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Transcript of February 2007 Office Technology
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03OT0107 1/3/07 11:46 AM Page 1
Put it in Writing
Use formal maintenance
& support agreementsby Robert C. GoldbergBTA General CounselWhy should you have a written
agreement? Because it clearly es-
tablishes the rights and liabilities of the parties in-
volved. The dealer who does not have a written main-
tenance and support agreement as part of his transac-
tional documents operates with significant risk.
“Lucky” is neither smart nor prudent.
4 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
CONTENTS
6
8
30
Executive Director’s Page
BTA President’s Message
Advertiser Index
Focus on Financing
Selecting the right
equipment lease providerby Brent HoskinsOffice Technology MagazineThe topic of third-party equip-
ment leasing companies some-
times leads to expressions of
praise, concern and advice. It
also leads to a number of ques-
tions. What are the traits of the
ideal leasing company? What policies and procedures
need to be considered? Who owns the customer? Com-
ments from representatives of four of the industry’s
leasing companies, along with the results of a recent
Office Technology survey, serve to address these and
other pertinent questions.
D E P A R T M E N T S
Volume 13 � No. 8
16 Staying Focused
Should you expand beyond
your core business?by Tom CallinanStrategy DevelopmentAre you thinking of adding products
or services to your portfolio, such as
office products, scanning services, content manage-
ment software or furniture? Such markets are com-
pletely logical options for some copier dealerships at
some point in time. However, some of them should
never be explored by the vast majority of dealers. Before
you venture into any other market, you should answer a
few questions about your current business.
10
20
F E A T U R E A R T I C L E S
Inventory Management
The key lies in real-time
record keepingby Jim KahrsProsperity Plus Management Consulting Inc.Properly managing your inventory is
critical to maintaining a strong pro-
fit margin. Every item that is lost or written off as obso-
lete comes right off the bottom line. That’s pure profit
out of your pocket. The key to minimizing these losses
is in the details of managing your inventory properly.
Problems come about when inventory procedures are
not in place or when they are not followed properly
when they are in place.
Managing Customer Loyalty
Apply continuous process
improvement & increase salesby Bob Cicerone and Chris TathamETC InstituteManagement practices are seldom
subjected to process improvement.
This is most likely to be true in small- to mid-size busi-
nesses. However, it is just as important to improve the
process of management within your company as it is
to improve the processes used to create products and
deliver services.
25
C O U R T S & C A P I T O L S
P R I N C I P A L I S S U E S
24
Selling Your Business
Here’s a foundation
from which to workby Arnie ValenzuelaFIMA 4 Consulting Group LLCSelling a business is just as com-
plicated as the game of golf, if not
more complicated. It can elicit many emotions,
including excitement, relief, doubt, insecurity, fear
and stress. Here is a look at some simple guidelines
that will serve as a foundation to work from as you
consider selling your business.
28
04OT0207 2/1/07 8:19 PM Page 4
EXECUTIVE DIRECTOR’S PAGE
What do you
believe are
the most im-
portant traits in a
third-party leasing
company? While work-
ing on the cover story
for this issue of Office
Technology, I asked the question of BTA
dealers via an e-mail survey. More than 100
dealers completed the survey, with 86 of
them responding to the question. Following
is a sampling of their responses:
� “Honesty, being forthright with leasing
terms and realistic buyout/upgrade figures
at the end of a lease.”
� “They act as partners and understand
their place in the transaction.”
� “A partnership attitude and under-
standing that the dealer is their customer.”
� “Communication with the dealer. If a
customer is unhappy, we need to know it ...
so we can fix it. That way, the lease com-
pany gets to fulfill its lease without compli-
cations and, more than likely, will get the
new lease afterward. Being flexible at lease-
end options with the dealer and the cus-
tomer can result in repeat business.”
� “Correct billing, as requested. Prior
notif ication of lease expiration/auto
renewal. Online meter entry. Have one
service rep who can handle all requests.”
� “Support on both the front end and
back end of the lease. Good communication.
Consistent program and options at the end
of the lease. Flexibility with upgrades. Flexi-
bility with programs. Simple paperwork.”
� “Knowing who the customer belongs
to. Reasonable approval rates. Timely
funding. Creative financing options. Online
capabilities.”
� “USA-based customer service.”
� “Great customer service (to us, the
dealer). Professional treatment of our cus-
tomer. Being able to reach a qualified
person when you call. Quick credit deci-
sions. Reasonable rates. A willingness to
give us the first opportunity to buy the
equipment at the end of the term in lieu of
selling to a wholesaler.”
� “Fairness, honesty and integrity.”
The survey also asked dealers to share
their comments on the topic of leasing com-
panies in general. For a look at some of
these comments, plus additional responses
to the question regarding important traits,
see an extended version of this column on
the BTA Web site at www.bta.org.
Incidentally, the search for the ideal
leasing company has led many dealers to
Greater Bay Capital (www.gbbk.com).
Several years ago, in its own search for a
leasing company to recommend to dealers,
BTA selected Greater Bay as an affinity
partner. Today, the company offers better
rates to BTA member dealers than it does to
non-members. Among the key benefits the
company offers BTA members:
� A lower, one-time documentation fee
charged to the dealer’s customers.
� A notification period in the BTA lease
contract that is only 60 days, as opposed to
“not less than 120 days before the end of the
lease and no more than 180 days” — the
wording in the non-member dealer contract.
� BTA dealer members have the first
right of refusal to buy a piece of equipment
back at the end of the lease term.
If you are interested in learning more
about Greater Bay, contact Kathy Curtin or
Helene Waldman at (866) GBC-BTA1.
— Brent Hoskins
What are the MostImportant Traits?
Executive Director/BTAEditor/Office Technology
Brent [email protected]
(816) 303-4040
Associate EditorElizabeth Marvel
[email protected](816) 303-4060
Contributing WritersTom Callinan, Strategy Development
www.strategydevelopment.org
Bob Cicerone & Chris Tatham, ETC Institutewww.etcinstitute.com
Robert C. Goldberg, General CounselBusiness Technology Association
Jim Kahrs, Property Plus Management Consulting Inc.www.prosperityplus.com
Arnie Valenzuela, FIMA4 Consulting Group [email protected]
Business Technology Association12411 Wornall Road
Kansas City, MO 64145(816) 941-3100
www.bta.org
Member Services: (800) 505-2821BTA Legal Hotline: (800) 869-6688
Valerie BrisenoMembership Marketing Manager
Cathy KentonMembership Sales Representative
Gary HedbergAccounting Manager
Mary HopkinsAccounting [email protected]
©2007 by the Business Technology Association. All RightsReserved. No part of this publication may be reproduced by anymeans without the written permission of the publisher. Everyeffort is made to ensure the accuracy of published material.However, the publisher assumes no liability for errors in articlesnor are opinions expressed necessarily those of the publisher.
6 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
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07OT0207 1/10/07 3:47 PM Page 1
BTA PRESIDENT’S MESSAGE
If you have not done
so already, I encour-
age you to register
today for ITEX 2007,
scheduled for March
21-22 at the Las Vegas
Convention Center .
Hosted by imageSource
magazine, the show will feature approxi-
mately 250 exhibiting companies and 100
hours of education. As a Business Tech-
nology Association (BTA) member, you will
receive a discount off the registration fee.
Instead of $99 for pre-registration, it is only
$79. Just use the promo code GBTA17 when
you register at www.itexshow.com.
BTA will have a significant presence at
this year’s ITEX show. Following is an
overview of our planned activities:
� BTA will have two exhibit spaces at the
show. You will be able to find BTA on the
trade show floor in booth number 244. Drop
by and learn the latest about the association
and its many member benefits. The associa-
tion will also have a membership informa-
tion kiosk in the show registration area.
� BTA is sponsoring six of the many ITEX
education sessions at the show. The BTA-
sponsored sessions include: Service 101:
Making Sure Break/Fix Systems are Opti-
mized; Promoting Your Business: Building
Market Awareness; Solution Selling: A New
Sales Compensation Model; Developing the
Right Product Portfolio — From MFPs to
Prints to Color to Application Software
Solutions; Digital Color: Exceptional Oppor-
tunities for Future Growth; and Contracting
in a Solutions World.
� BTA will present its annual Channel’s
Choice awards during an evening banquet
March 21 at the Aladdin Hotel. Each year,
BTA presents awards to those suppliers that
have distinguished themselves above all
others in key performance categories. The
winners are selected based on the balloting
of office technology dealers who are asked to
rate their primary and secondary suppliers
on a variety of factors within each category.
BTA will be presenting awards in the cate-
gories of product line, marketing distribu-
tion and corporate support. In addition, a
Superior Performance Award will be pre-
sented to the overall primary product line
supplier. Likewise, an Outstanding Perfor-
mance Award will be presented to the overall
secondary product line supplier. (The
banquet will also feature the imageSource
Perfect Image Award presentations).
� BTA Southeast and BTA will host a
member appreciation breakfast on March 22
at the Convention Center. The event will
provide a networking opportunity for BTA
members. The agenda includes a presenta-
tion by BTA General Counsel Bob Goldberg,
“Distribution: Leveling the Playing Field.”
Bob will focus on the need for dealers to
develop a strategy that de-emphasizes the
name on the product, but instead promotes
the name, knowledge and service associated
with the name on the dealership door. Bob
will also discuss the dealer’s legal rights in
regard to unfair competition by suppliers. In
addition, during the breakfast, BTA will
present its prestigious “Dealer of the Year”
awards to three dealerships that have
achieved excellence in business.
� BTA will schedule private, one-on-one
meetings with Bob Goldberg for members
seeking a legal consultation. If you would like
to meet with Bob, e-mail [email protected].
We hope to see you in Las Vegas.
— Dan Hayes
We Hope to See Youat ITEX in Las Vegas
®
2006-2007 Board of Directors
PresidentDan Hayes
Purcell’s Business Products222 E. 1st St.
Campbellsville, KY [email protected]
President-ElectShannon Oliver
25 Wheaton CircleGreensboro, NC [email protected]
Vice PresidentRonelle Ingram
Steven Enterprises Inc.17952 Sky Park Circle
Ste. EIrvine, CA 92614
BTA EastThomas Chin
Accolade Technologies LLC604 Hampshire Road
Mamaroneck, NY [email protected]
BTA Mid-AmericaMike Blake
Corporate Business Systems LLC2018 S. Stoughton Road
Madison, WI [email protected]
BTA SoutheastBill James
WJS Enterprises Inc.3315 Ridgelake Drive
P.O. Box 6620Metairie, LA 70009
BTA WestRock Janecek
Burtronics Business Systems Inc.216 S. Arrowhead Ave.
P.O. Box 1170San Bernardino, CA [email protected]
Ex-Officio/General CounselRobert C. Goldberg
Schoenberg Finkle Newman & Rosenberg Ltd.222 S. Riverside Plaza
Ste. 2100Chicago, IL 60606
8 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
08OT0207 2/1/07 6:17 PM Page 8
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by: Brent Hoskins, Office Technology Magazine
Focus on FinancingSelecting the right equipment lease provider
The topic of third-party equip-
ment leasing companies
sometimes leads to expres-
sions of praise, concern and advice.
Consider this recent comment from
a BTA member dealer: “There are
very good, honest leasing compa-
nies in our industry and just as
many or more with questionable
business practices. It has never
been more important to choose
your partner carefully.”
The dealer is among 110 dealers
who responded to a recent Office
Technology magazine survey on the
topic of leasing. Many offer praise
for their leasing partners. One dealer writes, for example,
that the “Customer for Life” principles of his leasing partner,
GreatAmerica Leasing Corp., are “truly a model for the
industry.” Other dealers use phrases like “dreadful to work
with” and “absolute dishonesty” in describing certain
leasing companies. One dealer figuratively states: “I am tired
of being hit in the head with the butt end of the rifle. I am
aligning our dealership at the present with a leasing
company that shares my pain and will always recognize that
the vendor (dealer) should be the lead entity with our
mutual customer.”
Are the majority of dealers responding to the survey dis-
appointed with their leasing company partners? The answer
is “no.” In fact, 48 percent of those responding to a question
regarding their current, primary leasing partner indicate the
relationship is “excellent,” while another 42 percent indicate
the relationship is “acceptable.” Only 7 percent indicate the
relationship they have with their leasing company “needs
improvement” while 3 percent indicate they are presently
seeking a new leasing company due to a poor relationship.
Whether relationships with
leasing companies are excellent or
poor, collectively, the companies
are dominant players in the office
technology industry. Eighty-seven
percent of the survey respondents
indicate that more than 40 percent
of their total unit placements are
leased devices, including 37 per-
cent reporting that more than 80
percent of their product place-
ments are under lease. “What we
see in data coming from some of
the industry analysts is that the
U.S. copier market is estimated to
be between $8 billion to $8.5 billion
on an annual basis,” says Mark Merkel, president of Wells
Fargo Financial Leasing. “Of that, $6.5 billion to $7.5 billion
is financed in some form or fashion. So, about 80 percent of
the market is financed through leasing, cost per copy or
rental programs.”
The dominance of the leasing option among office tech-
nology dealers is understandable. “They recognize that it’s
probably the best way to put a product out there, because
they (copiers, MFPs, etc.) are not the kinds of assets that
appreciate at all,” says David Pohlman, senior vice president
and general manager of the Office Equipment Division of
GreatAmerica Leasing Corp. “When customers buy these
products, they are essentially buying products that are going
to be used up over time. So, you want to pay for them as they
are providing a benefit to you.”
Given the reliance on leasing companies, where does the
dealer who is seeking a new leasing partner look? One option,
of course, is to seek input from other dealers. The survey
results provide some guidance. Respondents were asked: “If
an industry friend/fellow dealer asked you to recommend a
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third-party leasing company,
which company would you
recommend first?” Eighty-six
dealers offered a recommen-
dation. The top eight were:
U.S. Bank (US Bancorp),
GreatAmerica, De Lage
Landen, CIT Financial, Key
Leasing, Greater Bay Capital,
GE Capital and Wells Fargo.
Rather than simply going
on the recommendation of
others, one needs to take a
closer look at the issue. That is, what are some of the traits
of the ideal leasing company? What questions need to be
asked? What policies and procedures need to be consid-
ered? In recent years, one of the key complaints regarding
leasing companies involves the question: “Who owns the
customer?” It remains a concern. Respondents to the survey
were asked: “Do you believe your third-party leasing
company partner acts as if it ‘owns the customer’ once one
of your customers signs a lease?” Thirty-seven percent of the
respondents answered “yes.”
Related to the issue of customer ownership, the survey
asks: “Does the third-party leasing company notify you of
any lease termination, early payoff or upgrade request?”
Seventeen percent of respondents indicate they get no
such notifications. Also related is the survey question:
“Have you experienced difficulties in the last six months
when upgrading a customer during a lease term or at the
end of a lease term?” Half of the respondents indicate they
have experienced difficulties.
Executives from the first and second leasing companies
on the list of those recommended by dealers are quick to
respond to the question of customer ownership. From Dave
Verkinderen, general manager of U.S. Bank Office Equip-
ment Finance Services: “Our motto is ‘Your Customer, Our
Responsibility.’ We don’t come to work every day thinking
we’re a leasing company. At the end of the day, we’re really a
billing and collecting company. Your lessee is yours and
you’ve given us the opportunity to service it for a period of
time.” From GreatAmerica’s Pohlman: “It’s always the
dealer’s customer. We are simply given the privilege to
service them. At the heart of it, the dealer is our customer
and the lessee is our customer’s customer.”
Kathy Curtin, program manager for Greater Bay Capital,
offers a similar response to the question of customer own-
ership. “Our value proposi-
tion is and will always be
that the dealers are our
customers and we will al-
ways protect their cus-
tomer base ,” she says .
“When we write a lease for
a company, if they ever call
us for a buyout or for any-
thing in particular, we say
‘thank you very much,’ and
then we immediately call
the dealer.”
While it is easy for the leasing company to acknowledge
that the dealer owns the customer, the real proof lies in the
actions of the leasing company, says Mark Schmitt, senior
vice president of Greater Bay Bancorp. “The dealer should
ask, ‘Do you send offers directly to customers to finance
products through you?’” he explains. “At Greater Bay, the
answer is ‘no.’ We never call the dealer’s customers. We
never send brochures soliciting them with ‘the next time
you are getting something, call us.’”
Bad experiences with leasing companies circumventing
the dealer by seeking ownership of the customer (lessee) are
sometimes facilitated through lengthy automatic lease
renewals. The survey asks: “What is your third-party leasing
company partner’s automatic renewal provision listed in its
contract?” The largest number of respondents to the ques-
tion — 48 percent — indicate that their primary leasing
company partner has a month-to-month automatic
renewal. However, 33 percent indicate that the renewal is
annual. The remaining respondents selected either “I don’t
know” (10 percent) or “quarterly” (9 percent).
Several survey respondents share comments specifically
expressing concern with automatic lease renewals. One
dealer states: “End-of-lease terms should be consistent from
leasing company to leasing company and clearly under-
standable to everyone involved with the lease transaction.”
Another dealer states: “I’m amazed how deceptive many
leasing companies are when surprising customers with
automatic renewals.” Yet another simply states: “We need
clearer lease-end terms.”
Fortunately, month-to-month renewals are becoming
more common among leasing companies. “Our standard
approach is that we would, on the last invoice, notify the
lessee that it is their last scheduled payment and that the
transition will go into renewal, but it goes on purely a
“... The dealers are ourcustomers ... When wewrite a lease for a company, if they ever callus for a buyout or for anything in particular, wesay ‘thank you very much’and then we immediately call the dealer.”
— Kathy CurtinGreater Bay Capital
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12OT0207 2/1/07 7:59 PM Page 1
month-to-month basis,”
says Pohlman. “There is no
12-month lock. Anything
that has the GreatAmerica
name on it is always month
to month.”
The survey results reveal
additional concerns beyond
those related to automatic
renewals. Also among the
questions and responses:
� “Do you always know
the true residual amount on
all fair market value leases at the time the lease is signed?”
58 percent of the survey respondents answered “no.”
� “If you answered the previous question with ‘yes,’ for
each asset leased, do you have an agreement documenting
that you can buy the asset for that amount?” 41 percent of
the survey respondents answered “no.”
The results of these two questions and others point to
some important advice to any dealer seeking a new leasing
partner — get all of the details up front and in writing. “We
believe every dealer should have an agreement with his or
her leasing partner that clearly spells out how the relation-
ship works,” advises Merkel. “‘What are the fees? What are
the buyouts? How do trade-ups work? What happens if the
relationship ends?’”
Verkinderen offers a similar comment. When U.S. Bank
begins working with a dealer, “we tell them, ‘let’s make sure
we contract how we are going to work together,’” he says.
“‘Let’s not leave anything open-ended. Let’s talk about all
the different ways that we’re going to interact and let’s con-
tract and make sure that we understand.’”
The dealer who strives to thoroughly understand the
practices, policies and procedures of a new leasing company
will also likely uncover additional, welcome benefits. Com-
ments shared by Curtin provide some examples. “If the
dealer wants to build in a cost of, say, $50 a month for
service on a $150-per-month lease so that the customer only
sees one bill for $200, we automatically strip out the $50 and
send it to the dealer every month at no charge,” she explains.
“Another benefit would be that Greater Bay rebates
unearned interest on early buyouts as opposed to changing
the sum of the payments plus the residual.”
Finally, any discussion on the pros and cons of office
technology equipment leasing companies must also
include the problems arising from “low-ball” rates. Among
the survey respondents ’
comments on the topic:
� “Low rates seem to
come with stringent auto-
matic renewal policies. Are
the leasing companies allies
or enemies of the dealer?”
� “There is no free lunch.
You cannot have the lowest
rate up front and expect to
control the back end.”
� “It is my opinion that
too many leasing companies
are offering low rates, but making their profits with fees,
interim rent and lock-in renewals.”
Merkel advises dealers to consider a simple equation.
“Dealers ask me, ‘How can one company offer a rate that is
so much lower than another company?’” he says. “When you
present a balance sheet of how a financial company works,
they all look exactly the same. You have interest income and
other income, and you have interest expense and other
expense. That’s the only equation there is. So, if one of the
leasing companies is taking less interest income, where is
the other income coming from? That’s the question dealers
need to be asking.”
Pohlman agrees. “My primary advice to a dealer would be
to look at the economics of what the source is offering you
and just simply do the math,” he says. “If the sum of the pay-
ments that they are going to receive back doesn’t even cover
what they are paying you, be concerned. Because, clearly,
other things are going to have to happen in order for that
leasing company to get a return.”
Facing the problem of some leasing companies soliciting
business directly from dealers’ customers, charging extra fees
and utilizing annual automatic renewals, what do the dealers
see as the important traits of the ideal leasing company? The
survey asks the question. One respondent succinctly states
the ideal scenario: “We would like for it to be a positive expe-
rience for our customer. Leasing should be a value-add for the
customer, not a ‘gotcha’ every chance the [leasing company]
gets. Correct billing, timely communication,
clearly-stated terms and any hint of a part-
nership would be fantastic.” �
Brent Hoskins, executive director
of the Business Technology Association
and editor of Office Technology,
can be reached at [email protected].
“We believe every dealershould have an agreementwith his or her leasingpartner that clearly spellsout how the relationshipworks. ‘What are the fees?What are the buyouts?How do trade-ups work?...’”
— Mark MerkelWells Fargo Financial Leasing
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14OT0207 2/2/07 12:01 PM Page 1
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by: Tom Callinan, Strategy Development
Staying FocusedShould you expand beyond your core business?
Are you thinking of adding products or services to
your portfolio? Office products, large format
printers, facilities management, scanning services,
copy services, content management software, furniture — I
could continue with the list of what I see traditional copier
dealers adding to their offerings. The reasoning is usually a
diversification strategy aimed at increasing revenue or
profit. It almost seems like a plausible strategy since you
can rationalize that all of the offerings are directed at the
same business customer. What is difficult to rationalize is
how these decisions strain a company’s resources, both
management resources and capital resources.
Some of these adjacent markets are completely logical
options for some copier dealerships at some point in time.
However, some of them should never be explored by the vast
majority of dealers. Before you venture into any other market,
you should answer a few questions, including: How am I doing
in my core business? What is my overall market share? How
far outside of my core business is the market I am considering?
What is the best use of my capital?
First, what is your core business? You can answer that
question by examining the skills and knowledge of your
employees. In the copier industry, some of the skills that
define our core are knowledge of leasing, buyouts, copier
features, aftermarket costs, total cost of operation, cycle
billing, dispatch, onsite service, parts logistics and dozens of
other well-developed processes supported by employee skill
and knowledge.
If you have 3 percent of the copier market share in your
marketing geography, I would focus on making market
share gains by staying close to your core rather than moving
into an adjacent business. Simply put, focus your manage-
ment resources and capital on gaining more copier (MFP)
customers — it is the business you know. This does not
mean you should not make investments outside of your area
of competence. If your company’s strength is in selling to the
office segment, continue to drive additional market share
gains in this segment but explore making investments in
major accounts or GEM sales professionals. Once you have
major accounts and GEM accounts tackled, expand into
production color and production black-and-white products.
Sure, production devices are copier/printers just like you
are already selling, but they require a different sales
approach with a focus on applications and software, and
they will require a higher level of technical support, both
pre- and post-sale.
You now have the office segment covered, as well as
major accounts and GEM accounts, and you are supplying
your customers with their black-and-white copiers, B2C
products, production color and production black-and-
white, including their CRD and data center output devices.
Your market share is approaching 10 percent and you want
to expand with the idea of adding either a print manage-
ment offering or opening an office in a city 40 miles away.
Now you have it — your core offering is on solid footing, you
have expanded into some adjacent markets and you are
16OT0207 1/29/07 2:24 PM Page 10
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exploring two options that are one addi-
tional adjacency away. As long as you
have the management and capital
resources, regardless of which of these
two options you choose, you have the
competency to execute the decision you
have made.
Why do I think these two moves are
one adjacency away from your core
business? To open the office 40 miles
outside of your current geographic marketing area, you have
to add market knowledge, bring your logistic capabilities up
one notch, and — assuming it is your first remote office —
develop your management skills so you can handle remote
employees. You are not adding any employee type you do
not already have in your organization and you possess all of
the industry skills and knowledge required for success. To
sell print management, you get to use the operational,
logistic and service skills you have developed in the copier
industry. You can utilize the same sales force, and the
leasing and aftermarket aspects will be the same. You need
to develop product knowledge and market knowledge — not
a new employee type. It is somewhat subjective, but I con-
sider the additional requirements minimal to an immediate
adjacency to your core business.
When are you getting outside of your core business? The
first sign is that you have to hire people that have a com-
pletely new skill set (outsourced or employees). For
example, you are hiring designers and installers for furni-
ture sales, or production personnel for scanning or copying.
Another sign is that you are investing in different assets.
For example, high-speed scanners, dedicated servers or new
software. Another indication is that you need to hire a spe-
cialized sales force: an “experienced” manager to launch the
product, and completely different sales professionals to sell
the product to your own customers.
The less transferable the current skills, the farther outside
your current core you are getting. For example, training a
competent copier rep who is technology savvy, organized
and good at research to sell major accounts or production
requires some additional training, but much of his or her
current product and tools knowledge will transfer. Training
this same rep to sell furniture or FM will require significant
additional training and little to no transfer of his current
product and tools knowledge.
You may be wondering at this point if I am just some out-
dated “copier guy.” I do believe the copier industry is a great
business but I hope that does not earn
me a label. A well-run dealership will
produce returns in the mid to high teens
— that is a solid business model. Never-
theless, I believe there is great opportu-
nity in print management, wide format,
many software enablers — like variable
data printing — and, in certain dealer-
ships, even facilities management. I just
do not believe that moving into adjacent
businesses is a substitute for good management or focus to
gaining market share. I ran a $31 million professional services
business, a $55 million offsite FM business, and a $200 million
on-site FM business. I am not giving this advice because I lack
knowledge or comfort in these other market spaces.
So, how do you protect your customer base against larger
players that offer your products along with other products
or services your customers might use? Partner with strong
local companies that are not a threat to your core business.
Take the owner of a company that supplies engineering
firms, including wide format printers, out to lunch. Reach
out to the owner of a VAR that specializes in content man-
agement and workflow and develop an alliance with him or
her. Work out how you will engage one another; talk about
the total sales process — from first meeting through any
analysis to installation and training — so there are not any
surprises. Discuss how you will approach billing the cus-
tomer and getting each other paid. Talk about combined
leasing. What will ongoing support look like? This is not an
article on strategic alliances, but you get the idea.
Get successful in the copier industry and by all means
expand into adjacencies as fast as is logical — building com-
petence and market share in each area as you travel outside
your core. Being a marginal player in multiple businesses
will only drain your resources and produce much smaller
returns. You are taking all of the risks of entrepreneurship
so you deserve to earn a nice profit. Staying close to your
core will help you achieve your profit goal while providing
the cash required when you are ready to expand. �
Tom Callinan is the managing principal of Strategy
Development, a management consulting and advanced sales
training firm. From 1998 to 2005, he was an
executive with IKON Office Solutions.
Prior to that he was the founder and CEO
of Copyfax Inc. He can be reached at
Visit www.strategydevelopment.org.
You are not adding anyemployee type you do not already have in your organizationand you possess ...skills and knowledge required for success.
18 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
18OT0207 2/1/07 2:50 PM Page 18
The BPCA was founded in 1963 with the vision of
forming a best practices organization that unites
leaders of independently-owned office equipment
dealers. The concept is quite simple - bring the
leaders of these companies together so that they
can share ideas, learn from each other, and take
their businesses to the next level.
Our members will attest that it’s well worth the
investment by making each of them better leaders
and bringing more value to their dealerships.
Feel like there’s something missing from your
organization? Let BPCA bring together all the
pieces of the puzzle.
Piecing Ideas Together.
If you’d like more information about our
organization and how to join, please send
us an email or give us a call.
Phone: 800.897.0250
Email: [email protected]
Website:
www.businessproductscouncil.org
Membership Director BPCA
c/o BTA
12411 Wornall Road
Kansas City, MO 64145
“Better Dealers Through
Learning and Idea
Exchange.”
31OT0107 12/18/06 2:51 PM Page 1
20 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
by: Jim Kahrs, Prosperity Plus Management Consulting Inc.
Inventory ManagementThe key lies in real-time record keeping
This time of year, many dealers
are spending time with their
accountants getting their IRS
tax returns ready. When it has been a
good year, the discussion quickly
turns to finding ways to reduce the tax
burden. One common strategy for
achieving this is writing off inventory.
I am often amazed at the enthu-
siasm and excitement that some
dealers display when they realize they
can reduce their taxes by writing off
$50,000 of inventory. Can you imagine
having the same reactions with other
parts of your business? “Luckily we can write off the $50,000
we had in the money market account since the bank went
belly up.” Sounds a little crazy doesn’t it?
Properly managing your inventory is cr it ical to
maintaining a strong profit margin. Every item that is lost or
written off as obsolete comes right off the bottom line.
That’s pure profit out of your pocket. The key to minimizing
these losses is in the details of managing your inventory
properly. Problems come about when inventory procedures
are not in place or when they are not followed properly
when they are in place. Whether you use one of the software
systems designed for the office systems industry or a more
generalized package, it is critical that you keep the system
fully updated at all times. If an inventory item physically
moves, it must be reflected in the system. For the balance of
this article, I will outline the general concepts for you to
understand and some common mistakes to avoid.
The first thing to understand is that the physical move-
ment of any inventory item, whether it is equipment, acces-
sories, supplies or parts, must be reflected in your computer
system as close to real time as possible. You want to be able
to look in the system and see exactly where every piece of
inventory is right now. The further you
get from real time with computer
entry delays, the bigger your problems
will be. The immediate result is a staff
that does not trust the inventory
counts in the system and thus does
not use them. Imagine if you tried to
make f inancial decisions with a
checking account balance that was
three days or three weeks old. If the
deposits that have come in and the
checks that were written are not in the
checkbook, you would literally have no
idea how much money there is. The
same thing happens with inventory entry delays.
In addition, your system tracks inventory purchases step
by step through the process. If earlier steps in the process
are not completed on a timely basis, later steps cannot be
completed properly. For example, if a purchase order is not
entered in the system at the time the order is placed with
the vendor, then the product cannot be properly received
when it arrives.
Steps to Follow in Sequence� Create a purchase order in your system for any product
that has been ordered.
� Receive the incoming product in your system against
the purchase order.
� Accounts payable posts the vendor invoice to the pur-
chase order when it is received and pays the invoice when it
is due.
� Inventory movement:
Equipment — If inventory is moved to a demo room, to
another office, to a customer for demo or billing or to any
other location, it must be either transferred to the new loca-
tion or billed to a customer immediately.
20OT0207 1/30/07 8:18 AM Page 10
Supplies — Any time supplies are
taken from the shelf, they must be either
billed to a customer or transferred to
the location they are going to. This
applies to any and all supply movement,
including supplies taken for set up,
service issues, etc.
Parts — Any time parts are taken from
the shelf they must be transferred to the
technician they are going to. Typically
this is done when the parts are pulled and put aside for pick
up. When a technician installs a part in a customer- or
company-owned machine, the part must be listed on the ser-
vice ticket and entered when closing the call. This bills the
part to the customer or against their maintenance contract.
Typical Problem Areas to Avoid� The first problem occurs when product is ordered and a
purchase order is not entered in your system. In this scenario,
the product often shows up and cannot
be properly received in because there is
no purchase order to receive the product
against. The problem is often com-
pounded by a need to get the product to a
customer so it is immediately taken from
the warehouse without being billed or
transferred. Since it was never received in,
it cannot be billed or transferred.
� Problem two comes when the in-
voice arrives. If no purchase order was entered and/or the
product was not received in, the vendor invoice cannot be
posted and paid. This creates the need for forced payments
or other work-arounds, which leads to al l sorts of
accounting and vendor credit issues.
� When a purchase order is not entered and/or the
product is not received, it cannot be billed. This creates
issues that lead people to get creative. I’ve seen dealers
create new machines and put in the serial numbers just to
w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7 | 21
Any time supplies aretaken from the shelf,they must be eitherbilled to a customer or transferred ...This applies to any andall supply movement ...
v i s i t u s a t w w w . d o c s t a r . c o m
o r c a l l 8 0 0 . 3 6 7 . 5 9 0 6
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Solution for your customers.
docSTAR CP:
�Reinforce your position as your customer’s technology supplier.
�Natural extension for MFP - launch pad for document management.
�Easy product for your reps to learn and sell.
�Minimal upfront investment required - “plug and play” appliance.
21OT0207 2/1/07 2:56 PM Page 21
get an invoice out. Unfortunately, this
wreaks havoc because the original pur-
chase order still needs to be processed,
received and paid. Now you have got
duplicate entries and an inventory mess,
not to mention cost of goods issues
from the creation and bi l l ing of
phantom machines with incorrect costs.
� Failure to properly transfer parts can
be a problem for your inventory, as it
throws off inventory quantities. For example, Part A is taken
from the shelf and given to Technician One without doing the
transfer in the system. At the time, the warehouse only had one
and the tech did not have any. Now the main warehouse still
shows one even though it is not there and Technician One’s
inventory still shows zero. The tech now installs Part A in a cus-
tomer machine and closes out the call. The final result is that
the warehouse still shows one Part A that is not there and the
technician inventory shows minus one. The overall dollar value
of the inventory is correct, but both phys-
ical counts are wrong. Now multiply this
by hundreds of parts for each technician.
� Supplies that get used in the office
or in demo machines often do not get
transferred or billed out and throw off
the inventory counts and value. This also
happens with new equipment setups.
� Exchanges of defective supplies
often get forgotten. In an effort to help
the customer, the swap is done outside the system. The
proper way to handle this is to bill the customer for any
replacement supply item that is shipped or delivered and
then issue a credit when the defective item is returned. The
invoice does not have to be mailed to the customer since the
credit will offset it, but at least you will have a proper paper
trail showing what happened. If the defective part does not
come back, the invoice will age and hit the accounts receiv-
able radar.
� Machine/accessory exchanges should be handled the
same way as supply exchanges. Bill the new machine or
accessory that is shipped and credit the one that is returned
after it makes it back to the office.
There are probably hundreds of variations of these prob-
lems that cause inventory inconsistencies. Once again, the
key is to make sure that you keep the computer system in
real time. Do not allow data entry backlogs.
One final note — you should do regular physical inventory
counts and fully reconcile them when you need to. They
allow you to identify the procedural breakdowns that create
inventory issues. How to properly conduct a physical count
would be a topic for an entire article on its own. If you are
not sure how to do one, you can always check with your soft-
ware vendor or call us for some advice.
Though you may lose an easy write-off, understanding and
streamlining your procedures while avoiding the common
inventory problem areas can and will add to your year-end
profitability. Once you get things rolling in this area, the next
thing to tackle is properly setting aside money throughout the
year to pay the taxes due on all of the profits you will make. �
Jim Kahrs is the founder and president of Prosperity Plus
Management Consulting Inc.
PPMC works with office technology
companies in building revenue and
profitability. Kahrs can be reached at
[email protected] or (631) 382-
7762. Visit www.prosperityplus.com.
22 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
Supplies that get used in the office or in demomachines often do not get transferred or billed out and throw off the inventory counts and value.
22OT0207 2/1/07 4:02 PM Page 22
Recently, while meeting
with several well-estab-
lished dealers, the ques-
tion arose as to whether formal
written maintenance and
support agreements were nec-
essary. One dealer confessed
that all his company does annu-
ally is send out invoices for
maintenance and support .
There are no terms or condi-
tions for the services being per-
formed. The dealer boasted,
“We have never had a problem.”
All eyes slowly shifted to me and
finally I was asked: “Well?”
For years I’ve paid premiums for life insurance and fas-
tened my seat belt when driving or riding in a vehicle. Fortu-
nately, there has not been a payout on my life insurance
policy, nor have I been in a serious car accident. Regardless, I
will continue to pay premiums and click my seat belt. Selling
maintenance and support without a written agreement is
exposing your business to claims and damages that could
easily be avoided. The dealer who does not have written main-
tenance agreements has been very lucky. Unfortunately, that
luck can change with just one claim.
Why should you have a written agreement? Because it
clearly establishes the rights and liabilities of the parties
involved. We live in a litigious society and the absence of
protections could be a costly mistake.
My first question to the dealer was about his hours and
days of service. They were the same as our business hours —
and if we are open for business, we are available for service.
With many businesses operating seven days a week, this may
present a problem. The customer, who is unable to have its
equipment repaired on Saturday when the dealership is
closed, may experience two days of damages. The dealer has
nothing to establish hours or days of service, off-hour service
rates, or limitations on damages.
Equipment is often damaged because of extraneous events
like fire, flood, electrical surge or even simple negligence.
Without a written agreement,
the dealer would be required to
maintain the equipment in all
situations. There would be no
agreement to rely on if the cus-
tomer sought uncovered re-
pairs. This is also true for the
improper use of supplies or
damages resulting from a third
party’s attempted repairs.
The greatest concerns,
however, are the implied war-
ranties of merchantability and
fitness for purpose and use.
These warranties are part of the
Uniform Commercial Code and
become part of every sale of goods. “Warranty of mer-
chantability” requires that goods be of a grade and quality
expected for the type of product it is. Thus, if the product has a
defect, or if it fails to perform properly, it may be considered
“not merchantable” and rescission of the sale — plus damages
— could be sought.
As a vendor of specialized systems, you are an authority
regarding the products you sell. When you qualify a customer
and recommend a solution, you are saying that your solution
is proper for the customer’s purposes and use. This process
creates another implied warranty. Again, if the customer
becomes unhappy, he may claim a breach of the implied
warranty of fitness for purpose and use. Without contractual
language that eliminates these implied warranties, you have
no protection against these claims.
The dealer who does not have a written maintenance and
support agreement as part of his transactional documents
operates with significant risk. “Lucky” is neither smart nor
prudent. One successful claim can wipe out the rewards from
years of hard work. Use and update your
transactional documents and don’t forget to
fasten your seatbelt. �
Robert C. Goldberg is general counsel for the
Business Technology Association. He can be
reached at [email protected].
by: Robert C. Goldberg, General Counsel for the Business Technology Association
COURTS & CAPITOLS
Put it in WritingUse formal maintenance & support agreements
24 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
24OT0207 2/1/07 4:09 PM Page 24
Management practices are seldom
subjected to process improve-
ment. This is most likely to be
true in small- to mid-size companies. The
management practices established early in
the life of a company often continue with
little change as the company grows in size
and complexity. However, it is just as
important to improve the process of man-
agement within your company as it is to
improve the processes used to create prod-
ucts and deliver services.
Some of the benefits of applying process
improvement to management practices
include: increased sales; improved cash
flow and enhanced profits; reduced cost of
re-selling to lost or at-risk accounts; better
business decisions because more complete
information is available about the market’s
evolving expectations; conditions that
jeopardize efforts to increase sales and
profitability can be found and eliminated; strengthened com-
petitive position; increased number of loyal customers; and
less time spent reacting to fires created by upset customers.
This article describes six steps of an effective process
improvement method that reveals where opportunities exist
to improve management practices that control customer
loyalty. This method is based on a comprehensive model of the
factors that influence customer loyalty.
According to the model, customer loyalty and disloyalty
result from customers’ experiences at six critical points of
contact with a supplier. Management practices determine cus-
tomers’ experiences at these six points of contact. The equa-
tion below describes this.
The process for managing customer loyalty consists of thir-
teen factors grouped into three sets. The first set consists of
seven factors that control the job performance of individual
employees. These include expectations (the standards that
customers use to evaluate products, services and their interac-
tions with a supplier’s personnel); feedback (data showing
how well customers’ expectations have been met); conse-
quences (what happens to employees when customers’ expec-
tations are met — and when they are not met); abilities (skills
required for job performance to meet customer expectations);
resources (tools, procedures and materials required to
perform as customers expect); capacity (physical capabilities
required to perform as customers expect); and preferences
(willing to perform as expected under the physical and social
conditions that exist at the job site, for the rewards that are
available when performance meets or exceeds expectations,
and for the available compensation and fringe benefits).
The second set of factors controls the output of work
processes. These factors are the number, sequence and diffi-
culty of steps to perform a task, how well the job performance of
internal suppliers meets the requirements of their internal cus-
tomers and how closely the specifications for the output of a
Managing Customer LoyaltyApply continuous process improvement & increase sales
by: Bob Cicerone and Chris Tatham, ETC Institute
PRINCIPAL ISSUES
w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7 | 25
25OT0207 2/1/07 9:28 AM Page 25
work process meet the requirements of the
internal and external users of that output.
The third set of factors controls the job
performance of every employee. These
include a performance appraisal process
that holds all employees accountable for
meeting the expectations of their internal
and/or external customers, compensation
practices that recognize employees whose
job performance consistently meets the
requirements of their internal and external customers and a
mission statement that explicitly dedicates a company to sat-
isfying its customers.
Customer loyalty is either under-managed or entirely
unmanaged when a management team lacks information
about opportunities to strengthen customer loyalty to the
company. Management practices that inadvertently result in
employees working in ways that upset customers or make it
difficult for other employees to serve customers can negatively
affect customer loyalty.
Follow these six steps to determine if
any opportunities exist to strengthen your
company’s management practices that
impact customer loyalty.
Step 1: Select positions in your company
that have a significant impact on cus-
tomer loyalty.
Step 2: Answer these questions as they
apply to the employees in the positions
you selected in Step 1:
� Do these employees know, in detail, those features your
core products and/or services must have in order for
prospects and customers to buy from you instead of from one
of your competitors?
� Do these employees know the standards their work unit
must achieve in order to consistently meet the requirements
of prospects, external customers and internal customers?
� Do these employees know, in specific detail, how
prospects and customers expect to be treated by your
company’s employees?
� Do these employees have current information about how
closely your core products and/or services meet customer
expectations? Does their work unit’s performance meet the
requirements of internal customers?
� When the job performance of these employees consis-
tently meets the requirements of their external and internal
customers, are these employees regularly given non-financial
recognition such as appreciation, praise and thanks?
� When these employees consistently annoy or upset their
external or internal customers, do their managers deal effec-
tively with this?
� Do the current procedures for selecting people for this
position show whether candidates have all the skills and
knowledge needed to meet the requirements of the external
and internal customers of this position?
� Do these employees always have the equipment, mate-
rials, supplies, work space, procedures and tools in the quan-
tity and quality needed to consistently meet the requirements
of their external and internal customers?
� Are the work procedures used by these employees regu-
larly reviewed to determine if their outcomes would improve
by eliminating unnecessary steps, combining steps, changing
the sequence of steps, simplifying the steps or eliminating
boring repetition?
� Does the performance appraisal/review process clearly
and explicitly hold these employees accountable for how well
their individual job performance meets the requirements of
Customer loyalty is either under-managedor entirely unmanagedwhen a managementteam lacks information about opportunities to strengthen ... loyalty.
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26OT0207 2/1/07 9:51 AM Page 26
w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7 | 27
their external and/or internal customers?
Step 3: Answer the questions in Step 2
as they apply to the positions that manage
the positions you selected in Step 1.
Step 4: For each ‘No’ answer in Steps 2
and 3, identify how the current situation
could hurt your company’s efforts to
attract first-time buyers, convert first-time
buyers into customers, retain existing cus-
tomers and increase the value of purchases
by existing customers.
Step 5: Review your answers to Step 4; if the negative conse-
quences identified in Step 4 are unacceptable, revise your
company’s management practices as appropriate.
Step 6: Continually work on fine-tuning your company’s
management practices that control customer loyalty by
repeating Steps 1–5 each and every year.
Applying process improvement methodology to manage-
ment practices will uncover weaknesses that threaten your
company’s success in attracting first-time buyers, creating
loyal customers and enhancing internal
communication and teamwork. These are
weaknesses that previously might have
been unknown. By eliminating them, you
will be better able to meet and exceed your
market’s expectations. The critical result
will be accelerated growth in your cus-
tomer base and sales. Other benefits of
applying process improvement to man-
agement practices include: strengthened
competitive position; fewer fires created by upset customers;
and fewer resources spent acquiring new customers to replace
those who have switched to another supplier.�
Bob Cicerone is director of customer loyalty services and Chris
Tatham is chief operating officer of ETC Institute in Olathe,
Kansas. The firm’s market research services provide
information that helps organizations to make better decisions.
They can be reached at (913) 829-1215 and by e-mail at
[email protected] and [email protected].
Visit etcinstitute.com.
Applying processimprovement ... willuncover weaknessesthat threaten your company’s success in attracting first-timebuyers ...
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It was a sunny but cold autumn
day and I was golfing with one of
my best clients. My golf game was
atrocious as I had just completed my
tenth straight hole of horrible golf. As
I stepped up to the par-four eleventh
hole, I decided to stop thinking and
just swing.
I did not awaken from my golf
stupor to f igure out that my
problem was I was making the game
too complicated with focus on grip,
tempo, head position, etc.; actually, I saw how wide open the
fairway was and decided just to give it an easy swing. Guess
what? That swing — and seven more tee shots just like it —
yielded me one of my best nine holes. I made it simple and
kept to the basics and focused on one thing, relaxing.
Selling a business is just as complicated as the game of golf,
if not more complicated. Many people leave a seminar on this
topic with a 5-inch binder in hand and are afraid to engage in
the activity due to the fear of missing something. No matter
the subject, complexity breeds confusion and constricts
natural flow. The subject of selling your business can elicit
many emotions including excitement, relief, doubt, insecurity,
fear and stress. The objective of this article is to provide you
with simple guidelines that will serve as a foundation to work
from as you consider selling your business.
One of my favorite technologies is the GPS system on a golf
cart. In a split second, you get a complete lay of the land, how far
away you are from the hole, distance to hazards and distance
over hazards. Consider a GPS bringing an unseen hazard into
your shot planning. Today’s market for selling a business is analo-
gous to the golf course and there are a few hazards (market
trends) you should seriously consider as you plan for your future.
The first is the impact of baby boomers on the market. Of
the estimated 11 million businesses in the United States, 95
percent are private, 95 percent generate less than $5 million,
collectively they generate more than 65 percent of our GNP
and they employ more than 61 percent of our workforce. Baby
boomers represent 30 to 35 percent of our population and
dominate nearly every demographic pattern of spending and
investing that is tracked. What this
phenomena means is that the
market for selling your business will
be entirely different over the next 10
years and you need to prepare well
in advance for it.
Simple economic truths of supply
and demand are impossible to
ignore. Plainly stated: There will be
more businesses for sale than ever
before and this could create a glut
that will most likely manifest itself
in lower prices regardless of historical valuations from the
past five and 10 years. An example of this is real estate. Today,
the market is falling due to a flood of homes on the market.
The result is ominous. A recent BusinessWeek.com article
states: “Housing starts will see double-digit depreciation, the
sharpest decline since 1991, the worst year for housing starts
on record. While new home sales will be down for the year,
existing home sales will also be flat.”
As your virtual caddy, I suggest the following simple six-
point strategy to get around this evaluation hazard. These six
points will allow you to relax and take an easy swing and not
get stuck in the complexity of a 5-inch, three-ring binder.
The Feel of the Club: The Empathy View — Operate with
empathy. You must always remember — as a recent Axiom-
Valuation.com article states — that the “value of your business
is based on his (the buyer’s) future expectations of the busi-
ness performance and the history is context. He is buying the
assets of your business so he can hopefully get a better return
than you.” This does not mean that past performance should
not be a major selling point. It means the method you
employed to obtain that performance is more important. Can
it be repeated and improved upon in a scalable, predictable
manner? The buyer needs to see a go-to market strategy that
can be repeated consistently so his (or her) future expecta-
tions of return will be delivered.
Swing Naturally: Don’t Over Think It — Just like I could
not figure out why I had 10 poor tee shots, I once had a client
who could not figure out why his past two years of sales had
declined in the midst of a hot market for their product. My
Selling Your BusinessHere’s a foundation from which to work
by: Arnie Valenzuela, FIMA 4 Consulting Group LLC
PRINCIPAL ISSUES
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segmentation (client, channel, product, order size, order
volume) review brought to light the cause. The client’s past
success had come from large, complex manufacturing clients
within two industries. Instead of relaxing and finding any new
needs of his best customers, he decided to complicate things
and create a new market. His company shifted its focus,
eroding its position in the market. Before the shift occurred,
the company generated its revenue from a small group of com-
panies and orders. The shift caused 60 percent of revenues to
come from 5 percent of the customer’s base, but the company
had to deploy 80 percent of its resources to secure the
remaining 40 percent at lower profits.
Swing Statistics: The Segmentation View — I recall a
time in 2006 when Tiger Woods was standing over a putt of
three feet. The commentator rattled off a statistic that easily
predicted the outcome of his putt. Woods had never missed a
putt of that length during a final round in his entire career.
Imagine his level of confidence and predictability as he stood
calmly over the putt. Great golfers keep track of every statistic
(percent of drives in fairway, number of putts, length of putt,
type of grass) in order to assist them in predicting outcomes.
Before you entertain a buyer’s offer, conduct due diligence
on your company. It may reveal similar data. I suggest hiring
an outside consultant to perform this analysis as you may or
may not want employees to have access to such valuable data.
Just like swing statistics, you should have segmentation visi-
bility in the following areas: revenue, profit, product, distribu-
tion, region and sales force. Determine which 20 percent
represents your 80 percent and then stack rank the results.
Swing Analysis: How Far Do You Hit the Ball? — The first
step to discovering your predictability will aid you in posi-
tioning your company in a unique way. Look at customers for
similarities, such as: size of company, public/private, revenues,
stage (start up, mature) of life, SIC/NAIC, geography and
common need. The similarities in my client’s 20 percent
included an 86 percent repeat order for five consecutive years
with only a 7 percent turnover.
A solid go-to-market strategy also includes a complete
understanding of how each product is performing over several
years to reveal the market’s acceptance of its value over mul-
tiple business cycles. Consider reviewing performance much
like an investment portfolio is viewed. How did the product
perform in up, flat and down markets? Remember that my
client obtained 80 percent of his profits from only 5 percent of
his customers. More than 50 percent of revenues were from
one product line — the one that was being replaced by the
shift. Better you than them discovering this.
Your Short Game: How Accurate Are You? — The most
®
Scholarships for use at colleges or accreditedvocational trade schools are available
to the sons and daughters of BTA retail dealerand reseller members and the sons anddaughters of their full-time employees.
Scholarship recipients are chosen by an impartial and independent evaluator.Completed applications must be received at
BTA by May 1. To obtain a scholarship application form, contact Mary Hopkins [email protected] or (816) 303-4031 or write
to: BTA Scholarship Foundation, 12411Wornall Road, Kansas City, MO 64145.
BTA Can Help.
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29OT0207 2/2/07 11:58 AM Page 29
critical of all sets of data is the profit. This
is what a buyer will base his investment on
— the small pool that creates 80 percent of
the projected profit — the cash flow. What
do these customers buy, when do they buy
and why do they buy? The answers will
provide your most treasured possession,
proven buying disciplines of your most
profitable customers.
Who are your best salespeople and what
methods do they employ to create your most profitable sales?
Before you offer to sell, document the key sales methods, trim
the unproductive sales force and then deploy the methods to all
customers and measure the results. This will provide comfort to
the buyer that his investment has proven tactics to produce
high-profit transactions with validated disciplines.
Go On Tour: Offer for Sale — The market you will be selling
in is crowded and harshly competitive. The boomer phenomena
will create a situation where many companies are listed but never
sold. You have to market the one trait that makes your asset so
attractive — so attractive that it cannot be compared to the
others. Discovering these secrets about your success will be that
edge you will need and give you more control over who you will or
won’t sell to. If you have 100 accounts that produce 80 percent of
your sales from companies with very defined characteristics (i.e. ,
2 to 3 years old, 25-50 employees, $5-10
million in sales, two SIC codes in 10 ZIP
codes) that generate 60 percent of your total
profits, you are now in the position to sell
that company at a premium to the investor
who can be assured your predictable systems
will out-perform his risk.
As the old axiom states: “Drive for show
and putt for dough.” A golfer does not get on
tour without first attending Qualifying
School and proving he can consistently make the cut on the PGA
tour. He cannot do it with a one dimensional game, and neither
can you. Sure, he can drive the ball a mile, but can he putt? As you
prepare your company for sale, don’t get caught in the trap of
selling your company based only on the results. Show the buyer
your balanced game by showing him how you did it, why you did
it and where you did it. Be more prepared than they are; do the
diligence and reap the reward of a high valuation to the buyer of
your choice. �
Arnie Valenzuela is a consultant, speaker and
trainer with FIMA 4 Consulting Group LLC. His
career in the office technology industry spans 23
years. He has served at Print Inc., Ricoh Corp.,
IKON Office Solutions and several leading dealer-
ships. He can be reached at [email protected].
30 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | F e b r u a r y 2 0 0 7
ADVERTISER INDEX
The market you will be selling in is crowdedand harshly competitive.The boomer phenomenawill create a situationwhere many companiesare listed but never sold.
22 • Ames Supply Company
(800) 323-3856 / (630) 964-2440 / www.amessupply.com
19 • Business Products Council Association
(800) 897-0250 / www.businessproductscouncil.org
29 • BTA Scholarships
(816) 303-4031 / www.bta.org
21 • docSTAR
(800) 367-5906 / www.docstar.com
15 • DocuWare Corp.
(888) 565-5907 / www.docuware.com
27 • Duplo U.S.A. Corp.
(800) 255-1933 / (949) 752-8222 / www.duplousa.com
13 • FMAudit LLC
(573) 632-2461 / www.fmaudit.com
32 • Great America Leasing Corp.
(800) 234-8787 / www.greatamerica.com
26 • Hunter Barth Advertising Inc.
(949) 631-9900 / www.hunterbarth.com
23 • Imaging Industry.com
(800) 621-0623 / www.imagingindustry.com
2, 3 • ITEX ’07
(800) 989-6077 / www.itexshow.com
11 • Kyocera Mita America Inc.
(800) 222-6482 / www.kyoceramita.com
9 • MKG Imaging Solutions Inc.
(800) 881-7545 / (905) 564-9218 / www.mkg.org
17 • Muratec America Inc.
(469) 429-3481 / www.muratec.com
31 • Panasonic Digital Document Company
(800) 742-8086 / www.panasonic.com/office
5 • Print Audit
(877) 412-8348 / (403) 685-4932 / www.printaudit.com
7 • Toshiba America Business Solutions Inc.
(949) 462-6165 / www.copiers.toshiba.com
30OT0207 2/1/07 1:32 PM Page 30
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Permit #31 Office Technology MagazineBusiness Technology Association 12411 Wornall RoadKansas City, MO 64145(816) 941-3100www.officetechnologymag.comwww.bta.org
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32OT0207 1/16/07 3:14 PM Page 1