The fallout from Covid-19 continues to deliver one new blow after the other. Just when we think things are getting better, we encounter another hurdle. Rather than striving to increase sales and clients, our great label and packaging industry is just striving. Striving for normalcy. Striving for opportunity. And striving for things to calm down long enough for owners to figure out the next best move to grow their business.
The energy surrounding our industry has historically been one of vibrance and positivity. But we’re now feeling that we’ll face Covid issues forever. We’re focusing on shortages of substrates, suppliers, customers and employees. Yet the biggest shortage is our confidence.
As advisors, we hear the frustration: ‘We can’t do this anymore’, ‘We can’t last through this’, and ‘I give up’. These comments are no longer just quips. They’re gasps trying to catch fresh air. Attitudes do many times end up representing our future, and many owners know they aren’t well-positioned to move forward under the concerns over massive inflation, continually changing health and safety expectations, labor quality and availability, and market flux. The multiple issues we see are real, and the only way to get over them is to do something, regardless of how helpless we may feel.
We’ve waited too long following the path that Covid has taken us. It’s our turn to take control back. Sit down with the individuals who’ve helped build your great company and decide what you want for your future. You’ve weathered many storms before, and this is just another one of them. Here are your options.
Invest and grow. Most label and packaging owners have had their eyes on a specific piece of equipment or technology for a while. If you’ve done your ROI analysis, this might be the ideal time to dive in. Many of your competitors have stalled, waiting for the post-Covid influence to get better – and ultimately missing out on potential present opportunities. Assess this purchase in light of today’s landscape. How does it provide for your customers now? Can you manage it with current personnel? Can it solve any of the issues brought about by the pandemic? Talk to your customers and get a commitment, then make the move.
Acquire. One of the fastest ways to grow is through acquisition. However, buying another company is a big commitment, and an acquisition should always be approached with caution. More businesses than ever are open to a sale, which means that while you have more options, you also have more potential pitfalls.
Rather than just buying your flailing neighbor, make sure you have a strategic plan for an add-on. Determine where your biggest gaps and needs are, as well as what you might benefit from most (specific customers, products, supply chain/logistics, territories). Then conduct your due diligence to make sure you know what you’re getting into and that its structure, people, and capabilities can be integrated cohesively into your operation. Seek a professional advisor for support.
Sell (or divest). Entrepreneurs in all positions sell. It’s not a matter of selling at a high point or out of desperation. It’s about whether you can still make your company thrive or whether someone else will do better with it. An exit can bring a lot of opportunity, and you have plenty of options if you’re in a position of strength. There are a lot of potential suitors out there – local competitor, larger strategic, private equity, etc. After building your business for so long, you’ll want to find the very best match. Decide where you want to be (full exit, advisory position, sell only a business unit, etc), and what you can count on among your top leadership, so you can make the best and most profitable decision.
Form a strategic partnership or alliance. If none of the first three sound enticing, it’s still important to build. Times of challenge are times of opportunity. What’s your biggest weakness? What capabilities do you need to become the leader in your market segment? What are your clients struggling with, and what can you add to ease their pain? Some alliances can be simple, like adding a storage partner to improve material access or benefit from purchasing economies of scale. Others may be more expansive, such as bringing on a digital partner or having abilities on different substrates. If you have an existing relationship, make sure to formalize it and lock in lower prices now.
Two years ago, we didn’t know what the future would bring. And we don’t know how Covid and other dynamics will come into play two years from now.
The rewards for taking a powerful, focused direction are greatest when others cannot commit to move. It’s time to buy the press, create a solution, resolve supply chain issues, acquire, partner, or exit. Sitting and waiting on what might happen is a ‘going out of business’ strategy. Set your sights high and commit to making it happen.