Commentary & Analysis
Building Business: It Starts with a Plan
Special Feature Building Business:
By WhatTheyThink Staff
Published: March 1, 2006
Special Feature Building Business: It Starts with a Plan By Barbara Pellow March 1, 2006 -- Today's graphics communications marketplace is exciting and vibrant. Every day around the globe, graphic communications service providers are investing in equipment, software and personnel resources to grow their businesses. Unfortunately, some of these graphic communication service providers are often like roving mobs, rather than armies planning to win on the competitive battlefield. While some graphic communications firms grow at a rate of 15-20 percent or more per annum, the defeated wonder how and why they not only lost the skirmish but the entire war. The key differentiator between success and failure in today's market is a strategic business plan that includes marketing objectives. The firm's strategic plan is not an academic exercise. The very act of putting the plan on paper requires a complete knowledge of the facts so that you will have a tighter, more foolproof plan. A good strategic plan will assist you in sizing up and structuring your market. It will also aid you in sizing up the market's total business opportunity. A strategic business plan produces a unified, cohesive program that everyone in the organization can understand, use and follow. A strategic business plan produces a unified, cohesive program that everyone in the organization can understand, use and follow. It helps you change the product mix when necessary. It shows the need for pricing changes and what portion of the market or application area you are penetrating. The strategic plan can clearly show you who the prospective buyers are, where they are located, and what appeals are most likely to affect their purchasing decisions. Strategic Planning…F.P. Horak Style This past week, I had the opportunity to interview Tim Dust, President of F.P. Horak Company, and Matt Jeffery, President of F.P. Horak Digital Imaging Center, Bay City, Michigan. They described how they established a strategic business plan that transformed the company from a classic rotary web forms plant that opened in 1946 to a full-service commercial printer with 6-color presses, CTP, digital printing and variable data Web-to-print capabilities, offering Forms, document printing, mailing services, and warehouse distribution services In the early 1990s, F.P. Horak understood that the traditional forms market was in decline and they needed to take the appropriate steps to both streamline operations and diversify offerings for long-term business success. The print market has historically reacted to change, but F.P. Horak is different. It took a very proactive approach and developed a comprehensive strategic business plan. It's not a plan that sits on a shelf and gets dusted off annually, but it is an evergreen process that reflects how F.P. Horak operates. According to Dust, "We needed to adapt to the way the industry was moving. For manufacturers who are in traditional product lines such as forms, the ability to adapt is absolutely critical." For manufacturers who are in traditional product lines such as forms, the ability to adapt is absolutely critical. Instead of printing only forms, F.P. Horak decided, the firm was going to provide a variety of print-related services, feeling that it was essential to diversify its offering and increase the value-added services portfolio for its existing customer base. Commercial printing was at the forefront of the company's strategy for broadening its offering. Because F.P. Horak had its genesis in the forms market, the company was familiar with contractual selling and the delivery of print management services. The management team believed this knowledge could be extended into the world of commercial print. Instead of building a commercial printing division from within, F.P. Horak purchased a well-established $2 million commercial print shop in July 1995 that was only 45 minutes away from its office in Bay City, Michigan. The commercial printer, which employed 20 people, was "grounded, had a great reputation for quality and service, and was a much better option than building an [internal] department from scratch," Dust said. Another critical element in F.P. Horak's business strategy was the migration to digital print technologies. Unlike many printers, before making an investment, F.P. Horak wanted to ensure it could generate adequate print volume to make it profitable. The company closed a sizeable project for print outsourcing with a large local hospital, installed its first Xerox DocuTech 135, and formed the F.P. Horak Digital Imaging Center. The center has continued to evolve from that point. In 1998, a Xerox DocuTech 6180 was added to the mix. In 2000, the company added large format capability based on the needs of a large casino client. Two years ago, the firm moved into the world of digital color with the installation of an HP Indigo 3050. According to Matt Jeffrey, " While some printers struggle with digital color, we were successful right out of the gate. We sold expanded services into our existing customer base." While some printers struggle with digital color, we were successful right out of the gate. We sold expanded services into our existing customer base. The next major challenge Dust tackled was developing a business plan to integrate Internet technologies and business-to-business e-commerce. In October 1999, F.P. Horak signed an agreement with Menlo Park, California, e-hub firm Collabria Inc. to improve its supply-chain processes. When Collabria was acquired by Printable in 2001, F.P. Horak migrated to the Printable e-commerce suite of solutions. The implementation of integrated Web print management solutions has helped F.P. Horak evolve into a single source print-on-demand supplier for customers. One of its key successes was with Dow Corning. According to Dust, "Today, companies like Dow Corning are turning to F.P. Horak for print supply chain management solutions. F.P. Horak manages the documentation for more than 10,000 products for Dow Corning. With our Web based capability, we delivered a 25 percent reduction in fulfillment costs, 20 percent reduction in printing costs, fewer back orders, improved employee productivity and assurance that customers were getting the right orders at the right time." Planning Never Stops F.P. Horak has grown from a $ 9 million company in 1995 to a $ 20 million firm in 2006. F.P. Horak has just started its next five-year strategic planning cycle with the objective of increasing revenues to more than $30 million within the planning horizon. As part of the planning process the firm revisited its mission and vision and is cascading this throughout the organization. F.P. Horak's mission is to "provide print and communications solutions that build long term value driven relationships with our clients." Its vision is "To grow the company by making it easy to do business with F.P. Horak through streamlining operations, placing focus on sales and distribution channels and through the use of innovative technologies." F.P. Horak's mission is to "provide print and communications solutions that build long term value driven relationships with our clients". Within this framework, Dust identified two critical areas of focus. First, the company will place stronger focus on vertical and horizontal applications to drive digital business. F.P. Horak is assessing new application areas to penetrate very specific target markets including manufacturing, financial services and healthcare. The firm has "innovative technology" in place including a traditional print, digital and Internet capability that it can leverage to deliver value-added variable data printing applications. These offerings need to be properly packaged and marketed through sales channels with a clear value proposition by target segment. Most importantly F.P. Horak is focused on distribution. Sixty percent of revenues are generated through direct sales reps and forty percent come through its distribution network. Its direct sales focus is confined to a seventy mile radius. Dust and Jeffrey understand that to sell total print management requires a non-traditional sales focus. To extend its geographic reach, F.P. Horak is strengthening its relationship with critical distribution partners by assuming an ownership stake in their businesses. This past year, they assumed a fifty percent ownership stake in Cincinnati-based Prograde. Today, Prograde services clients in the Midwest and on the East Coast. It has a philosophy that closely aligns with F.P. Horak's. Prograde works to blend traditional print management with technology solutions and has a proactive approach to meeting customer needs. Prograde also focuses on providing eBusiness solutions to manufacturing, service and financial customers. According to Dust, "We are continuing to look for strong distribution partners like Prograde that will help us broaden our geographic presence. This will be essential to business expansion and reaching our objectives." Good plans will give guidance not only to top management, but also to those whose task it is to carry out such plans. The Bottom Line In any well-ordered modern company, managers have a duty to plan, organize, direct and control the activities of those for whom they have taken responsibility. In the dynamic and rapidly changing world of business communications services, development of a strategic busisness plan with strong marketing components needs to be approached in a professional manner. As F.P. Horak discovered, good plans will give guidance not only to top management, but also to those whose task it is to carry out such plans. An ordered planning approach will give more security to an organization in terms of its vision and the image it presents, both to its internal employees and to the outside world.