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Building a business that thrives

One of the greatest assets of the label and packaging industry is its ability to innovate, writes Bob Cronin.

One of the greatest assets of the label and packaging industry is its ability to innovate.

We’ve embraced revolutionary technologies (digital printing, RFID labeling), retooled machinery around novel substrates and environmental mandates, and adopted arising methodologies to respond to emerging markets. Namely, we’ve set new standards, locking in our position as one of the most flexible, profitable – and acquirable – businesses out there.

With our industry consolidating faster, and M&A still at top multiples, now might be the perfect time to make a deal. But, even if you’re not ready to sell, ensuring your business’s maximum value is critical, as this will provide you the financial leverage and growth possibilities that help you carve out your optimal trajectory. Covid-19 has brought a world of change to our industry. The fluctuating dynamics mean that every business needs to be operating differently. In reviewing our most successful clients, here are five activities you can do to have the greatest impact. 

1. Commit to health and safety. Because of the diversity of news, geographic variances, and personal experiences, every client (and employee) likely has a different take on Covid. Businesses without a clear and encompassing response can lose these valued individuals simply out of fear. Implement and monitor all measures you have in place, and make sure they extend across every touch point, from initial ordering through freight and delivery. Also make sure you protect your staff in-house. Keeping your team happy and safe will ensure you can operate in the most productive fashion.

2. Manage cash wisely. Times of change can be times of opportunity. While we hear stories about companies that achieved success by going out on a limb or taking an aggressive new position, now is not the time to take big risks. Study every investment carefully, and consider all possible outcomes – whether things get better worse. Avoid large capital expenses that require a sizeable sales push or a lot of customer education. Many industries are going to face even greater struggles, and many companies (even in favorable segments) may fail due to poor decisions. Stay cash-positive, and make sure any move you make will help you grow through multiple opportunities. 

3. Build your best team. The Covid fallout continues to leave many highly skilled people looking for work because of challenges outside their control. Smart companies can jump on this fleeting opportunity to recruit newly available talent (and perhaps at more favorable rates). I always say people make the business, and now’s a time when having a few more winners on your team can make a difference. Look for a track record of innovation, technological savvy, and measurable achievements, and capture the game-changers. These people may come from our sector or related industries such as commercial print, marketing, or materials/ equipment manufacturing. You may have a solid growth position, but think of how much stronger it will be with the best team in the business.

4. Review your markets and adjust for the (new) future. Every great entrepreneur is constantly evaluating and adjusting for the idiosyncrasies in their markets. In times past, this process was a lot easier. Now, much of the traditional strategic growth planning has been replaced by crisis management. 

The best companies are finding ways to once again be proactive. Look at what’s happening not only in your clients’ markets, but in the markets of their customers. And examine this daily. The future of a number of industries is hanging in the balance, so those that they support will suffer too. What can you change to affect this?

Consider every customer’s value. What have they meant to your company? How profitable is their business? How does their (changing) future look for the next three or five years? Are they a smart fit for your long-term strategy? Answering these questions will help determine your path. Don’t be afraid to shift focus to more favorable markets if you have the capabilities and capacity to serve them. Look at markets that have a strong, sustainable fit for your products and develop a buy or build strategy to enter them.

5. Maximize your best differentiators. Competitive differentiators are important in any economy. Right now, those differentiators must be things that deliver real value. Examine all your assets and reevaluate what you can offer. Customers align with suppliers for numerous reasons – the most important being that you can answer their needs better than anybody else. There are new needs now, and we’ll see more to come. Keep a thoughtful eye on continually carving your unique differentiators and staying focused on resolving clients’ challenges. 

The Covid crisis has impacted virtually every industry. As we adjust to the ever-changing ‘new normal’, we must return to the characteristics that made labels and packaging great in the first place. Be flexible, financially sound, innovative, solutions-oriented, customer-focused, and in charge. We’ve weathered tough challenges before. Those that can triumph in the Covid market can become the next leaders of our industry.

ABOUT THE AUTHOR

Bob Cronin is a regular columnist in Labels & Labeling, writing about M&A activity in the industry.

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