Passing On The Business - Are You Ready?
VAR David Volkmuth has decided to retire just as his company is taking off. Here's how DJV Enterprises got where it is and where its new leaders plan to take it.
I always said when I became successful in the custom label printing business, I would turn it over to my employees," says David Volkmuth, president and founder of DJV Enterprises. The Label Division of DJV Enterprises grew by 125% last year, so Volkmuth has decided to retire. He has been in the printing business since 1956, and owned his own companies since 1976. While his label division is in an upswing, he will pass it on to his two sons and sales manager.
Labels Were Adventurous
At one point in the 80s, Volkmuth owned four printing divisions – labels, sheet-fed, web and engraving. "One day I woke up and said "What am I doing to myself?" I had 142 employees and division managers, but I wound up making many of the major decisions for people I hired to be in charge. It took so much time and effort that, in reality, I wasn't running the companies, they were running me."
Volkmuth sold three divisions during the next four years, keeping the label printing business because he felt it was adventurous. This was his weakest division. It had a high investment and little competition. "At that time, labeling was a specialty line," he explains. "People didn't get into the business without a lot of capital because of upfront expenses. Consumables like dies were very expensive, and they still are. I kept the division because I wanted to see what it could do if I nurtured it."
Nurturing Pays Off
At first, Volkmuth targeted anybody and everybody in the St. Cloud area in need of custom designing and printing labels. "We started out with $5,000 in labels a month and it wasn't enough," Volkmuth said. "My payroll was about half of that income, and I was sure I had made a mistake. But, I stayed in the game and realized I couldn't be a label company for everybody. When I brought Kurt Olson on as sales manager in 1994, we started concentrating in the food service business. Through his job in a service industry, he had seen a lot of custom labels in grocery stores. We really started to grow in 1995."
Olson gradually expanded the sales area from St. Cloud to a territory that spans the Midwest. "After we started working an area that we thought was going to have sales potential, we would then add another salesperson."
Today, Volkmuth's business has expanded from creating monochrome custom labels to selling and servicing monochrome and color thermal-transfer label printers. The company starts out by designing and printing custom labels for a customer, like meat processing companies. As the end user's business grows, DJV sells the company a thermal printer, allowing for on-site, on-demand printing. With hardware sales come continued sales of consumables needed for printers. After helping the end user purchase its own printer, Volkmuth starts the process all over again with another client. "We thermal print for customers until they feel comfortable enough to make the investment in a printer," says Volkmuth. "We don't recommend purchasing the machine until the company has enough label volume."
Color Is Becoming Increasingly Important
Volkmuth sees continued growth in the color thermal printing area. "Color is already here," he states. "End users need to have color on their shelf tags or apparel tags, especially in apparel retail. Color draws people to that shelf and gives the product identity. We see it all over. The only time I see monochrome now is on box labels. Three- and four-color label printing is a must."
Making The Decision To Retire
It was obvious to Volkmuth that when he decided to retire, one of his employees would take over the business. "When I saw that the revenues and business were increasing in 1997, I had it in my mind that Olson would partially run the company, but he doesn't have all of the management skills and is best suited to lead sales. My son Brian took over as production manager because of his previous experience with our company and another company in Maine. We zeroed in on October 1, 1999 to complete the transition process. This marks the end of our fiscal year. At that time, my son Randy, who recently earned his business degree, will take over as president. The three complement each other."
As it stands, Olson will continue to focus on sales. Brian Volkmuth will continue as production manager, where he is responsible for all day-to-day activities of the plant and printing technology. Randy will focus on business trends as well as the computer technology needed to keep the business running. Each of the three will purchase 25% of the company. David Volkmuth will keep 25% and give portions to other employees as he sees fit. Through this process, he will remain active in the company, predominately in sales, on a full-time basis until October.
"I believe my company wouldn't have survived the way it did if I sold it to a larger company. They would keep the business going in the same manner, but after a while, they could start letting my employees go. My employees will attest that we all benefitted when we built up the company. I don't want to lose that way of doing things when I retire." Volkmuth initiated profit sharing and bonuses based upon the number of years each employee has been with the company.
Plans For The Future
Each of the new principals has specific goals for the Label Division of DJV Enterprises. "The biggest change and challenge we face is technology," says Randy. "I try to keep up with computers and technology. Brian tries to keep up with printing equipment technology.
"It isn't easy keeping up with the constant change while we are keeping up with the competition," he says. "In the end, service is the name of the game." Because of DJV's commitment to technology, the company can provide a more efficient service. This helps it keep up with the competition. "I'm very confident in our capabilities," says Brian. "We do our jobs very well because we have the right people in the right places. This is an exciting time in the printing industry because technology is taking a huge leap."
In comparison, Olson believes in a more old-fashioned sales approach. That means knocking on a lot of doors to get – and keep – customers. "Our sales staff must to be willing to get the door slammed in their faces a dozen times before they hear a yes," says Olson. We deal up front. We tell our customers what we have to offer and how we will offer it. We are in this business to make money. It's what we are all after," he continues.
"I want to keep the company very family-oriented. As sales manager, if I can't walk through the back room and know who is cleaning the floor, that's when I am going to leave. It is possible to make as much money as we want and still stay small."
Keeping Growth Under Control
With a 125% growth rate last year, DJV projects a 30% or 40% growth this fiscal year. "Everything started happening for us in 1996," says David Volkmuth, "but it showed up in 1997. We can realistically expect the 30% to 40% growth and add one salesperson to handle additional sales."
"We believe in selling service first and foremost," he continues. "We don't want to sell on price alone. That's a mistake. It's getting to a point where it's a dog-eat-dog world. Sometimes I have to back off a sale and remind a customer that my philosophy is on service, not price. I want to be their partner for as long as we are around."
"We want to continue on the course we have charted," says Randy. "That means continuing the business in the same manner as my father."