P>For more than a decade, Gary Carder was owner, president and CEO of what had been a flourishing, full-service visual communications company in Akron.
His firm, CarPec Corp., averaged annual sales topping $3 million. He provided jobs for about 40 people. His peers admired him. And for five consecutive years, between 1990 and 1995, CarPec was named on the Weatherhead 100 list of the fastest growing companies in northeastern Ohio.
But this month, Carder closed his doors. Today’s rapidly changing technology saw to that.
When he launched CarPec, Carder invested his life savings to offer a realm of quality visual communications services. His first computer system cost him $46,000. Today, a computer that outperforms that system costs only $1,600.
But even at today’s prices, Carder would have to shell out another $750,000 to bring all his existing technology up to date to stay in business. He’s done that far too many times already, he says, and the return on investment just isn’t there to justify it.
Carder refers to the common business philosophy that a newly manufactured product typically produces four to five years, then it’s time to replace it with a newer model. But in today’s world of computer technology, the wrap-ups are short lived.
“You put all your resources into a certain piece of technology or method of production, but the next month, something comes out that wipes that away,” he says. “The technology side of this industry keeps coming out with more sophisticated everything. Like so many other small companies, I just can’t keep up with it. And I’m tired of it.”
His only alternative, he says, is to walk away.
Luck of the draw
With a penchant for graphic design and years of experience working for other printers, Carder dreamed of having his own business.
“This geographic area was and still is a hotbed for graphic arts. And in the corridor from Cleveland to Columbus, there’s a lot of printing,” says Carder, remarking that this region has a reputation for award-winning craftsmanship. “As a plant manager, I felt the competitors were not doing an adequate job, and that a start-up company could easily come in and grab some market share.”
So in October 1986, Carder started mapping out his future. He ran his business plan by a few colleagues. They all tried to dissuade him. Finally, he found a mentor in Cascade Capital Corp.’s Debbie Victory, who was at that time with the Akron Regional Development Board.
“She was the only person who listened and gave me encouragement,” he says, noting that Victory also supplied a list of contacts that rounded out his hand.
“It took a big commitment on my part to walk away from a guaranteed income — as one of the highest paid plant managers in the area — to start my own business,” Carder says.
Carder signed a lease on a 4,000-square-foot facility on East Exchange Street. “It was a nice building, but it wasn’t suited for all the technology I needed. It even had dirt floors in certain areas,” he recalls.
After spending some of his own funds to help renovate the building, and purchasing $250,000 worth of used equipment for about $30,000, Carder opened his doors under the name CarPec Graphics Inc. on Jan. 1, 1987.
“I had enough savings to get by for about six months. But I also had some potential customers who, as soon as I started performing work for them, made sure I was paid quickly, instead of 60 or 90 days,” he says, adding that he landed some substantial clients early on.
Starting with two employees, Carder hired 13 more in four years. By 1991, he was hitting his mark and purchased a 14,000-square-foot building on Beaver Street. He doubled the size of his staff.
“Being in business is like a big circle,” Carder says. “When you go into business for yourself, you go out and sell your products or services. Then you need people. So now you have people, products and services.
“Now you need equipment, so you buy that. Then you need more sales because you have people and equipment. More people, more sales, more equipment. If you’re doing it right, you never get off that cycle.”
Carder says that’s exactly how he played his hand, until it was time to fold.
Losing hand
Carder says technology has radically altered his industry.
“By 1994, I had 17 percent net profit,” he says. “An industry leader was thought of as 3 to 5 percent net return on investment. Then, about 1995, technology came down in price and customers started buying their own equipment, bringing it in-house. That was the beginning of CarPec’s losing market share.”
In CarPec’s early years, Carder says, his firm was a service provider to printers who would buy his services to keep their presses running. When printers began purchasing their own equipment, they outsourced fewer services.
That’s when Carder saw the writing on the wall — and in the books. Trade journals forecasted that 70 percent of printers, ad agencies and trade houses will not survive the year 2000 in their current situations, because sweeping mergers and acquisitions will heighten the competition.
“The middle-sized company is being squeezed, big time,” Carder says. “We’ve seen an age of prosperity, but now few of us are getting the return on investment we need.”
Offering value added services formerly distinguished one competitor from another, he says. Now, if a firm doesn’t boast current computer systems, image setters and scanners, clients look to competitors who have sunk huge sums into the latest technology.
Last January, Carder seriously considered borrowing $750,000 to stay in business. He reviewed his profit and loss statement. Contemplated the future. Figured the return on investment.
“I decided I just couldn’t do it with good conscience. If you’re making only 5 percent net profit, what incentive is that to continue to spend money on new technology?” he asks.
Carder tried everything to stay in the game. He tried downsizing, rewriting his business plan and setting up crossover profit centers. He was offering a full range of services using his computer and graphics capabilities: electronic imaging, scanning, digital and conventional graphic design, packaging and labeling, Web site development, point-of-purchase displays and catalog production. He even started teaching graphic design and offering ad agency services.
But he was playing a losing hand, and he knew it.
In 1996, Carder developed a rare, debilitating form of leukemia.
“I lost the edge, and I’m just now getting my stamina back,” he confides.
Carder says he was very proud that his family kept the business going while he was out of play. But running a business and growing a company are two different things, he says.
“They didn’t lose any business, but we didn’t grow in the two years that I was ill,” he says.
A new deck
Carder says it was the toughest decision of his life to shut down his firm, especially when so many valued employees and beloved family members were involved. Years ago, he’d even put his succession plan in place.
“Not everyone can start something from nothing and grow it. It was a badge of honor,” he says. “But just because I’m out of business now doesn’t mean I didn’t succeed.”
Carder is liquidating the last of the equipment and selling his building, having recently acquired his real estate license. He’s also working with a major printer in the Akron area as a senior prepress and printing coordinator while contemplating his next move. Luckily, he has savings to fall back on while he’s looking for his next game.
“Once a person backs out of business ownership and enters the labor market, prospective employers are ambivalent about hiring you because they don’t think you’ll have the work ethic,” Carder observes. “But if you stop and think about it, what kind of work ethic does any owner have?”