go after the lower end as we define it, but they are actually go after the largest share of the market, offering products that many customers have trouble differentiating from ours. This puts even more price pressure on us and forces us into an even smaller niche. What they lack in talent they make up for in money. It takes a capital requirement most of us couldn’t meet to start a franchise.
So what I’ve managed to do in my sixteen years in the sign business is come to believe I understand the problem and short of putting in a few hundred thousand dollars more, not yet grasp the solution.
One of the normal steps in the consolidation of an industry as it matures is the elimination of the weakest competitors, usually defined as the ones with the least amount of capital, whether caused by starting out without enough or running on margins that don’t allow it to accumulate. This step is accelerated by an economic downturn so it's particularly acute right now.
The next step is consolidation of the next tier, which I think is most of us. I have never been able to execute this, but have always believed that many territories can support one or two independent shops but very few, if any can support more. Wouldn’t your business be more efficient (read: profitable) if you and two of your best competitors joined together? Do you really need two CNC machines for the amount of work you produce? Four plotters and three solvent printers? Four sets of bookkeeping software, computers and bookkeepers? Four advertising campaigns and rent on four different facilities to house it all?
This is my own personal theory. As I’ve said, I have had no success implementing this theory. Independent sign makers are the most independent group of business owners I’ve ever seen. Getting them to do this has been almost impossible. How to do it without exposing yourself to your competitors is another problem. Maybe, as we get closer and closer to the edge we’ll give this more credence, even though your chance of success is higher if you do this before you all run out of cash.
I write this not only to share some personal opinions, but to encourage this debate. I know that the very best of us will thrive, another group will hang in there and survive, and many of us should consider another line of work.
Please share your thoughts on possible alternatives to this last outcome.
-------------------- Paul Luszcz Zebra Visuals 27 Water Street Plymouth, MA 02360 508 746-9200 paul@zebravisuals.com Posts: 483 | From: 27 Water Street, Plymouth, MA 02360 | Registered: Jul 2003
| IP: Logged |
That is probably the best post regarding the challenges of this business I've ever read anywhere.
Thanks.
-------------------- Brian Oliver Paxton Signs Fort Collins, CO paxton@peakpeak.com www.paxtonsignsofcolorado.com Posts: 237 | From: ft. collins, colorado,usa | Registered: Mar 2001
| IP: Logged |
posted August 06, 2009 12:50 PM
Paul......yewars ago I did exactly that.
I had 2 friends that I shared work with...one was a silk screen & comuter cut viyl shop and the other was a plastics and dimentional shop. Between the 3 of us ... we could handle just about any job that came along.
It was a great setup, but I outlived both of them
-------------------- Si Allen #562 La Mirada, CA. USA
(714) 521-4810
si.allen on Skype
siallen@dslextreme.com
"SignPainters do It with Longer Strokes!"
Never mess with your profile while in a drunken stupor!!!
Brushasaurus on Chat Posts: 8827 | From: La Mirada, CA, USA | Registered: Nov 1998
| IP: Logged |
posted August 06, 2009 02:09 PM
I'd probably be one of the last guys to go in with partners or other businesses to do a business. It may make sense from a financial point of view to aquire the scale to do things profitably but I am far too independantly minded.
But our business model is far from the norm. There are plenty of sign makers in our community - even right here in Yarrow population 1100. In the greater community there are plenty more.
Our approach to business is to do things in a way and offer a product that few others (if any) in our area (or anywhere) can. We do only three dimensional signwork in our shop. We have no real competition (as defined by someone else offering the same design and fabrication service of similar products)
We are in essence starting our business from scratch as our large theme park projects have gone away in the last two years because of the economy. It's a fact that it is not a great time to change or start a new business but it is not impossible. With a relatively expensive and high end product that caters to a very small niche market it is a challenge to get the word out fast enough.
We aren't letting any of that deter us and are slowly achieving a good measure of success. Our local business grows daily and orders are coming in from further afield as well as our reputation grows.
The economy is starting to improve locally and word is getting out about our unique business and product we create. As word spreads more enquiries come every day and as a result more work too. We have learned through the years it is best to grow slowly, to earn a solid reputation from quality work. Its better (for us) to do fewer jobs for more money than simply keep busy doing small jobs with little profit. And that is the plan we are sticking to.
As we rapidly pay down our debt, being careful not to add any more burden it gets a teeny bit easier each day. There is light at the end of the tunnel.
I come onto our porch each morning looking out at our beautiful yard and out to the shop out back. I'm grateful, and feel so very fortunate to do what I love with my family and friends close by.
While we will most likely never be rich, we are living the dream, not going to a job each day and that is a good thing in Yarrow...
-grampa dan
-------------------- Dan Sawatzky Imagination Corporation Yarrow, British Columbia dan@imaginationcorporation.com http://www.imaginationcorporation.com
Being a grampa is one of the the most wonderful things in the world!!! Posts: 8738 | From: Yarrow, B.C. Canada | Registered: Nov 1998
| IP: Logged |
Your business model is far from normal. You are focusing your efforts on your core competency. A lot of businesses (even big corporations) hold true to this business model. Intel doesn't make toasters because their core competency is making computer processors.
You market your product by pointing out your product's uniqueness and how its uniqueness provides greater benefits. You market yourself as THE source for 3 dimensional signage much the same way Walmart markets themselves as THE price leader.
I think it is wonderful how you are very conscious of your business model and are always thinking about what you do and how it fits into this plan. A lot more small businesses would be successful if they took this same approach.
-------------------- Dan Beach Cylinder 9 Designs 1650 Glassboro Rd Sewell, NJ 08080 Posts: 625 | From: South Jersey | Registered: Sep 2008
| IP: Logged |
posted August 07, 2009 08:50 AM
Paul has a number of excellent points, particularly about "sharing" equipment and technology.
I don't have a CNC router - but a tech shop up the street does (they don't make signs, but mostly do specialty work for other industries, including my router needs when I need them). I don't have a large-format printer - but I can buy prints at wholesale from any number of local sources. As a result, I don't pay the overhead and depreciation of this kind of equipment, which means I can afford to be choosy about the kind of work I do. People in this industry buy into the trade-show technology song and dance that they need this and that and the other latest equipment in order to be "competitive" - but as Dan repeatedly points out, if we do what other people can't and won't do, the competition is minimal. And why compete for something you didn't want in the first place?
-------------------- "A wise man concerns himself with the truth, not with what people believe." - Aristotle
Cam Bortz Finest Kind Signs Pondside Iron works 256 S. Broad St. Pawcatuck, Ct. 06379 "Award winning Signs since 1988" Posts: 3051 | From: Pawcatuck,Connecticut USA | Registered: Nov 1998
| IP: Logged |
posted August 08, 2009 11:09 AM
When we started up Starr Studios, even though this is not the first business I have owned, I knuckled down and did the business plan approach. I also read the book The E-Myth (highly recommend it) and came to some troubling conclusions. For us, it was either build a small company focused on doing the kind of work I have always loved doing but got little chance to at the big sign companies I worked for over the years or become one of the big companies with employees, high equipment costs and overhead etc.
We kick started the business a year ago with zero money (and I mean zero, I did our first job by strapping my brush box to the back of my 1982 Kawasaki and rode to the job site in the rain) and my wife and I have worked round the clock to get this thing off the ground.
I think, Paul, this right here is why your idea in theory may work great on paper but will never materialize. Sign makers are a stubborn group of business people who sometimes go to great lengths to build our businesses because we love what we do, and faced with getting a 9 to 5 job or make this business go in the middle of a recession/depression many of us choose the latter.
We are broke anyway, so we are only going after and bidding on work we really want to do. I have no problem spending days on a hand routered/hand painted sign because its what we defined in our business plan to do and to make it profitable over time with proficiency.
Right before 9-11 I worked in Seattle at a company called Karagrafic that seemed bulletproof. We had a national client base of large corporations and one of the owners had worked for years as a 3M rep. Almost overnight following 9-11 our company went from 60 to zero and collapsed. It was merged with a silk screen company who kept their existing staff and cut loose most of the rest of us. I have never worked for a big company since and never want to. I'll take my chances being the small guy.
And here it is, what I just wrote is where a lot of us are, and it may not make a whole lot of sense to the big corporate guys, but I don't really care. The middle class in this country is being squeezed out, and I am looking to put food on the table without buying in to the materialisitc hype we grew up with. My old beater shop van is a piece of crap, but does the same things that the shop down the street's brand new SUV does.
Sorry for my rant, but I'm just not willing to buy into the corporate mentality any more. I am educating myself daily on how to make our business more efficient and profitable so that it will be around for many many years. I like very much that aside from our 24" plotter the rest of our shop consists of saws, routers, brushes and cans of One Shot. They don't break down very often and I'm learning more every day how to make them work for us. For digital prints, I gladly send those files off to shops who produce them cheaper than I could ever do if I even wanted to invest in the equipment and floor space.
My dad supported 6 of us kids for many years working out of the back of his Caprice station wagon custom painting any and everything. We learned a great work ethic, morals and fair business practice. What the big companies wanted to teach me was how to screw the competition, take advantage of uneducated customers and to cut loose friends with mortgages when profits were down. No thanks, small is fine with me
-------------------- "A wise man concerns himself with the truth, not with what people believe." - Aristotle
Cam Bortz Finest Kind Signs Pondside Iron works 256 S. Broad St. Pawcatuck, Ct. 06379 "Award winning Signs since 1988" Posts: 3051 | From: Pawcatuck,Connecticut USA | Registered: Nov 1998
| IP: Logged |
![[Smile]](smile.gif)
![[I Don t Know]](graemlins/dunno.gif)
Why?
![[Big Grin]](biggrin.gif)
![[Applause]](graemlins/applause.gif)
![[Thanks]](graemlins/thanks.gif)
![[Bash]](graemlins/bash.gif)
It's just not a comparable business model.
![[Wink]](wink.gif)
![[Razz]](tongue.gif)
where's my bag of m&ms.................
![[Frown]](frown.gif)
Printer-friendly view of this topic