Value Drivers for Printing Companies
A key to understanding how to value a printing company is understanding the industry. Only two of the industry’s largest companies have market shares of over 1 percent. As such, a significant part of industry sales is made up of smaller companies. This means the printing service industry is fragmented and competitive. Thus, the way to increase the value of a printing company and stay competitive is by understanding key value drivers for printing companies.
If you are looking to buy or sell a printing services company, understanding the value of a printing business is important. When a valuation expert values a printing company, they often use valuation multiples and value drivers. Learning what these are and what they imply about a business can help you make more informed decisions and negotiate a better deal.
To better understand the value of a printing company, get a business valuation. Peak Business Valuation, a business appraiser, is happy to provide you with a business valuation for a printing business. We can also answer any questions you have about valuing a printing service company. Schedule a consultation below!
Key Value Drivers for Printing Companies
In the following paragraphs, we discuss factors the top printing companies use to stay competitive. We refer to these as key value drivers for printing companies. These value drivers can increase the value of a printing business in this ever-changing industry. For additional information see Valuing a Printing Business.
Adjusting to Customer Demands and the Current Economy
It is no surprise that as our world becomes more digitized, printing services become less relevant. The benefits of digital media are obvious. For example, digital services can prove cheaper than traditional printed media. This challenge has changed the printing services industry and will continue to do so.
Many operators have found ways to cope with this external challenge. For example, some print companies have begun providing consulting services. Consulting services include marketing, packaging, and logistics. Others have even begun providing website hosting services. This provides a holistic marketing approach to their clients. This improves economic efficiency by grouping services together and expanding print services demand.
The value of batching services cannot be understated. Doing this can expand revenue and improve profitability by batching costs. Reducing costs and expanding revenue streams can increase the value of a printing business. Peak Business Valuation, a business appraiser, will compare your operations to similar businesses. Being ahead of industry averages makes your printing business more valuable. For questions, schedule a consultation today!
Shortening Production Cycles
The speed of digital content is a reason the digital world has hurt the printing services industry. In today’s fast-paced business world, companies want to communicate with their customers quickly. This makes the speed of digital content attractive. In response to this, top printing services operators have shifted towards shorter printing jobs. This helps operators turn out prints in a fraction of the time as before. This has required higher investment in new printing technologies.
This value driver has an interesting aspect to it. Faster printing jobs are less lucrative. So how could these quick-turn-around projects drive company value? This move is more efficient for both industry operators and their customers. Customers receive their orders quicker and printing services companies complete projects faster. This is an excellent way to improve how effective fixed assets such as printers can be optimized to produce more revenue per hour. These methods also have reduced setup time. Plus, they carry fewer labor costs further improving margins.
Improving the amount of revenue a fixed asset can produce over a given time will increase the value of a printing company. When Peak Business Valuation analysts see higher financial ratios, they tend to apply higher multiples. These higher multiples have a significant impact on the value of a printing business.
Expanding Markets and Key Relationships
Expanding into key markets can have a huge impact on the value of a printing business. For example, an effective way to increase the value of a printing service company is through key relationships. For example, your business could partner with marketing agencies. Specifically, marketing agencies that specialize in direct mail. Another important client may include political groups during election cycles. These high-value clients can increase company value.
Additionally, printing services companies established near manufacturing markets experience increased demand levels. Manufacturers are some of the largest clients of printing businesses. Manufacturers require a lot of printing for packaging and shipping needs. Often, manufacturers partner with printing services companies close in proximity to their markets. Thus, being close to markets with high levels of manufacturing results in increased demand for printing services.
Seizing Current Market Opportunities
The most valuable printing services companies share a quality: these companies seize opportunities. Printing companies can become beneficiaries of many opportunities. As stated, political campaigns have proved to be a great opportunity for companies to generate extra revenue. Another example of these opportunities was during the COVID-19 pandemic. Many companies needed to communicate their adherence to safety standards. So, the demand for printed communication increased resulting in more demand for printing services. By paying attention to these events, printing service companies can expand revenue.
Currently, a new opportunity has presented itself to the printing services industry. In 2023, demand from the publishing industry is expected to grow according to industry reports. This is excellent news for the industry. When the publishing industry grows, the printing services industry has shown increased revenue. Operators that prepare to meet this extra demand will have a chance to further grow revenue in the short to medium run. Compounding current opportunities will result in higher revenue and an all-around better-performing company. Peak Business Valuation, a business appraiser, assesses these opportunities when valuing a printing services business.
Understanding what drives the value of your printing company will enable you to set goals to maximize the value. The value drivers for printing companies shared here provide ways to increase value. Whether you are looking to buy, sell, or grow a printing services company, you need to know how to value your printing business and what factors increase its value.
Determining the value of a printing company can be complicated. A business valuation professional uses their judgment and facts to determine the value. The first step to finding out how much your printing business is worth is with a business valuation. A business valuation will help in determining the fair market value. It will also analyze your strengths and weaknesses and how they compare to competitors.
As a business appraiser, Peak Business Valuation works with printing services companies across the nation. We are happy to answer any questions you have about valuing a printing business and value drivers for printing companies. Please reach out by scheduling a free consultation.
Schedule Your Free Consultation Today!