Jan. 19, 2009— It's around this time every year that Printing News talks to the experts, and brings you their forecast for the economy in the coming 12 months. This year was no different, but I'm afraid the picture isn't very rosy. But even with some hard times ahead, it isn't without hope, or opportunity, for those who take advantage of it.

Recession. It is a dreaded word no one wants to hear. But, according to Andy Paparozzi, chief economist and vice president, NAPL, we've been in one, and getting worse, for some time now. The industry, as well as the populace in general, was just in denial about it.

On the one hand, he notes, recognizing the problem means now steps can be taken to correct it. But at the same time, just focusing on getting through the recession isn't going to be enough this time.

The print industry, Paparozzi says, is changing structurally. And one of the consequences of that is that the "rising tide" will no longer raise all boats. Surviving the recession doesn't mean your company will manage to stay in business.

Don't Panic
The first response for most people when they watch the news these days or talk to customers is to panic. They cut costs across the board, lay off staff, and hunker down to hope the ill winds will blow by quickly. However, this response is never productive, and given Paparozzi's prediction that only the proactive will survive, this is probably the worst strategy possible.

So what should you be doing?
First of all, the changes you make to ensure you thrive well beyond the recession and recovery periods don't have to be major or dramatic. For the most part, they are simple, basic business decisions that you should be thinking about and making anyway, no matter what is happening in the economy or your current state of business.

1. Begin with your financials.

This step includes basic things such as updating your business plan and knowing where your money is coming from and going to.

"In a credit crunch, credit is reserved for the most credit-worthy," noted Paparozzi. "You need to be on top of your financials." He suggests looking at the types of things potential lenders will look at, such as whether or not you have a short-term cash budget, whether or not you have lined up alternative sources of financing, and whether or not you have scrubbed your accounts receivable, and weeded out troubled customers.

This isn't always an easy thing to do, but, at the very least, you should be doing this once a quarter, if not once a month, no matter how good or bad business is. These types of things are the basic financial vital signs of any business, and especially in a credit crunch, potential lenders will want to see that you are not only aware of your strengths and weaknesses, but that you have a plan in place to minimize the bad, and maximize the good.

2. Think cost containment, not cost cutting.

Going in and indiscriminately cutting costs across the board might solve a few of your problems in the short term, but long term, even a few months long term, this is a bad strategy. It means depriving your business of the vital things it needs to stay competitive and vibrant.

Instead, Paparozzi suggests forming a cost reduction task force, made up of people closest to the operations. These are the people in the trenches, who know where the fat is. Get them on a voluntary task force, and ask them to tell you where the cuts can be made. Get everyone involved to insure you are cutting appropriately. Not only will this save your costs, but you'll have the support of your staff, and they'll be more likely to accept budget cuts if they know you're making every effort to do it right.

3. Step up your marketing.

One of the first things to go from any budget seems to be marketing, and in reality, it should be the last to go. No business can survive without new customers coming in, but you can't get new customers unless you are actively going out to look for them.

Paparozzi has a few tips on ways to market yourself in a recession without breaking the bank. First is to send out "miss you" cards to past clients. A small postcard referencing the last time they did business with you, and noting that you're still there to help them with their needs is a great way to remind people about who you are and what you can do for them.

Second, court current clients for more business. You can create marketing programs, review their current marketing programs, and help them revise the jobs to be more effective. Especially in a time when everyone is looking to make the most out of every dollar, clients will appreciate suggestions on ways to increase the ROI of their campaigns. You can also develop referral programs to encourage those current customers to tell people about you and your services.

4. Talk to your staff and clients.

This might seem like a no-brainer, but one study, Paparozzi said, cited that only 3.8 percent of companies actually discussed the recession with their employees. The reason most often cited was a fear of creating a self-fulfilling prophecy. "That small other percentage took the other route, and made sure employees heard their voice, with candid, sober discussions to reassure staff you know what's happening, and with everyone's help, you're going to counter it," he noted.

In the same vein, clients are hearing all kinds of things from a lot of different sources. "Make sure clients and prospects understand that you are financially sound, progressive, reliable, and you will be around to help them through the recession, regardless of what competitors might be saying. Make sure you present yourself as viable, reliable, and there to help the client," Paparozzi said.

A Whole New World

Paparozzi stressed several times that printers can't afford to sit back and use the wait-and-see method anymore. And in fact, the NAPL has figures to back up that the forward thinkers not only are the ones to survive hard times, but when the upswing inevitably happens, they widen the gap between themselves and their competitors.

He cited the NAPL Leaders, a group of printers the organization has tracked for years now. In the 2000/1 recession, these people consistently responded with the various things they were doing in anticipation of the recovery and beyond. And while that recession wasn't as prolonged or deep as the current one is proving to be, when the turn-around did happen, those shops all reported huge leaps forward, and to this day continue to lead the pack. This proves that this type of thinking has not only short-term survival benefits, but long-term growth benefits as well.

Recovery, Paparozzi cautioned, will be painfully slow when it does come this time, so printers need to ask now "what are we going to do about it," and "how are we going to do it."

Our industry, along with the U.S. economy, is struggling. For print alone, sales are contracting, volume and output are down, payroll hours are falling, and overall confidence of printers at record lows, even lower than after 9/11.

And to make matters worse, the outlook for the economy overall is that GDP will be contracting again in Q1 and Q2 in 2009. We may see a modest upturn in mid year, but that's not guaranteed. And even if it does happen, Paparozzi noted, this just means the contraction has stopped, not that we're going from bust to boom.

His forecast is that our industry remains in recession deep into 2009, with, at best, sales starting to see modest improvements at the tail end of the year. It probably won't really feel like a recovery until well into 2010—The end of recession just means the bleeding has stopped, not that all is well.

While bleak, printers can't afford to stick their heads in the sand and hope this all goes away. Taking steps now will get your company through the recession, allow you to participate when the recovery does come, and will help ensure your shop is still around in years to come.

"Who makes it and who excels has nothing to do with size, equipment, time in the business, or any of that," Paparozzi concluded. "It's who can take advantage of the structural changes in the industry, and turn threats into opportunities."