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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

05OT0207 2/1/07 7:24 PM Page 1

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

[email protected]

Cathy KentonMembership Sales Representative

[email protected]

Gary HedbergAccounting Manager

[email protected]

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.


®

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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

[email protected]

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

[email protected]

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

[email protected]


08OT0207 2/1/07 6:17 PM

09OT0207 1/10/07 3:45 PM Page 1


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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07OT1006 9/30/06 11:12 AM Page 1

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


12OT0207 2/1/07 7:59 PM Page 1

13OT0207 2/1/07 7:27 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


14OT0207 2/2/07 12:01 PM Page 1

15OT0207 1/16/07 3:35 PM Page 1


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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07OT0107 12/14/06 4:23 PM Page 1

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

[email protected].

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.


18OT0207 2/1/07 2:50 PM

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


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

docSTAR™ CP

© 2006 docSTAR, 2165 Technology Drive, Schenectady, NY 12308. All trademarks are the property of their respective owners. Specifications subject to change without notice.

Easy to Sell, Fast Increaseof Gross Margins and a Smart Total

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

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.


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

15OT0107 12/29/06 4:51 PM Page 1

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


24OT0207 2/1/07 4:09 PM

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


25OT0207 2/1/07 9:28 AM

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.


26OT0207 2/1/07 9:51 AM


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 ...

27OT0207 2/1/07 9:47 AM

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


28OT0207 2/1/07 11:43 AM


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.

Having trouble findingmoney for your

child’s education?

29OT0207 2/2/07 11:58 AM

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].


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

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31OT0207 1/18/07 12:32 PM Page 1

PRSRT STDU.S. Postage PaidEaston, PA 18042

Permit #31 Office Technology MagazineBusiness Technology Association 12411 Wornall RoadKansas City, MO 64145(816) 941-3100www.officetechnologymag.comwww.bta.org

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See You at ITEX!Booth 728

32OT0207 1/16/07 3:14 PM Page 1

February 2007 Office Technology

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