We were lucky to catch up with Jeff Charlton recently and have shared our conversation below.
Jeff, thanks for joining us, excited to have you contributing your stories and insights. One of the things we most admire about small businesses is their ability to diverge from the corporate/industry standard. Is there something that you or your brand do that differs from the industry standard? We’d love to hear about it as well as any stories you might have that illustrate how or why this difference matters.
Typically most printers and mailers tend to focus on bidding on projects that have already been established by the client and often low price is the major factor as to who gets the order. This type of model results is a race to the bottom where no one can make any money. As a result, at least 70% of printers have gone out of business in the last 15 years. The ones that have survived are still shrinking.
What I have always done, and I teach all my staff the same, is we dig into each project and find out what the true pain is and then develop a solution that solves the problem. often that solution is different than what the client thought he needed.
In addition, we try to focus on niche markets where we can be innovators and create products and services that are unique so we either eliminate or greatly reduce price competition.
Lastly, I have used acquisition as a growth strategy, which has proven to be very effective To date I have acquired 22 companies in the last 23 years and am workign on another as I write this. .
Jeff, love having you share your insights with us. Before we ask you more questions, maybe you can take a moment to introduce yourself to our readers who might have missed our earlier conversations?
I have been a salesman and direct marketer since I was a Boy Scout at 11 years old. My Boy Scout troop sold fertilizer (yes, that’s right – yard fertilizer to help your grass grow.) I went door to door asking people if they wanted to buy from me. I also made up flyers to put in mailboxes to advertise. I didn’t realize until 20 years later that the use of those flyers was direct response marketing. All I cared about then was that it worked, and I led my troop in sales by more than triple what anyone else sold.
I was self-employed in a small business at the age of 14, painting houses. I fell into that when one of my lawn-mowing clients asked me to paint their house. I had just helped my Dad to paint our house, so I knew how to do it. I said, “sure.” He paid me $4.00 per hour, and I remember earning $200 total on that job. Compared to the $5.00 per lawn I used to get, that seemed like crazy money. I said goodby to lawn-mowing and asked my best friend to be my partner in my new painting business. We had no fear and went door to door asking poeple if they wanted two 14-year old kids to paint their house. To this day, I can’t believe anyone said yes, but we got a few jobs that first summer, and we were off to the races after that.
The painting business grew into a reasonably large summer operation through high school until I graduated from college nine years later. It grew to a workforce of 12 guys, and we painted over 200 houses over the years. Since I had just finished college, I took a hiatus from self-employment when I graduated with a Civil Engineering degree. I figured I would try corporate America. I worked as an engineer for Procter & Gamble for 3.5 years and realized that I hated both engineering and the bureaucracy of a large company.
I wanted to get back into self-employment but did not want to be a painter. So I decided to make a deal with my father-in-law, who owned a small printing distributorship. (He bought and sold everything – did not manufacture) The deal was I would work for him as a salesman for about five years until he retired, and I would then buy him out. That agreement lasted about three years when I realized that my philosophy and his were not aligned, and I decided to venture out independently. But I did learn a lot and proved that I liked the industry and could be very successful in selling printing.
I started Graphic Connections in 1992 in my basement with no clients and a sales contract from my previous employer that prohibited me from contacting anyone I had contacted when I worked for them. I pounded the phones for sometimes 10 hours a day to set up appointments. 60-hour workweeks were the norm. It was tough, but since I had proven I could succeed selling printing in my previous job, I knew it was merely a numbers game, and I stayed the course.
By the end of the first year, I had generated enough profit to put food on my table, and that was about it. Then it took off. 30 years later, I have 65 employees and an 18,000 square feet of production/office space that is filled with equipment that we own free and clear. About 20 of our employees are remote, with some in India, and the Phillipphines.
In those early years, there were no gimmicks. No fancy sales pitches. No patents or revolutionary products. I lived by two basic philosophies. I did what I said I would do – 100% of the time. I also returned all my phone calls in one hour or less. Integrity and my word were (and still are) the two most important things I lived by – both in business and personally. My engineering background gave me a problem solving mentality and I used that to try to find unique solutions to clients problems . I have built a company culture around that philosophy and am convinced that is the biggest secret to our success.
One of our industry’s challenges is that it has been shrinking since the day I got into it in 1988. The common message was that we were moving to a paperless society, and there would be no more printing in 20 years. It is true, the amount of printing has reduced dramatically with the advent of technology. The advances of computer printers have made it easier than ever for people to print their own forms and brochures. The advances in digital technology and email has reduced the number of letters written, and websites and PDF software have reduced the number of brochures printed.
The one area of printing that has not shrunk, and is actually growing, is direct mail. These days, everyone has a website, and many sell online. But marketers have realized that their sales can be greatly enhanced by the addition of direct mail to push people to their websites. I realize direct mail was an opportunity about 20 years ago and have directed our resources to become experts in that area.
One of the other things I realized is that finding a niche, And being really good at supporting that niche,
is an ideal way to grow. It so happens that I fell into a niche that has turned out to be big for us. I have been a real estate investor for 35 years “on the side.” Through that activity, I met a lot of real estate investors and realized that there was an opportunity to help investors to generate leads through direct mail. We formed some strategic partnerships with leading real estate “house flipping trainers” and have grown into one of the top direct mail companies serving the real estate investing niche nationwide. Because I am an investor, I understand completely what it is investors need and how they need to communicate with leads. It gave me a leg up on the competition since I was on the “inside.” We see our company growing dramatically over the next few years in this niche.
I also used my skills in problem solving and marketing to innovate some uniqiue products specific to the REI space. About 5 years ago I invented what we call “accupix mailers”. These mailers will pull the unique photo of a ouse for every name on the mailing list directly from the google streeview imaga and print it on the mailer. Since then many of our competitors have copied this and it has proven to be very effective. We also developed a unique texting system associated with mailers that to this day is proprietary to us. We are constantly coming up with new innovations to help our clients get more and better leads.
One way that I chose to grow the company, which is something that most entrepreneurs never consider, is to grow by acquisition. I have bought 22 companies in the last 23 years. No, I am not a rich guy or a corporate raider. I identified small companies in our area that did printing, direct mail, graphic design, and embroidery that were failing or the owners were retiring. I found a way to create a win-win scenario for the owner where I could take over their operation and still pay the owner a fair price even if his company was losing money. Each deal was unique, but I used my ability to find win-win solutions and found a way to make them work for everyone.
Not every deal was a home run. I had about five home runs, five losers, and the other 12 in the middle somewhere. But one thing it did do for me, which was an unintended “good” consequence, was I got some really great employees. When a company is about to close its doors, they are usually down to their last one or two best employees. When I bought these companies, I also got those great employees. I also got some of the owners who wanted to stay in the business and were good at what they did. Additionally, I got a lot of good equipment that was old, solid, and worked well. In printing, the old equipment is often better than the newer stuff, and it lasts forever.
If I had to sum up the secret to my success both personally and in business, integrity is a vital ingredient. Communication is also extremely important. Just about every problem we have starts with poor communication and usually gets worse as communication breaks down further. Making sure that you are a person of your word and that the people you are speaking or writing to completely understand what it is you want them to understand is paramount to success and happiness.
On a personal level, I am a believer in Jesus Christ and am very active in mission work both in St. Louis and also in Panama. I support a ministry in St. Louis called Love the Lou, which helps inner-city families to keep their kids in school and stay out of trouble while at the same time putting God at the center of all activities. I also have led a mission trip to remote villages in Panama for the last ten years, where we build clean-water systems, houses, and schools. The work is gratifying and keeps me grounded. I believe that I have been blessed in many ways and feel I should take a few weeks each year and give back.
I love to play golf, snow ski, exercise, and play the guitar. I have a family with three grown kids, a wife, and two dogs. My wife spends about five months a year at our summer vacation cottage in a place called Chautauqua, which is on the Mississippi River about an hour from our house. I can say with a smile that I have lived a good life.
Let’s talk M&A – we’d love to hear your about your experience with buying businesses
Yes, 22 on 23 years with another in the works right now.
It started in 1999 when I wanted to get away from brokering printing (buying a reselling) and into manufacturing. The first deal I ever did was with my main vendor who was a small print shop with no sales force. His business was shrinking because he did not have a sale force. We had the sales force. So I bought him out and he moved his entire operation into our building. He still works for me to this day. I let him run the print shop and I focused on sales and everything else.
The second deal I did was to buy a small graphic design company to bring that in-house as well. Pretty much the same model.
Both of those were successful deals so I just kept looking for more. I did roughly one deal per year.
All the deals after the first two involved finding small companies in our area that did printing, direct mail, graphic design, and embroidery that were failing or the owners were retiring. I found a way to create a win-win scenario for the owner where I could take over their operation and still pay the owner a fair price even if his company was losing money. Each deal was unique, but I used my ability to find win-win solutions and found a way to make them work for everyone.
Can you talk to us about how your funded your business?
When I first started in 1992, I had very little money. I started with just me and all I was doing is buying and selling printing orders. I would get the order first, then contract with a local print shop to manufacture it and resell it at a profit.
To fund this I did three things.
1) I used a personal credit card to pay for orders
2) I was able to get a bank to give me a $50,000 line of credit with my house as security
3) I negotiated favorable terms with my vendors so I could pay them in 30-60 days.
4) I took up front deposits from my clients for orders so at least I had a good chunk of the money to fund the orders up front.
I worked out of my house to keep expenses down. It took discipline and good money management to get through those early days. BUt I was able to steadily build up cash reserves of my own by not spending any more than I had to and kept most of the profits in the bank to use as working capital.
We have always paid our bills on time and always took discounts for early payment if available. Paying bills on time is critical when you depend on suppliers to deliver your products.
Contact Info:
- Website: www.gcfrog.com, www.reiprintmail.com