Last Updated Jan 6, 2011 1:51 PM EST
In January 2009, after an 18-year history of consistent growth, my direct mail printing company saw a 20% dip in printing orders. The rise of Internet marketing was hurting our entire industry, and we were no exception. Some of our clients decided to take their marketing campaigns completely digital.
To make matters worse, every time the price of postage went up, our orders decreased because it became more expensive for clients to use our service. It's a vicious cycle. In one year our revenue dropped from $2 million to $1.9 million and showed no signs of holding. That might not seem like a big drop, but in my industry margins tend to be thin, and that $100,000 made up almost our entire profit margin. If revenue dropped much lower, we'd be in big trouble.
Fortunately, I had taken steps years ago that would ultimately save the business.
We weathered the storm
The first order of business was making sure that we paid our bills and didn't go into debt. We pay most of our bills up front -- leases on equipment, truck expenses, subcontracts, mailing lists -- and hope we do enough volume to break even.
Right off the bat, we took a 5% pay cut across the board, which helped. But what really saved us was planning ahead. Ten years ago, before I even suspected my company might be in trouble, I started a rainy-day fund using an automatic deduction from our operations account. It was one of the best decisions I've ever made. By 2009 there was about $150,000 in the account -- enough to pay our rent, pay our vendors and operational costs, and keep us in the black for the remainder of the year without drawing it down completely.
Staying out of debt and continuing to pay our bills on time made it easier to negotiate a temporary reduction in rent and vendor costs. The fact that we had a clean credit record gave our landlord and vendors confidence that it was worth investing in a future relationship with us. If we'd gone to our landlord already late on payments and piled with debt, it would have been a different story.
We share our clients with the competition
Our rainy-day fund was enough to get us through the worst of it, but merely surviving wasn't enough. We had to adapt to a changing industry if we wanted to ensure our company's future. It would be unethical and fruitless to tell our clients that they should only use print marketing. It's inevitable that most companies will want to add some kind of Internet marketing to their campaigns. Keeping our clients all to ourselves -- away from the competition -- is impossible.
So our strategy is to help clients understand how they can combine our services with digital marketing to maximize returns. Statistics show that Internet marketing works best when used in conjunction with print marketing. Meanwhile, print marketing is better for targeting older audiences, and can be used as a way to lead customers to websites.
Now when a client wants to go digital, they come to us first. Their whole marketing campaign grows out of their relationship with us. We -- not our competitors -- help them make the transition. We even help them choose which Internet marketing firms they should work with. Clients see us as their window into the world of digital marketing. Ironically, sharing our clients with the competition usually increases clients' loyalty to us, as well as the size of their print orders. We no longer lose clients to the competition; we share them.
As the current 40- to 65-year-old group of business leaders is replaced by the Gen-Xers, we might need to incorporate some Internet marketing into our business model. And the more we learn about and work with the competition now, the more prepared we will be if and when that time comes.
We're ready for the future
We've managed to hold at about $2 million in revenue and we've reversed the downward trend we experienced in 2009. Considering the adversity my industry is facing, I consider this a major achievement. Whatever the future holds, we're going to be prepared to meet it.
-- As told to Harper Willis
Before his life as an entrepreneur, Greg Demetriou worked as a detective for the New York City Police Department.