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Successful Business Ideas: The Sign Market

Looking for ideas to expand your distributor business? Take a look at the sign market. It’s a natural fit—and it’s ever-expanding. Here’s a primer on how to capitalize on this hot opportunity.

When John and Sharon Stingel began running their wholesale signs business in 2001, the couple cut rolls of self-adhesive vinyl to create letters and shapes for their signs.

Ten years later, this cut vinyl method of sign production has largely gone the way of the dinosaur, says John Stingel, co-owner of Amtek Wholesale Signs (asi/35964) in Salem, IN. “Today, only a small portion of what we do is cut vinyl,” he says. “Ninety percent of what we do is digital-printed.”

Experts say the Stingels’ transition is representative of the pervasive influence of digital technology on the signs business over the last 10 to 15 years. Wide-format inkjet digital printing revolutionized businesses like the Stingels’, and electronic digital signage and billboards rose in popularity. “What we have seen is technological advances increasing the capabilities afforded to people in the business, and we expect that to continue,” says Bill Dundas, director of technical and regulatory affairs for the International Sign Association (ISA). 

Quantifying the exact value of the signs business in America is difficult because the industry is segmented and highly fragmented; everyone from hand-carved sign makers to companies that produce the tall pylon signs that advertise gas prices at the local fill-up station fall under the umbrella. Nonetheless, a 2008 ISA survey determined a ballpark estimate for the industry’s value in 2005 was about $50 billion. Since certain types of signage were not part of the survey, the real value was likely greater.

“There’s a lot of money to be made in signs,” says Dave King, a Massachusetts-based printing and signs consultant. 

The Digital Age

Growing numbers of sign makers started using digital printing technology as it became more affordable, especially within the last 10 years, says King. The change led to a shift from more labor-intensive manufacturing to more efficient tech-driven production. Digital printing also opened up opportunities to create signs in new places, contributed to cross-pollination between the printing and signs businesses and even influenced tastes, industry experts say.

With digital printers, signs are produced faster and with more consistent quality, decreasing the chance of a rerun. “A lot of the bugs are worked out in the technology itself. It’s more reliable and easy to use,” says Dan Marx, vice president of markets and technologies for the Specialty Graphic Imaging Association (SGIA), an international trade association that includes sign businesses

Additionally, manufacturers have at their disposal a full spectrum of colors, enabling them to meet highly specific color requests. “Before, when you were working with vinyl, red was red,” says Stingel.

Now you have umpteen different reds to choose from. There’s a whole gamut of colors.”

With such an expansive palate available, some customers’ tastes are trending toward brighter colors and more intricate designs. “We’re seeing more yellows. Things that catch the eye,” says Ray Titus, CEO of the Florida-based United Franchise Group, whose SIGNARAMA is the world’s largest full-service sign franchise.

Another result of digital technology was that sign makers had to become more computer-literate, signaling a shift from hands-on work to graphic design. “Before, you had someone who was more a machinist, where now you have more of a computer designer,” says Dundas, noting that some production methods, such as blowing glass to shape neon signs, are still labor intensive. 

Armed with the new technology, sign manufacturers now produce digitally-printed graphics on a variety of platforms, from floors and windows to vehicles and tile countertops at fast food restaurants. Wrapping vehicles, the process by which a car or truck is covered fully or partially with digitally produced graphics, is growing particularly popular. In an effort to differentiate themselves, some sign manufacturers are moving away from traditional banners and printing on fabrics like cotton and silk. “With wide-format digital printing, there is almost no limit to where signs can be displayed,” says Dundas.

As digital printing technology came more into play, printing companies and signs businesses increasingly crossed over into each other’s industries, borrowing techniques and looking for ways to expand. “There has been a blurring of the traditional lines between the two industries,” says Marx. “When digital came forward, both started using common technologies.”

Allegra Print & Imaging (asi/372419) of Little Rock, AR. is one business with a stake in commercial printing that recently entered the signs game. The marketing consulting company, whose services also include promotional products and mail services, announced in January that it had bought a local sign shop to diversify. “If I have someone calling me for promotional products, now maybe I can sell them on signs too,” says Darwin Buehler, who co-owns Allegra with his wife Lisa.

Electronic Digital Signage & Billboards

In a market where consumers continue to expect versatility from products, digital signs and billboards are gaining ground. Whereas digital-printed signs feature static graphics created by a digital printer, digital signs and billboards are electrical screens that allow messages to be changed frequently, a significant selling point to potential advertisers. “It’s the big rage,” says King. “People say they don’t want a fixed sign. They want something you can change with the stroke of a key.”

In recent years, these signs appeared in more places than ever before. They’re featured as networked displays in stores, advertising specials. They’re in buildings, pointing the way to exits and stairwells. They’re complimenting primary signs outside pharmacies and hotels. Digital billboards that cycle through advertisements or other messages at 6-to-10 second intervals are proliferating along highways.

“More people are looking into (digital signage), but that’s not to say it will displace other types of signage,” says Dundas.  “For the foreseeable future, we will see a market for more traditional signs.”

And speaking of the market: a January poll of 80 economists suggested that the U.S. gross domestic product will likely rise 3% this year, up from a consensus forecast of 2.3% in November. Sign makers are hoping that brighter economic outlook will lead to revenue growth and more sizable profits. Still, predicting how the signs business as a whole will fare is difficult because of the industry’s segmentation. Some see a half-empty glass, worrying pricing pressures could exacerbate and profits remain flat. Others, like Titus, predict significant growth.

 Marx says many manufacturers of digitally printed signs are buoyed by increased interest from long-time customers who, believing the economy is now in a growth mode, again want to spend. Those sign makers are fueled by a growing eagerness to expand their Internet business and explore new market areas, a push in which digital technology will play a central role. Says Marx, “The general sense is optimistic.”