The Global Pandemic has hit the Imaging Industry hard. We are not alone though. All businesses are experiencing extreme hardship, and that should make us feel better about that, correct? I agree; me neither!
This Global Pandemic is a first time for everyone. No one had a playbook on how to do business in a post pandemic world, however, here are three things your dealership can do to get things started on the road to recovery:
Reduce your inventory
Inventory is money. Converting that inventory to cash is money that you can put back to work in your business versus borrowing it from a bank. I talk with many dealers across the country, and I am surprised when I hear from some dealerships the level of supplies inventory they keep on average. From some dealers I hear that they keep an inventory level as high as three months; this is way too much!
It doesn’t take three months for your vendor to deliver it, so it doesn’t make sense to tie up your cash resources in that extra inventory. Maybe on some items for current machines you are selling where big placements would spike activity, however, outside of that, you should look to carry a maximum of one month of inventory.
Look at the bottom 10-20% of supplies and parts you sell, and look at the inventory value. Any excess inventory you should get rid of immediately.
How can you move this? Many dealers belong to industry peer groups. Leverage your group by communicating with dealers that sell similar brands you do. On inventory for equipment that has been discontinued for a while, you can communicate amongst your peers and each dealer share a list of inventory they have in this category that they are willing to take offers from any interested dealers. This type of inventory will eventually depreciate to $0.00, so you should be open minded to reasonable offers.
You will get more value from items that are more current, and you can work with your group providing a list of the items you have surplus inventory. Every dealer in the group will agree that when they need those items, they will check with the group first to see if they can make any purchase from their dealer network before turning to the manufacturer. In one month, your dealership (and your peers) would take a significant step in reducing your inventory towards an ideal level, and conserve cash.
Be an Experimenter
You ever notice those times when ideas are suggested for change, that our minds immediately go to how that can’t work?
Something we are seeing talked about in the industry that is hotly debated is a flat rate billing program. Think about some of these services we all use: cable, cell phone, managed services; all flat rate subscription for cost certainty. Is it any surprise when it comes to print those customers would ask if they could buy it the same way?
30+ years ago, a new form of billing was introduced to the industry called Cost Per Copy (CPC). Pundits said it was doomed to fail, and today it is the standard way business is done. But at the beginning, this was very scary. 30+ years ago, the amount of data available was a sliver of what it is today, and it is simpler to construct a flat rate billing program with data available now.
Change is scary. I don’t recommend a scary big risk jumping off the high dive; I do recommend experimenting with minimal risk.
Use this down time from the pandemic to ask your team about a flat rate program:
- What type of customers are a fit?
- What new opportunities are available with a flat rate program?
- What model devices would work with a flat rate program?
Find a client or two that looks like a fit, and experiment with it. See what you learn. Make adjustments to improve it. The outcome you want to hear for the rest of 2020: we know who and where a flat rate program works; we’re prepared. If a customer asks us for a flat rate option, we are ready to present it.
When we suggest radical change our instinct is to resist and justify how it won’t work. When we experiment, we take smaller risks, see the possibilities, and believe there are alternatives. Then we implement actions that make a difference. So be an experimenter, and leverage your peer groups to reduce your inventory.
Check out these interesting flat rate billing articles from the April 2020 issue of ENX magazine:
State of the Industry From Bundling to Flat-Rate Billing: Making XaaS Work for Dealers, End-Users by Erik Cagle
XaaS and IT X Marks the Spot: Everything-as-a-Service Gaining Steam as a Way of Doing Business by Greg VanDeWalker
iDaaS and Print Device as a Service: The Hows and Whys of Flat-Rate Billing by Wes McArtor
Case Study Meter-less Billing: Marco Finds Success in Embracing Device- and Seat-Based Models by Erik Cagle
Make the Choice
It’s easy to feel paralyzed by the disruption caused by COVID-19. You know those times when you’re afraid to make a decision, because you are worried it, could be the wrong decision? Instead of choosing to make a decision, we do nothing and take a wait and see attitude. By the way, doing nothing, is making a choice.
I never believe that doing nothing is the best choice. When we choose a course of action that is the wrong one, we can make adjustments, and make a new decision, because we have learned what the right decision is. We can decide to do nothing, or we can decide to take actions to navigate through this difficult challenge, and come out through this better than we were before. That is hard work, however it is possible.
You have what it takes to recover from this pandemic. You’ll leverage the help and support of your peers to reduce your inventory, and put more cash to work in your dealership. You’re an experimenter, where you risk experimenting new ideas, seeing the possibilities, and understanding how other alternatives can grow your business. You’re a leader that knows better days are in front of you, and you will make the difficult choices to navigate through this storm, and become a better version of your dealership than it was yesterday.
Polek & Polek has helped hundreds of dealers get through and recover from some of the most difficult economic storms over the past five decades, and we can help your dealership through this one. Schedule a call with us, and we can show you how we are helping other dealers.