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The Economy and Your Business

Work with a digital-display manufacturer that can weather the economic storm.

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Sign companies, like most businesses, frequently buy products from manufacturers for resale to an end user. The current, delicate, financial situation mandates we know with whom we’re doing business and if a supplier is reliable, that is, if it will continue to serve us.

Those of us who sell digital displays must ensure the supplier remains available after the sale. I’m fond of saying, “When you buy a digital sign, you not only make a purchase, you enter into a relationship.”

Regardless of the product quality, any display requires maintenance. As the display ages, maintenance frequency may increase. Parts and service support availability is crit¬ical, not only at the sale, but throughout the display’s lifetime.

Over the last two weeks, three U.S. manufacturers of LED signs ceased operation. That’s very sad news for those who committed so much to those ventures. Unfortunately, I’ve experienced such losses in my career, twice. It’s painful. But, life goes on, and other opportunities exist.

However, the ramifications can be significantly more devastating for those who purchase display products from a defunct manufacturer. If the business has been effectively using the digital display, it most certainly has become a critical, business-development resource that communicates its message to a vital audience.

Consider the following, hypothetical situation: Carpet Warehouse, which sells “wholesale to the public,” is prominently located on a major freeway, with a traffic count of more than 150,000 cars daily. Competitive, retail carpet enterprises bracket the store on both sides.

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In 2006, Carpet Warehouse invested roughly $500,000 in a large, freestanding, digital display, which dominated attention from both directions, with clear visibility, for at least 25 seconds from each exposure. To maximize the opportunity, the company hired a young, talented artist who had just graduated from a community college and seemed to have a flair for creating dynamic messages on the display medium.

Each Thursday, the ownership/management group met with the new programmer to establish the game plan for the next week’s advertising. In the meetings, they evaluated their priorities and sales opportunities, and considered who was offering co-op advertising dollars, in the context of the message they wished to present to the public.

Following the meeting, the new programmer scripted the messages and scheduled them so new informa¬tion continually streamed without redundancy. On Friday, the managers reconvened to review the message schedule and make last-minute changes. When the message format was approved, the programmer spent the last two hours of the week finalizing the schedule for the weekend and each subsequent day until the next Friday’s update.

In short, this company bought a dynamic, high-resolution display and programmed it effectively. Consequently, that company experienced a significant uptick in sales which continued until the day the sign failed, and the carpet store discovered that the manufacturer had, unexpectedly, closed its doors.

I’ve witnessed several similar disasters in recent years. Although you probably can find some replaceable parts after a manufacturer fails, in almost all cases, technical support always evaporates. Even if you maintain a relationship with a knowledgeable technician and a parts depot, the display will suffer an early demise. The remaining parts will be limited to only what’s left. Likewise, matching the LED boards, the most important component, will be difficult. If the boards aren’t calibrated, the image won’t be consistent.

For a business such as the hypothetical Carpet Warehouse, its display manufacturer’s dissolution could be catastrophic. At best, it interrupts its most effective advertising. In any event, the value of the company’s digital-display investment dramatically plummets.

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The sign company that sold the display suffers an embarrassment, significant frustration and frequent service difficulties. Worse, many of the sign company’s customers might be suffering from the situation. Providing a remedy for angry customers can become an all-consuming task.

As I write this column, the Dow has just experienced another 300-point drop. The talking heads predict further declines while, simultaneously, they fret about eroding consumer confidence. In the end, it’s not a good time for any manufacturer. So, what does a sign company do to ensure that it, and its customers, don’t face this predicament?

Most importantly, do a little more research. When looking for good, safe, digital-display manufacturers, look at such things as financial viability and ownership. If the company is publicly owned, the financial information is readily available. If not, ask for an opportunity to review it. I know that makes a lot of people squeamish, but these are unprecedented times. You can’t go to your customers, in good conscience, without knowing the product you represent will be supported by the manufacturer, after the sale. The repercussions could be disastrous.

I highly recommend that you visit the manufacturing facility that produces the products you intend to buy. That visit could speak volumes about the manufacturer’s current health.

Is the plant busy? Is the product similar to what you want to purchase? Ask about materials and any recent changes in materials. What type of LED do they use? Have they have changed their supplier recently?

Ask to speak to the head of engineering. Are new products being developed, and refinements being established, for existing products? Most importantly, ask for a list of the spare parts that will be provided with the sign you want to purchase. Ask what it costs to increase that spare-parts inventory.

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Just as the current economy has slowed, ironically, the number of competitors, especially from China, has grown. Last week, while in Las Vegas, I was invited to view a new Chinese display in an industrial-district warehouse. The very high-resolution display was offered for a very low price. As an informed prospect, I asked many questions that I know other prospects wouldn’t consider. Here are a few questions and answers:

• Where is your U.S. service center? Not yet.

• Does the sign include spare parts? Yes.

• What parts are included? Not yet.

• Who makes your LEDs? No answer.

• Is your cabinetry IBC-2006 compliant? No answer.

• How many levels of dimming are there? No answer.

• Does the sign offer diagnostics? No answer.

Offshore manufacturers pose my greatest concern. They face the same economic uncertainties as U.S. manufacturers, and they’re several thousand miles away. I’m not implying that no Chinese products are viable. Certainly, many manufacturers provide good Chinese products for sale in the U.S. The key is to ensure a significant U.S. presence, service access in this hemisphere and ready access to spare parts. Discovering financial viability and long-term prospects could be difficult.

As I’ve stated in previous columns, a recession is an excellent time to prospect for digital-sign sales. However, make sure the products you offer are from a manufacturer who can weather the storm. It’s worth the time to study the market and look for the right partner(s). The more knowledge you gain, the more success you gain as an informed resource to your customers.

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