The biggest challenge facing a small business is survival. It is estimated that small businesses generate $5 trillion in sales in the United States alone, but that handsome number is divided among the multitudes who strive to keep their doors open. Of all new business startups, 80 percent go under within five years. And 80 percent of the remaining 20 percent don’t make it through the next five years.
Plenty of people in the label business know well what survival means. Small label shops abound, but their numbers are declining. Some close their doors, others are fortunate to find a buyer. Starting a printing business today – and labels are among the few that are potentially profitable – has more challenges than most.
On July 1, Label Master celebrated 35 years in business. Based in Lodi, NJ, USA, the company was founded in 1978 by Bob Mazzella, who remains the owner and can still be found running presses in the shop. Mazzella knows about survival.
“It’s been a rough ride, up and down, but you roll with the punches,” he says. “Some years you think you’re going out of business, then you’re flourishing like crazy. We have survived over the years, and who knows if we will survive this year, or next year? In this business you can’t be afraid to say yes to the challenges.”
Six Disciplines, a consulting firm that advises small businesses, says that the main challenges for those companies can be grouped as follows:
• Financial – Finding adequate funding, getting billings out on time, collections, and credit management. In a word, cash.
• Customers – Understanding what the customer really wants, finding enough of the right kind of customers and keeping them happy, so they don’t turn to competitors.
• Production– Varies by type of business. In general, businesses of all types struggle with being able to give customers what they want, when they want it, at the price they want it, and at the highest quality levels. Doing this predictably and repeatedly is a tremendous challenge.
• People – Finding the right people, keeping them happy, compensating them, motivating them, training them, and getting them to deliver quality work.
• Resources – Small businesses usually don’t have large cash reserves, dedicated research departments, fully staffed IT functions, strategic planning functions, etc., to address challenges or opportunities.
• Growth – It’s one thing to get good at something when you can hone your skills through repetition. It’s a completely different challenge to get good and stay good when the rules of the game keep changing with regard to competition, customer expectations, globalization, people issues, finance, and technology.
Some small companies can add client dependence, founder dependence and fatigue to that list. Each of those comes with its own basket of problems.
For most of its existence, Label Master relied on brokers for its work. The company has no sales people, so it doesn’t go out looking for customers. “Over the past 15 years it started to change a bit,” Mazzella recalls, “and over the past year and a half it really has changed. People are coming to us and asking for labels. Years ago we never printed labels for bakeries, for example, but these days we do a lot of it.”
Now in his 70s, Bob Mazzella maintains the pace he has kept since he launched the business. He stays in touch with converters in the region, and knows precisely what types of jobs he wants to run. “You have to pick and choose what you do,” he says. “I like the little stuff – three to five good jobs a day.”
A small business operator in an industry dominated by giants with global clients has to be flexible and anticipate change. Label Master prints on basic flexo presses, but has adopted digital printing on a small scale with a Primera press, which runs three to four days a week.
“A few customers have been very loyal to us, and we are loyal to them,” says Mazzella. “When they need labels tomorrow, you deliver them today. The little guy has to bow down and suck it up, then go home at night and say tomorrow’s another day.”
Good label converters know how to keep their employees, and many smaller shops understand the benefits of longevity. Over the years I have visited countless plants at which the managers emphasize the family aspect of the work environment. They introduce employees with one, two, three decades of service.
At Label Master, the newest employee has been there six years. Everyone else has more than 20 years of service with the company. “I make lunch for them a couple of times a year, have a barbecue,” says Mazzella. “And I bring in donuts just about every morning. They appreciate it, and that’s what you look forward to: the people who are going to be honest with you.
“The people, that’s part of the key, but for the little guys it’s a bigger key. I do good business with seven people.”
The challenge of doing business today for the small operator is compounded by the demands of the government. “Lately, taxes are killing us,” Mazzella says. “Every year there are more government forms to fill out. For what? When I send in that form I also have to include a check. Why? Does it correct anything? No.
“The little guys like myself, we suffer. We don’t have the manpower to put a person in the office just to do filing work.”
Not far from Lodi is Hackensack, home of Roll Flex Label, founded by Bill Zink 30 years ago. Roll Flex, like Label Master, gets most of its orders through brokers, and the labels it produces are for a wide range of industries. These days “We have to hustle like crazy,” Zink says.
“Business has gotten more hectic. It seems that it’s becoming more difficult dealing with people – they are not that knowledgeable, and it requires a lot of handholding. People want more things, such as core labels, smaller rolls. At our level we have to be very accommodating. It’s time consuming and sometimes aggravating, but it’s business.”
For the first half of 2013 Roll Flex has seen a healthy increase in revenue, and Zink notes that its digital printing (also on a Primera) has increased. Roll Flex has eight employees.
Zink observes that service is the key to success these days. “People we deal with are happy with us because we are very service
oriented,” he says. “We get to know them personally. It’s really service. The customers as well as the brokers can be demanding.”
As with any small business, the label converters don’t have the advantage of purchasing large volumes of materials and supplies. “We get nickeled and dimed by vendors, with their freight surcharges and other things,” Zink says. “We try to hold the line with prices whenever possible, but we don’t have that much leverage.”
Bob Mazzella says he had a potential buyer for Label Master last year, but the offer was not successful. He looks forward to turning the business over to his grown children when he retires. Bill Zink says that his son is not interested in running the business, so when the time is right he will look for a buyer.
“You do whatever you have to do,” says Zink. “We are one of the many, and there are a lot of label guys out there. I don’t have great growth over the years, but I make a good living.”
The author is president of Jack Kenny Media, a communications firm specializing in the packaging industry, and is the former editor of L&NW magazine. He can be reached at firstname.lastname@example.org.