Look After the Pennies
Walking the aisles of The Print Show just a couple of months ago, one thing was abundantly clear: people are buying new kit. Whether this is a new wide-format printer to support their expansion into a new market or taking on additional finishing technology to offer new effects to customers, new machines are being snapped up across all areas.
This can only be good news for a sector that was hit hard during the pandemic as demand for certain work dried up, with many manufacturers and suppliers supporting companies with their investments by offering certain funding and financing arrangements.
Add in third-party options from specialist financing businesses and this can help open doors to new purchases for print companies of all kinds. Here, we highlight recent examples of funding and financing in practice and present some of the options available to those in the UK industry.
A Tough Market
Compass Business Finance is an independent finance company specialising in asset-based lending to the print and packaging sector. Director Jamie Nelson explains that with asset-based finance having increased 6% in October, this reflects an overall rise in confidence across the UK market. However, he says the situation is not quite the same in the print sector.
Compass Business Finance specialises in asset-based lending to the print and packaging sector
“For the print market, investment has slowed, perhaps in part because we have Drupa on the horizon,” Nelson says, adding: “However, the market is tough. We’ve been working with customers on various projects, including debt restructuring, MBOs and acquisitions, as well as direct investments.
“During the past year, we’ve seen a lot more investment decisions being driven by potential energy savings and workflow efficiencies. Sustainability is high on the agenda for many businesses, especially where it has the ability to help them win more contracts. The majority of investment we’ve seen has been in sustainable large-format and packaging applications.”
So, what can Compass offer to help print companies overcome the financial stumbling block with new investment?
Regardless of whether times are buoyant or tough, Compass is able to support customers through a range of funding solutions, whether they are making investments or looking to improve their own cash position.
“We take a relational rather than transactional approach to doing business, valuing our team, our customers, and our partners so that we can provide the best possible products, service, and experience now and into the future,” Nelson says.
In addition to what Compass does, Nelson says there are tax incentives in place to encourage continued investment. Such schemes run alongside the Recovery Loan Scheme (RLS) and help to support lending to businesses that may otherwise not be able to attain the funding they need. However, it is worth noting that the pandemic-linked RLS is currently due to end on June 30th next year, with those interested advised to move sooner rather than later to avoid missing out on this type of funding.
Support from Manufacturers
So, we have established that funding and financing is readily available, but what about how this works out for PSPs? The proof is very much in the pudding with plenty of PSPs having made use of financing in recent months to support their business growth plans.
Some manufacturers have started to reach out to support customers with their growth plans. One example of this is personalised packaging start-up Penny Black, which has secured major backing from Agfa.
Agfa committed to an initial investment of £1.3m in October 2022, following on from this with a further £1.5m pledge. Both investment funds were triggered by numerous partnerships and wins across the UK and Europe, with the business having shown steady month-on-month growth, attracting several new customers. Among these clients are sustainable toothbrush retailer SURI, gin brand Warner’s Distillery, and health supplements retailer Zooki.
A key part of Penny Black’s success has been its marketing SaaS tool for e-commerce brands, with this already being deployed across Europe by global fulfilment providers like Radial, Elanders, I-Fulfilment, and Schroeders.
“3PL companies currently struggle to personalise e-commerce packages and can’t do much beyond mass-printed, one-design, gift notes thrown inside,” Penny Black chief executive Douglas Franklin explains, continuing: “Our unique offering helps automate a revenue-boosting process for on-demand, beautifully designed printouts, specifically geared towards each customer, location, product, or package.
“The moment consumers receive their online orders is the only touchpoint left for e-commerce brands to have a physical connection with them. Brands need to surprise and delight customers to secure their loyalty, especially when acquiring new ones can be so expensive.
“Riding the wave of global growth in e-commerce, we’re delighted to be attracting more interest, and this latest boost in investment will help us develop even further.”
Banking on Support
In perhaps a more traditional way of bringing in financing, Manchester-based Browns Print secured more than £2.4m in asset financing from Lloyds Bank. The funds were used as a hire purchase loan for a new, state-of-the-art printing machine.
Browns Print secured more than £2.4m in asset financing from Lloyds Bank
By taking on the new technology, Browns Print says it now prints more efficiently, uses less energy and produces less waste than before the machine went in. The new device, the details of which were not released, produces sheets of paper 35% faster than the previous printer, saving several million sheets over the course of a year. It also uses ‘push to stop’ technology, an automated system that monitors the printing process in real-time to optimise printing speeds and quality.
As part of its wider sustainability offering, Browns Print has also invested in 444 solar panels. These are capable of generating 200 kilowatts an hour and recycle over 1,000 tonnes of wastepaper each year, helping to cut energy usage and costs while improving the overall environmental credentials of the business.
Tim Guest, chairman at Browns Print, says that increasing print capacity has also given the business more opportunity to grow. The company has recently hired ten more employees, boosting its total headcount to 80, while it has a long-term goal of growing revenues and capacity, and becoming a carbon-neutral business by 2028.
“When our business was in need of a new printing press, we knew we wanted to purchase a machine that would help us to stay competitive and operate more sustainably,” Guest says, adding: “The investment from Lloyds Bank allowed us to do that, providing our customers with high-quality products, while increasing efficiency and reducing energy usage.
“We’re pleased to have had Lloyds Bank by our side for the last seven years and look forward to working with them in the future as we continue to grow and advance the business.”
For print manufacturers like Browns, using this financing to invest in cutting-edge equipment and technologies has helped it to stay competitive in the sector, and ultimately improve business growth”
Angela Parry, associate director at Lloyds Bank Asset Finance, adds: “At Lloyds Bank we offer businesses a full range of asset funding options. For print manufacturers like Browns, using this financing to invest in cutting-edge equipment and technologies has helped the company to stay competitive in the sector, and ultimately improve business growth.”
Alternative Routes
In terms of thinking outside the box and looking at other financing options, an excellent example comes in the form of print-on-demand merchandise platform Merchr. The company was founded by an experienced team backed by Martin Varley, a well-known executive in the personalised products industry. The business swung into production earlier this year after securing £350,000 in an oversubscribed pre-seed fundraising round, allowing it to get off the ground.
Less than a year after opening, the company installed a raft of new, custom-built machinery as part of a £250,000 investment for its production facility in Middleton, Greater Manchester. Merchr says the investment enables it to ramp up its services to a growing customer base of retailers, visitor attractions, and online brands.
The new equipment includes a flatbed printer which can print up to 60 notebooks at a time with a varnish finish, and a 360-degree cylinder printer machine for water bottles and flasks, with capacity to produce 250 an hour. In addition, Merchr has also installed a Graphtec cutting plotter which produces raised printing with a vinyl finish, along with a laser-guided dual heat pressing printer for glitter, neon, and textured printing on T-shirts, hats, toiletry bags, and other items.
To support this, Merchr is also recruiting for several new roles as it grows its team in line with its expansion.
It is worth noting that the initial oversubscribed pre-seed fundraising round served as the catalyst for what has been a fruitful first year in business at Merchr.
Jack Fox, head of operations at Merchr, comments: “Advancements in technology have opened doors to a new era of sustainable merchandise printing. The ability to print retail quality items on demand, without having to order in bulk, not only enhances our commitment to sustainability but also empowers our store owners with more choice and customisation options.
Jack Fox, head of operations at print-on-demand merchandise platform Merchr
“We’re excited to embrace this innovative machinery, as it aligns perfectly with our goal of reducing waste and minimising our environmental footprint while delivering quality products for our users.”
The bottom line is that financing and funding is available to print companies of all shapes and sizes. Of course, any sort of venture or arrangement in this area should be properly planned out and thought through before diving into anything. Analysing your business and speaking with finance experts can give you a clear idea of exactly what you need and what the best solution is for your company.
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