The challenges of running a business in the stationery industry in 2023

There are 10 business principles I have always followed, learning from others whilst establishing some of my own. 

 

Here are my top 10.

 

1.       DROOM - don’t run out of money. 

2.       Ensure you financials are in order. Invoice and collect on time. Cash is king. 

3.       I’d advise not to have an accountant in charge of your business - always sales and marketing supported by the financial team. Accountants tend to get rid of salespeople in times of trouble which will always affect the top line. 

4.       People cost. If you use technology, use it. 

5.       If you are going to put the kitchen sink into a business be darn sure those financials are achievable.

6.       Strong businesses need strong suppliers. Not the cheapest.

7.       Ultimately, it’s product the customers are buying not the price. 

8.       Getting it right at the front end saves so much time, cost and lost good will at the back end.

9.       Your people are key, empower them and make sure they are good. If they are more talented than you are so much the better!

10.      Delegate, delegate, delegate. What ever your main skill is should drive the business. Do not involve yourself in what you either hate doing or are not good at.  

 

This blog looks at the challenges of maintaining these principles at a moment in our industry’s history when price is becoming a dominant driver, to all our detriment.

 

Let me start by talking about something that’s extremely pertinent – the issue of pricing over loyalty. We had a Chinese company approach us in July offering us a product we were already buying. We’d sourced it through our normal sourcing agent and their supplier has now approached me directly. This presents me with the dilemma: do I go directly to the manufacturer? Or stay with my sourcing agent?

 

For me it starts the question about loyalty and commitment to an excellent resource, continue to work with my regular supplier who’s done all the hard work, hasn’t let us down or would we move on price.

 

If we move on price, you are effectively creating a moral issue. You can say ‘business is business’ but if you’ve been pleased with the price your supplier is delivering, which you must be as you were already doing business with them, why would you undercut them – and all their hard work and their commitment to your business – to go direct to a manufacturer? This manufacturer has already proven itself to be unethical, bypassing their customer who had brought them our business. 

 

Going on from there, it’s worth pointing out that every business book I’ve ever read, it’s always talked about my top 10 principles of business, not whether you’re small, medium, or large. I’ve sat on boards with chairmen of PLC’s, CEOs of multi-million-pound businesses, and on boards with more modest turnovers, people from all across the business sector, the same principles apply.

 

One of the advantages of running a small business means you’re involved with decision making across all areas, Sales, Marketing, Finance, Buying, HR. When large companies make decisions that affect us, I can look at it from our perspective and ask, would I do that in my business? It’s probably far easier for me to do that, without all the layers of management they have. My answer to the opening dilemma is therefore: yes, I will remain loyal to my supplier because of the relationship, track record and ethics of the situation.  Price isn’t everything. 

 

You can always find somebody cheaper. 

 

I’d also like to tell of an experience I had when our biggest customer always used to meet with me to discuss product: What’s exciting Geoffrey, what’s new? We grew, they grew. I remember then going to a meeting with the Merchandising Director and suddenly it was all about share prices and not product any longer. And I knew this was the beginning of the end. And that wonderful business did change for the significant worse. We subsequently talked price all the time, we stopped talking innovation, product development or entrepreneurial opportunities.  How do you get those elements into businesses, when price is the main driver? We had another customer a few years ago demanding overnight an 18% decrease in price. There was no understanding of how that would affect us, our overheads, the value we brought them, and if we didn’t, we were told, we would be delisted. We chose to be delisted. Solely focusing on squeezing suppliers and not considering the products they bring and the value in those innovations and ideas brings short term rewards certainly, but I believe and have experienced many times ultimately, they become a declining business as the cheapest suppliers normally live up to that billing. Yes, benchmark suppliers of course, but we don’t want to be demanding the cheapest, because ultimately as the learned astronaut once said, I wasn’t comfortable getting into the cockpit where everything had gone to the lowest bidder.   

 

I modestly have always felt I could be very useful to our customers to see if my approach that I bring to my business could be of value to what they’re doing. We’ve been going for nigh on 30 years and faced every challenge imaginable. I always feel that I could be on the board of most of our customers and bring something different to the way they approach things. But I imagine lots of people on my side of the industry have similar thoughts and ideas!

 

So, my advice is to concentrate on product and innovation. The supplier or manufacturer knows if a reseller is too expensive there will be no sales. And there lies another key question, how are teams targeted and if it’s just about cost saving then are you making the best decisions ultimately for your business? Target sales growth and see what happens.  

 

The problem with really large companies is they don’t generally understand cash flow. People cost money. When I first went into business on my own, I recall winning a large retail stationery business. “We need another person to cope with this” was the cry from the shop floor so I employed one. Sales were up but so were the costs - and profits at year end remained the same. A salutary lesson. If you are going to set targets, set them higher than you actually need. In my manufacturing days I once told an employee I need them to produce 120 rubber stamps a day, ‘I can only do 100’ they replied. OK, I said, I’ll settle on a hundred. What I really needed was 80…. He thought he’d won and was happy and I love motivated happy employees. 

 

Cash is king, the pandemic and loss of key customers through insolvencies and mergers means for the first time in 25 years cash is once again a key focus. It’s been quite a shock, but we have taken the necessary decisions and are pleased to report the balance sheet is heading in the right direction once more. 

 

Finally, in any size of business the key is to find suppliers who are offering price, quality and if required innovation whilst giving you a workable margin for your business. Create a happy motivated workforce, trust in your employees. My key mantra is if I was run over by a bus tomorrow would my company still run. If the answer is yes, it means you have a business that allows you to be absent through illness or to take breaks, which are key. You must keep your health; nothing is more important.  That said I have worked every day of my entire life since I began running my own company – every day, but fortunately through creating a healthy work life balance it’s been so worth it.