When I announced at the end of last year that I was semi-retiring from Datamann, I was surprised by the number of people who told me they had just retired or were on the verge of doing so. In some cases, these were owners of their respective companies and had either just sold it or were contemplating doing so.
Those that were contemplating a sale of their business invariably asked for my thoughts on this, especially with regard to whether 2023 was the right time to sell or whether they should wait. I’ll come back to that.
I’ve learned a few things lately. Everyone has their own reasons for retiring (or, in my case, semi-retiring) and their own timing. I was surprised at the number of clients and blog readers who indicated they were older (in some cases, much older) than me and were still working.
But then the reality of the situation started to dawn on me. I looked beyond the individuals reporting their specific age and their retirement status and thought about the collective age of the industry.
We’re no longer a prime industry for younger professionals. You can hype the concept of “Everyone loves Print” all you want, but the truth is that cataloging has as much appeal and relevance for people under 40 as learning how to operate a steam locomotive. Maybe the better metaphor would be as relevant as learning to operate a letter-opening machine.
Here is a different way of looking at it. I began listening to Garrison Keillor and A Prairie Home Companion in 1982. When Keillor published Lake Wobegon Days in 1985, I went to the Wang Theater in Boston to hear him read from his book. (I can still hear my brother asking “You paid money to hear a guy read from a book?”) The theater had a capacity of 3,500 and it sold out in a few hours. In 1987, he took A Prairie Home Companion off the air to move to Denmark with his then new wife. Neither his marriage nor time in Denmark lasted long, and a year later, I saw him perform in Worcester, MA, in a theater with a capacity of 1,300.
In 2010, my wife and I took our son to see him perform at the Colonial Theater in Keene, NH, with a capacity of just under 900 seats. Keene has a population of 23,000 people.
We have tickets to see him once again, at the end of April 2023. Only this time, we only have to drive five minutes from our house. He’s performing at the Park Theater in Jaffrey, NH, which has a seating capacity of 333. Jaffrey has a population of 5,300.
Over forty years, I’ve watched an entertainer who I admired tremendously, go from filling large theaters in Boston to playing a tiny community theater in rural New Hampshire. Sure, Elton John was still able to fill football stadiums last year. But Garrison Keillor was never a rock star. The adoration of an audience keeps some performers coming back again and again, in some cases long after they should have retired.
I cite the example of Keillor because I see his career, venues, and audience sizes over time as a metaphor for the catalog profession. We used to draw thousands of catalogers twice a year to DMA Catalog events. Now, you’d be hard-pressed to get 50 catalogers to show up somewhere.
That may seem pessimistic, but look at a list of catalog companies that attended those DMA conferences 20 years ago, and I guarantee that half of them are gone, and it’s probably closer to 75 per cent.
So, is the time right to sell? You realize now that you missed the peak time to sell in 2020, during the first year of the pandemic, when consumers were lined up to purchase from catalogs. That was the high-water mark and you’ve slowly been losing the momentum you gained from the pandemic bump. You’re worried that if a recession hits in 2023, your potential sale price will fall even more.
But here is what you need to be thinking: you are selling your business, not your catalog. Unless you are incredibly successful, it is doubtful that other catalog companies would want to buy you. The conglomerates have been canvasing the remaining catalogs for years – they have a hit list of additional titles they may want to acquire, but only if there is synergy with their existing titles/customers. They have been talking with the owners of those potential targets for years – reminding them that when it’s time to sell, to give them a call. More importantly, the conglomerates only want to acquire new titles that have a high organic percentage – meaning companies that are generating loads of orders and sales without aid of a catalog.
Is that your company? Probably not because you were slow to evolve to being a more web-centric business. Oh, to be sure, you did all the “best industry practices” of becoming more of an online company. You put ads of Facebook. You targeted a younger audience with new merchandise. But, you never expanded your product assortment beyond what you could show in the catalog, because…well, because your customer still loves your catalog as much as you do.
However, that’s not what the majority of consumers want in 2023 – they want a great online/mobile “experience” from you. They don’t care about your catalog.
No, another catalog probably is not going to buy you. Most of the recent sales of our client’s companies (in the past three years) have been to non-cataloger companies. And from what I have seen, these new owners did not make the purchase so they could learn the catalog trade.
What do you gain if you wait? You may not admit that your personal business skills are lagging, but your company’s infrastructure probably is getting rusty. In 2022, I wrote a blog posting about the difficulty our clients were having with recent operating system changes/integrations. One reader wrote to share the following: “I always enjoy reading your blog. This morning’s blog hit one of the more painful episodes in business. I have had [two recent] experiences in implementing ERP systems. Both were disasters, and one almost put me out of business. And you are right; the time and expense are always underestimated. The whole process was underfunded, and resources were underestimated. The salespeople at these companies are very good. I hope all your readers pay attention to your message.”
If you have been in this industry for a while, you’ve probably gone through several systems integration. As the reader above stated – they are never easy. Is that something you want to go through again? I use a new system integration as just one example – the truth is, your business needs new everything.
Let’s say that there is NO recession in 2023, but your sales trend down anyway, and you are forced to have layoffs. Jobs still need to get done, but with fewer people. Remaining staff have to do their job, plus the job of three people who were let go. Everyone takes shortcuts to find new products, bring in inventory, and get the catalog out. Some of you still thrive on the rush of pulling all those irons out of the fire one more time while aiming for a strong holiday season in 2023. Others are thinking “maybe it’s time to leave the stage”.
In 2022, your company experienced a return to pre-pandemic response rates. Now, you are trending even worse than where you were in 2019. You’re wondering if it is the economy or competition. (Amazon is so hard to ignore). You knew that you could not keep doing what you had always been doing, that you needed a Plan B. But the pandemic interrupted your efforts to develop that Plan B. Now your investors are getting anxious as they see the money running low, which matches your energy level too. Paper is going to be too expensive to keep trying to get the attention of a 35-year-old who uses her smartphone to shop.
There is no easy way to grow. The most important area – and always has been – is merchandise. Are you up to the always continuing task of developing, sourcing, and buying new exclusive, proprietary merchandise that resonates with your existing customers?
I have read that one reason that many family-owned businesses, especially those with a strong commitment to the local community and their existing staff, are reluctant to sell is they are afraid of what the new owners will do. They know that when one company buys another – whether in a related or unrelated field – it rarely means growth, but results in contraction.
But what is worse? To see your company forced to close down in the future when you can’t find a buyer, or sell now to new owners where there is a chance they can revive the business – with new ideas and new practices – that are beyond your present reach?
In my experience, new owners rarely want to immediately throw out that which is working. But, they do tend to get rid of a lot of internal culture and operations that were flawed. Sometimes it takes an outsider to simply ask – why are you doing that?
In my opinion, cataloging will never again be better than it is now.
I’ll let you know if the News from Lake Wobegon was still as good as it used to be…