Dive into Digital

Ready to expand into digital printing? Consider these decision steps

Digital printing can be profit-able, but it also requires patience and a full commitment to the technology, because the processes, although easily accomplished, demand a somewhat imprecise learning curve that depends on the nature of the learner. For example, visually inclined geeks, especially those familiar with Adobe software, will learn faster than novices who are unfamiliar with such systems. However, if you’re coming in cold, don’t fear your shop adopting digital printing because all the processes are based upon solid logic and easily learned by anyone who is willing to follow specific instructions.

In truth, learning the technology isn’t anything to trepidate. Instead, fear buying the wrong machine, an unrealistic view of costs vs. cash flow and an overzealous view of your market. Fortunately, these three evils are easy to avoid. Start by conducting market research to determine what type of digitally printed products are in local demand that your shop could produce and sell, which will narrow down your machine choices. Also, evaluate your local market’s willingness to pay a price that will allow your new venture to profit. Next, assess your competitive circumstances by learning if a nearby shop is producing similar print products. Consider, also, that a neighboring shop may have similar market-development ideas, so having no competition today isn’t a guarantee of none tomorrow. Remember that recognizing your competitive picture allows you to create “barriers to your competition” (usually as value-added services) as one way to retain and increase your market share.

As you can see, the process is to gather information that determines which types of machines would produce print products you can sell at a profit. More importantly, however, you’re developing a broad picture of your life with the new, high-tech print machine and determining whether you’re economically and personally companionable with such a venture.

Do this. Conduct preliminary web research and pick three print machines that might do the job you have in mind, but don’t lock down yet. Then, learn about ancillary products these print machines can make to determine if your shop could also produce and sell these products. An example would be a printer that will print signs, banners and posters, but will also print and cut product labels you could sell to local manufacturing plants.

Research the print machine manufacturers – are they well-known in the sign industry? Do they offer online training, tutorials and post-purchase marketing advice? You might also check web-based chat rooms, but be careful; they’re often dominated by self-styled doyens who offer flawed opinions and advice. Instead, try to find a person who does the real work and get practical ideas and advice.

Rick Shuler, owner and vice presi-dent of the Florence, KY-based Fastsigns of Northern Kentucky franchise, oversees two digital print machines – a Roland VersaEXPRESS RF-640 and an Océ Arizona. Rick’s mantra is, “Debt is bad and cash is king.” He has run this busy shop for 21 years (five clients came and went while we briefly talked) and says, yes, he receives buying advice from Fastsigns headquarters and other franchise owners, but he also talks to suppliers before he makes buying decisions. Shuler’s Fastsigns shop produces signs, graphics, interior décor, exhibits, displays, point of purchase, promotional and branding products, interactive and digital signage, and more. Interestingly, Shuler’s installation demands are so high that he recently bought a bucket truck. He’d previously farmed out high-rise installations, but decided he’d rather control the schedules and pricing. Regarding cash flow and profits, Shuler’s advice for new shop owners is not to be bigshots.

Next, if possible, visit tradeshows, manufacturers’ display sites or sup-pliers to see, firsthand, applicable print machines in action. I suggest you take your own image files – a PDF of an image (with text) you might commonly print – and ask the print-machine demonstrator to help you process the file, but insist that you operate the print machine yourself (under their direction, of course). Essentially, this is a test drive and gives you a “feel” for the machine and its systems. You should also research pertinent data on manufacturers’ websites to create a chart of relevant specifications, and decide what level of print quality (think print size, dpi and ink colors) your print buyers will require.

About now, it’s a good idea to discuss the digital-print machine concept with your shop stakeholders – those people who have interests and concerns for the business – and others whose advice you value, especially the clients who you believe would buy your print products.

Several miles downstream (meaning more toward the Ohio River) from Rick, Darrel Sallee, the Accu-tex Signs & Banners president for 20-plus years, gave me a friendly and interesting reception. I’d talked to Sallee previously and knew he was a self-determining guy, so it was no surprise when he said he didn’t have any advice for shop owners who want to venture into digital printing. Sallee, who prefers Mutoh’s ValueJet 1604 digital printers, simply smiled and said, “I’d rather not help my competitors.” He did note that the learning curve can be high and suggested that new digital-print adventurers attend any print-machine manufacturers’ classes. Accu-tex produces and installs signs, banners, digital graphics, vehicle and fleet graphics, window decals and labels. To give you an idea of his shop’s character, Accu-tex clients often ask Rick to have a staffer pick up their new truck at the dealer for wrapping before it goes into use.

You’re taking notes on all this, right?

What’s next? Evaluate each of the three digital-print machine’s output production costs – ink, media, labor, finishing, machine payments and overhead – and, more importantly, how these costs will affect your shop’s cash flow because such direct expenses detract from your operating cash. Ignoring the subtractive effect of such new expenses is hazardous to your company’s financial picture. Also, search out any hidden or unexpected machine costs – a RIP, freight, installation expense (check doorway sizes, electrics, ventilation), unusual supplies, maintenance schedules and costs, waste disposal and insurance. In your notes, list these as either immediate or future costs.

Next, project your shop’s cash flow over the next 12 months, without including the new machine costs and possible income, so you have a monthly cash-flow figure to measure against your new operating costs as you move forward. Incorporate the new, expected cash outflow figure to create a forecast chart. Pay special attention to the first few months, the period when the machine expenses (installation, training and media and ink stock) will be higher than the machine income because you’ll just be developing the market. Will your present cash flow tolerate the new expenses?

Following this, estimate the sales you expect to reach with the new printer when it reaches its peak and subtract the salary, materials (media, ink, cleaning materials) and overhead costs that reduce that sales figure. Estimate a break-even point and mark it on your whiteboard.

Create a simple chart (pencil lines on copy machine paper) to compare your three proposed print machines’ assets – products, costs and other relevant data. Also, note your impressions of each machine’s operations, meaning how you felt about the machine processes and relevant software when you studied it in person.

Finally, look again at warranties, training programs, financing (the machine manufacturers may offer a finance program that’s more attractive than those available locally) and tax benefits (talk to your CPA about the latter two). And, talk with your shop stakeholders again to get their feedback on your findings.

By this time, you’ve settled on a machine choice, so contact the company for a sales person to interview. A knowledgeable salesperson can be an excellent consultant, especially if the manufacturer produces several similar machines from which you might choose. Ask the salesperson for contact information for at least three out-of-area shops that own the machine, then call the shop owners for feedback. You want to learn if they agree with your evaluations and, if so, contact your salesperson again and obtain a sales contract.

Remember: Technology may stand in your way, but you have the potential to understand the true costs and opportunities of owning any print machine. Once you conduct your research, observe test prints of your own files, and compare your services to competitors, you’ll be well on your way to designing value-added services – and increasing your market share.

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