Valley Edge Design: Looking over the edge

“I was about ready to give it away. I was really down, I had been fighting for a long time, four or five years non-stop, to keep the business afloat, and it was going down the drain. It was bad.” In 2012, with the effects of the global financial crisis still lingering, Rocky Cassantini was in a dark place. His 10-staff Brisbane printer Valley Edge Design was stagnating, with morale on the floor. The company had offloaded its offset presses the previous year and was outsourcing all its commercial work, but cash-strapped clients with little confidence in the economy were still not spending money on print, and the business was barely clinging to life, with a razor-thin seven per cent profit margin.

“The business was in a bad way from the GFC, and the staff from that time, to be honest some of them were a bit complacent and couldn’t really see the future and didn’t really want to be here,” Cassantini says. Desperately wanting to see his business continue, he turned to a government program offering business consulting for small businesses. Two rounds of consultants analysed Valley Edge from top to bottom but Cassantini knew he needed more help. He attended a presentation by multinational consulting firm Shirlaws called ‘riding the third wave’ about identifying what your capacity is and how much more work you can take on. “I was blown away,” he says. After a follow up personal presentation he wanted to sign up for a year of consultation, but could not afford the more than $40,000 price tag.

“Shirlaws said ‘we will find you the money, don’t worry about that, but you need to start now’. So with a big sigh I said ok, and we did it,” Cassantini says. The firm helped him secure a $20,000 government grant to help pay for it and soon two consultants were with him for the whole of 2013. “We worked together for an afternoon every two weeks, sometimes a whole day, and we really pulled everything apart – people’s attitudes, procedures, policies, communication, analysed the figures, we did everything,” he says.

There were changes in almost every part of the business – from upgrading kit so it was more productive and easier and more efficient to use, to advertising and quoting more, and using sophisticated technology in the business to serve clients better – but Cassantini says the biggest change was cultural. “We had a lot of negative energy in the business. Sometimes when you do the same thing for a long time you get tired and wheels start to fall off,” he says. “We tried to fix that in people but it just wasn’t going to be fixed so in the end people left because they could see there were changes happening, and people don’t like change. I like change and the people who did too stayed. It became a new energy.”

In one year, Valley Edge’s net profit tripled to 21 per cent, far surpassing even his consultants’ expectations. “It is absolutely the best thing I’ve ever done,” he says. “I had to work hard, long hours, but it paid off. Now the vibe and energy are awesome and I’ve never felt better.”

Doing less in-house production has been key to Valley Edge’s revitalisation, allowing it to slash overheads and focus on areas it can do most cost effectively while outsourcing the rest. Gone are its two Heidelberg Speedmasters that were given away to Sunshine Coast trade printer Ink Spot in exchange for mates rates on commercial print jobs. Cassantini’s firm also makes extensive use of trade printer CMYKhub for standard jobs like business cards, DLs, flyers, and books. Essentially being a print manager in these markets, he says that now makes up almost half his business. In-house work now focuses on quality, fast turnaround digital printing, signage, and bookbinding to a range of corporate, healthcare and government clients.

“We want to get smaller, believe it or not, we don’t want the staff and other overheads, we want to outsource to trade as much as we can – because that is the future for our type of business in that we want to do more print broking and print management, that has become our model now,” he says. “We still have our same clients and we charge them the same amount as we used to, but we are now able to buy better than we could ever print in house.”

Cassantini says being able to produce quality work fast is now the central plank of his company and what separates it from the competition, not even charging a premium for next day or even same day service. “It sets us apart and is something we advertise, I don’t really see a lot of printers doing that,” he says. “We do wide format work for six Event Cinemas in Brisbane on a daily basis, including flyers, posters, and lightboxes. We bend over backwards to give them fast turnaround high quality with good service and they love it.”

He says it is vital to never let your clients down and be able to make everything easy and reliable for them so they don’t have to worry about production, and just know the job will be ready when they need it no matter what it is. To achieve this, all his staff are multi-skilled so they can do different jobs. This allows them to move work around to meet tight deadlines. “Not every job is urgent so if we get something in that is urgent we can change schedules to get it done.” One example of this commitment to meeting tight deadlines is when Valley Edge produced 516,000 DL flyers for Event in a single shift.

Cassantini is not originally a printer, coming from a design background and being fed up with substandard service from his printers. “I love design and the end result is print, so I wanted to be able to touch it and feel it. I also wanted to control the quality and speed of delivery, and none of my printers were giving me that – I’d have to beg to get the job done and I hated begging.” So in 1990 he bought seven-year-old Doggett Street Press from Hans Quality Print, and is still here 25 years later.

Because he is originally a designer not a printer, Cassantini says he understands what people want, but ‘at the same time what we do here needs to be fun’. “It’s serious business but if people enjoy coming to work they will do a better job,” he says. “Coming from a design background gives you a different mindset, in manufacturing it is all about getting boxes out the door – for me it’s about delivering a beautiful job to a client – that’s the way I see it. So I will not just use any trade printer to get the best price because it’s not about that. I need to establish a relationship with a business I can always trust and rely on.”

Having survived a near-death experience, Valley Edge is now firmly focused on a brighter future and continuing its remarkable profitability. Cassantini says while he is ‘a bit old school’ and doesn’t have a business plan – just something in the back of his head – the goal for the next two years is to double turnover without significantly increasing overheads, just by working smarter and harder, and using better technology. The aim is to both create and absorb extra work through a new online, in the cloud estimating system, online ordering for consumers, and online business client portals and asset management, that will streamline his processes and free up the sales team to go after more complicated work that requires personal service.

Valley Edge also only runs one shift in-house and could run two shifts to grow without gaining much more staff, and continue to use trade printers for offset work. “There is no reason why we cannot handle double the work with not much more than the team we have. I believe that we can always do more, and that’s what Shirlaws taught me,” Cassantini says. He also plans to improve the company’s website and social media presence, and continue its weekly newsletter.

Better market conditions have also arrived, with sales for the company’s signage dvision having ‘shot up’ recently, doing more than $150,000 of work in two months for clients including Queensland Gas Corporation, Brisbane Airport, architects, commercial builders, and a big Brisbane recycling company. “It is only last year that people have started to spend money on their business, people are feeling a bit more comfortable about investing,” Cassantini says.

To that end, Valley Edge upgraded to a new Roland XF 640 six months ago – after Cassantini saw at the AVS stand at Visual Impact Brisbane – a wide format inkjet printer four times faster and far better quality than the company’s previous four-year-old Roland printer. It also bought a new cutter and laminator in a package deal. Cassantini says it proved itself within a day of being plugged in it printed a 15m vinyl semitrailer cover in 90 minutes on a high quality setting.

Further into the future, Cassantini would like to take a step back from being hands on and get more into the print management side of the business, ideally by getting a digital company and a signage company to merge in and have the former owners run the production for each part. He has also started an advertising agency side venture with a partner who has more 15 years of agency experience, who Cassantini says is the ‘best brand designer I’ve ever met’, run out of small office upstairs in the Valley Edge building. He says the venture he is personally funding already has five big key clients. Valley Edge will manage all the printing, and will send him high-quality design work. “I want to get back into design because it’s in my blood and the essence of what drives me.”

Situated at the southern edge of Brisbane’s inner suburb of Fortitude Valley (hence the name) Valley Edge is only a few kilometres from the CBD and the area is rapidly changing from industrial to residential and commercial. In the next year there will be another 2000 people living in the area. Apartment towers and office buildings are already going up across the street. “Being this close to the city we knew something was going to happen,” Cassantini says. “I have been offered a lot of money for the building from developers but have said no because we feel that being an inner-city business lets us offer the convenience of speed and allows us to get into areas like media buying and advertising. We are in a good position to keep being noticed as an authority on print. Being in the same area for a long time goes a long way. It’s just a matter of continuing to promote ourselves and let the people who do not know us get to know us.”

In the meantime, Cassantini is happy to share the secrets of his success with other business owners and in October told his story at Shirlaws’ conference. “If I can inspire some people to really get stuck into their business and really make the decision to work on it, that hey maybe you need to work on some things to get back on track, but it’s not the end of the world,” he says. “I hope that will give them a spring in their step.”

 

The positives and pitfalls of acquisition-driven growth

Like an increasing number of print owners, Rocky Cassantini is turning to a growth by acquisition strategy to both alleviate overcapacity, and get new clients without paying for too many sales reps.

However, he says he will never pay money for a printing business again after the disappointment of the Railings Print acquisition in 2008, which did not come with as many clients as expected. Instead he wants to take on struggling businesses and their owners in exchange for a salary or a stake in Valley Edge.

“Bring them on. Find me a printing guy who’s not doing too well, I’ll pay him more than whatever salary he’s drawing from his business to come in and manage his clients,” he says. “They will have a happier life, they won’t be stressed, and their clients get to experience a bit of signage and professional corporate design, it’s a win-win.”

However, Cassantini knows this is a hard sell for many print veterans. “It’s very hard to say to a printer ‘I know you’ve been in business for 20 years, but just come and work with me’,” he says. “They say ‘this is my family business, I can’t just walk away’. But I tell them to look at what the possibilities are – if your business is worth nothing, you are never going to sell it, you’re just slugging yourself trying to pay for everything and barely making any money.”

Acquiring other businesses, especially ones not in great shape, has its pitfalls, however. Cassantini says one of the biggest mistakes is assuming most of the clients will stay.

“People have unrealistic expectations of how much business they can keep from a merger or acquisition. I can tell you from experience a lot just do not stick around,” he says. “It gives them an excuse to go somewhere else, especially if they don’t know us or like us.” Cassantini says he managed to retain at least half the clients, and many that he didn’t were trade work which he introduced to Ink Spot.

But he says the hardest part is letting the good people go, and integrating the ones that are kept on into his company’s culture. “If you keep all the staff from a merger, the first thing that’s going to happen is you’re going to lose clients during the transition anyway, that’s inevitable, and then you’re managing a lot of staff who you don’t really need,” he says. “Before you know it, within six months you’ve burned through all your cash reserves, you’re not making enough money, and your net profit has dropped by half. So if you want to do that, you’re an idiot and shouldn’t be in business.”

“Even though they are great at what they do, and may have been with that business for a long time, you have to break it down to what is the fundamental driving force to make the business succeed. It is simple mathematics, you need to manage your overheads so you can’t have a lot of staff just because you think you have a lot of work – you’re better off having not enough staff and a lot of work and getting everyone to work harder, unfortunately. I think people are afraid to let staff go because they think they might get busier and they will need them, or that they are putting people out of a job. But I can’t be emotional about that, you have to make decisions based on figures and facts because it’s imperative for the livelihood of the business. I used to be emotional, but you do not get to 21 per cent net profit without making hard decisions. I still consider people’s feelings and their family situation, but if somebody does not want to be here or if I cannot afford to have them here, they are gone.”

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