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Energy Crisis effect on the signage industry
This will undoubtedly be a problem for all industries due to the price cap not applying to businesses. There are some things we can all do to cut energy usage but there is a limit as most of us have machines and materials that need an ambient temperature to work properly, so turning the heating off is not an option for most. Many of us will work with local small businesses such as cafes and restaurants who will be hit most and this could lead to a downturn in orders for new signage etc.
What are you doing in preparation for the winter and what predictions do you have? I do not mean for this to be a negative conversation, more an open discussion on how this will affect us and any tips some of you may have.
I will start by sharing that I will move our main printer into a smaller room so that it can be heated without heating the whole building (not an option for most) and wearing lots of layers when working in the main room. 😎
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15 Replies
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Much the same as what we did in Covid. Tightening the belt buckle.
During covid we took a good look at the business, and what we were doing, which was pretty much anything and everything. We scaled right back, at at the time upgraded the lighting to LED, invested in diesel heaters rather than electric & gas.
It’s primarily vehicle signage we undertake, and put our prices up during covid, and have an unwritten minimum order amount on signage and vehicles.
We can easily work from home so I’m not heating the workshop etc, and will only go into the workshop when there’s work to be done – More importantly work that’s worth doing. No point popping in for a £10 poster.
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Covid did push businesses to cut back so there may be many that are already at their leanest, good tip on the generators, as long as ventilation is not an issue.
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I think it may bite some who took the BBL’s and other loans and support during covid, thinking it was free money, and invested in new machinery on a bit of whim, or in the hope of expanding into other areas.
Speaking to other sign makers, there seems to be reluctance to increase prices, or a belief that their customers won’t pay it. If you read one of the posts about ink costs, you’ll see the point I make time and time again. Our material costs aren’t usually that big in the grand scheme of things, its time and overheads that cost the money.
Just look at the day rates some trades people are charging 🤯
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Very true David, material costs are not ridiculous and I have very low overheads already. I was ready to push the button on a larger unit but have backed out until things settle down. I know of some people who took the BBLs and are now driving around in new Range Rovers 🙄
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I think work (enquiry wise) is already slowing a little, though this time of year often does for me. We’re turning more work away if it’s stuff we don’t find overly profiable, using our time on work that pays.
Our fixed rate energy (via Landlord) went from 14p to 32p a unit back in Jan, we managed to lock in to 2 yrs at that price, but my Jan bill was still over £600 for electric. We defo need to look into more economical heating though.
We now turn off all laminators and switchoffable items at the main switch. Printers and puters on standby, all lights off at night now, despite being low volt hi-spec led. Not much more we can do, we’ve upped our hourly rate from £45p/h by 25% to reflect the fact we have larger premises that need lighting, heating, renting, insuring etc. which has all increased. as has fuel for the van and so on.
What can we do? We no longer stock as much material as we once did, though I do have a habit of over-ordering colour change films and probs have several ££££ of wrap on the racks!! Otherwise it’s being ordered as we need it.
I guess we’re lucky that we don’t rely on low profit / high turnover work, typically I can do 2-3 decent jobs a week (+bread n butter stuff) and still earn reasonable money, compared to one local guy undercutting everything, doing tons of cheap vans etc. yet seemingly earning no more according to companies house!
I think we’ll be ok if we can maintain a reasonable level of enquiry conversions, but belts will need tightening, even if I am committing another £45k on a new work van
😂
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I get you on the small jobs, low profit, I find that spending time quoting is a difficult one as sometimes you know you will be too expensive for certain new customers who wont give you a budget, this can be a time waster for all involved so I am looking to create some documentation with average size letters, boards, illuminated etc. with prices, hoping this will save some time before quoting (many of you may already do this 😁). Vans are probably a good investment, a dealer told me I could probably get 3-4 grand more than I paid three years ago for mine 😎.
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I suspect the vans will come down in price, unless they deliberately keep supply short. I was just fortunate that my transit custom sport is worth almost as much on the forecourt today, as I paid 3yrs ago, I got £5k off the van on the forecourt so £30k instead of £35k, after 3 yrs I have £15k equity in the van! However, the equivelent new van is now £43k!! So I’m looking at a spec’d up premium Vito instead, making use of the equity!
As for making quotes up. We’ll give a rough price on a job but no visuals or effort put in to it unless we have an artwork fee, we’ll then do the artwork to suit their budget.
If they don’t want to do that then they can sit down with me and we’ll spend 30-60mins knocking out the bare bones of a design and a price, if they like it I’ll take the artwrk fee and flesh out the design with proofs. At this point there’s still no visuals given until money is in the bank, no “can I take a photo to show the wife / busi partner /dog / cat” nonsense either, show me the money, then you can take your design away or they can come in to see it!! Gets rid of wasters at the start then.
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I’m going to get some flack off @Hugh-Potter after yesterdays conversation 🙄
My comment about unwritten minimum orders, means I have a general rule.
We don’t touch vans, or more ‘basic’ signage below £300+VAT – Bascially a ‘day rate’ larger signgage projects we don’t really touch unless it’s over £1500+VAT, but more £2000+VAT
It may sound expensive, but I’ve run our costs, and provided we can produce and install a van comfortably within a day, we’re making money. Larger signage work we use sub contractors who are demanding nearly £500 a day for a two man team, so of a £1500 job, a 1/3 of it is installation costs.
Throw those kind of figures at customers on the phone, or in reception and save yourself chasing aroun and dealing with them.
That’s not a hard and fast rule, yes we’ll knock out roller banners, and PVC banners, whilst we’re here, but it’s few and far between, and again charge good money for it.
Of course, the one time I don’t take my own advice I shaft myself 😂
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Good topic Adam, this is something hitting everyone just now and no sign of it letting up.
We switched to large storage space heaters years back. they heat up overnight at the lowest tariff time available and store the heat. You then turn on the heater fans in the morning and they steadily blow out warm air throughout the day. It still has its costs, but a fraction of the costs of many other methods of heating the workshops.
We switched all lighting in offices etc to LEDs but still have a ton of fluorescent tubes to get changed over.
Other than that, there isn’t a great deal more we can do, as there are only computers, cutters, printers etc left. so other than cutting back on lights and machines sitting idle. we need to try and grin and bear it in whatever way we can. 😬we are around £600+ a month and have been told that will soon be £2500+ per month.
That’s the equivalent of starting a new member of staff and telling them to sit in the corner and do nothing! because we get zero extra benefits for these new obscene costs.I have been reviewing all my stocked materials and the products we offer, continually for the past 5 years and more so over the past 2 years. Not because of Covid but covid did kick me up the arse to push faster forward with it all. I am making a couple of big changes before the end of this year and in 2023 I will focus solely on a smaller scope of products we will offer here on.
Standardisation of your business processes in every way possible is key!
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Thanks Robert, I am looking at alternative heating so will check out the storage heaters as an option. I know there is no magic wand for saving costs but its interesting to hear what others are up to and consolidating stock is a great one, it’s sometimes seems a good idea to agree a job on unusual materials and then be left with excess that you may only use once in a blue moon. Minimum order values too, although if not busy smaller jobs can fill a void.
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I am sure storage heaters are a bit more expensive than gas. but it’s not an option for us for a few reasons.
one of the good things is, the heating is just a large box that stands alone, so when we move, we can take the heating system with us very easily. -
we do not have a lot of options. we use only what is really needed to power machines and things.
the heaters are off, thermals on! 🤨 -
its incredible – with the arcade business, a few have actually called it a day as each machine is 2-2.5amps and that can add up. With Latex printers this will be a bit costly to run now. Sadly energy is what we need to work with.
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Just to cheer you all up. We have of just coming to the end of our contract with our energy supplier.
We were 3200 a year. We have been offered 10,800 or the variable rate could be half that… or by January I’ll be wishing I took the fixed bill. Called several energy suppliers just to see what the deal is and apparently that is a really good deal. But all of them told us to sit on it and do nothing till the last second.
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I have another guy calling us back tomorrow, but some that are are just stupid prices.
We are with EDF and getting mixed prices “from the same source” but from different brokers which I get, but the differences are in the thousands.
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