Consolidation in the label industry is a little bit like global warming. We’re not entirely certain it’s coming, but in many ways, it’s already here. Unless you’re careful, you’re going to transformed from a “Cool-Hand Luke” owner to a “Nervous Nail-Biter”.
We’ve written previous articles about how the label industry is no different than the railroad, oil, and newspaper industries, in which consolidation occurred in a fragmented market. As a mid-size player, you may think you can escape consolidation’s eventual creep. That won’t be the case, as mergers and acquisitions involving your partners will soon pit you against organizations backed by extensive resources and capabilities. When that occurs, the cool, rational owner you are today will be replaced by a panic-stricken, nail-biting desperado.
Why? I believe it’s because of what I call LaManna’s Hierarchy of Decision Making, which I equate to Maslow’s Hierarchy of Needs.
Where Do You Stack Up?
As you may know, a fellow named Abraham Maslow believed that people had “deficiency needs,” which are detailed in this pyramid graphic at the bottom level.
If an individual can’t fulfill these needs, they may become tense or stressed out.
You can only move up a level if you fulfill a need.
The bottom level is all about meeting basic physiological needs, the top level is when you focus on emotional and psychological issues, like friendships and self-esteem.
In LaManna’s Hierarchy of Decision Making, I equate your ability to make decisions to how profitable your business is.
The bar on the left represents profit. When you’re in the red and in trouble, your strategic decisions are relegated to last-ditch efforts to get your company back on track. Turnaround, exits plans, family conflict resolution, even some strategic planning (crisis management) all occurs when you’re in trouble.
Now look at the upper tiers. These occur when your business is doing well, and cash is flowing. Lean operations, recruiting, succession planning, and of course mergers and acquisitions.
Why do I bring this to your attention? Because when you’re in a good position, you make good decisions. If you’re cash-flowing comfortably, you’ll be able to make calm, rational choices that will move the business forward.
Right now, many label owners are in the top tiers. That’s great news. But as consolidation continues its steady march, people who haven’t planned intelligently for the future will see their green bar status turn to red.
My advice to you is to consider some of those upper-tier strategic moves while the going is good. I’d rather see you make decisions like Cool-Hand Luke than a Nervous Nail-Biter. If you value those green bars, you probably feel the same.
Rock LaManna helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at Rock@RockLaManna.com.