ENX JULY 2015 ISSUE

JULY 2015

VOLUME 22 NO. 7

Connecting People, Ideas and Products in the Document Imaging Industry since 1994 Connecting People, Ideas and Products in the Document Imaging Industry since 1994

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Managed Services

Made Easy Latest OEM Results:

More Indications That Markets are Weakening in 2015 Business Profile Service Excellence Diamond Award Winner

5 Biggest Deal Killers

What Do You Expect for Your Salary?

Northern Exposure:

Servicing Office Technology in the 49th State

Indiana Business Equipment

Coaching

Your Salespeople

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e e n n xx

16 Between The Lines 14 Between the Lines: The Managed Services Scam 24 Trends and Trendsetters of of 2015 2015 22 Managed

By ScottServices Cullen Made Easy EDITOR’S NOTE NOTE EDITOR’S EDITOR’S NOTE

In This

INDUSTRY STATE OF STATE OF THE THE INDUSTRY INDUSTRY

Issue

STATE OF THE INDUSTRY

By Scott Cullen

e n x

32 16HP Sheds More Resellers As As It It Implements Implements New New Qualified Qualified 28 Latest Between The Lines OEM Results Offer More Indications that Markets are Weakening Supplies Program NEWS NEWS BRIEFING BRIEFING

In This

EDITOR’S NOTE

NEWS BRIEFING

STATE OF THE INDUSTRY in By Charles Brewer 242015 Trends and Trendsetters of 2015 By Charles Brewer

Issue3640 32

BUSINESS PROFILE PROFILE

By Scott Cullen BUSINESS PROFILE SERVICE EXCELLENCE DIAMOND AWARD WINNER

Static Control NEWS BRIEFING

Staff Staff

InsideHP theSheds Numbers: Business EquipmentNew Takes Service MoreIndiana Resellers As It Implements Qualified DEALER SPOTLIGHT: SPOTLIGHT: DEALER SPOTLIGHT:

Excellence Seriously Supplies Program

44 A Conversation with Keith Keith Justus, Justus, President President of of Business Business

By Charles Brewer Copier Solutions 40 Town Business Center: Sticking to an Uncomplicated Strategy Control 48 40BEIStatic Services and ENX Magazine Magazine to to Acknowledge Acknowledge Service Service 44Excellence 44 What Do You Expect for Your Salary? in 2015 A Conversation with Keith Justus, President of Business

By Charles Lamb Copier Solutions 54 48The Year Ahead BEI Services and ENX Magazine to Acknowledge Service 48 Northern

By Brad Roderick Exposure: Dean Johnson of Royal Business Systems on Excellence in 2015 Servicing Office Technology in the 49th State 58 54HowThetoYear WinAhead Over a New Prospect Prospect 54 Coaching

By Brad Roderick

By Dave Sobel Your Salespeople BUSINESS PROFILE

BUSINESS PROFILE

SERVICE EXCELLENCE SERVICE EXCELLENCE EXCELLENCE

SALES MANAGEMENT DEALER SPOTLIGHT:

Staff

SALES MARKETING SALES & & MARKETING MARKETING

SERVICE EXCELLENCE

DEALER SPOTLIGHT

Susan Susan Susan Neimes Susan Neimes

Publisher & Managing Editor Editor Publisher Publisher & Managing Publisher & Managing

Susan Neimes

MANAGED IT MANAGED SALES & IT MARKETING

SALES & MARKETING

Publisher & Managing Editor

By Troy HarrisonIT MANAGED EXIT STRATEGY STRATEGY 58EXIT How to Win Over a New Prospect

60 The 10 Biggest Mistakes Business Business Sellers Sellers Make Make –– Part Part 11 of of 33

By Dave Sobel 58 5 Biggest Killers

By Jim Deal Zipursky By Zipursky 60JimThe 10Advertisers Biggest Mistakes Business Sellers Make – Part 1 of 3 Index Index 62 Display

By Jim Zipursky Events Calendar of Industry Events Calendar IndustryIndex 68 65 Repairing andof Rebuilding the Fusers for Xerox WC-5945 & 5955 Display Advertisers 62 Tech Tip ByPrinter Britt Horvat Printer Tech Tip Calendar of Industry Events 66 65By Pros

By Laser Laser PrinterPros Tech Tip 66 64 By Laser Pros Free Tech Free Tech Help Help 68 By Free Tech Help Smarka!

69 68By Smarka!

By Smarka!

Xerox 4110 4110 Style Style Fuser Fuser Repairs Repairs 70 Xerox Xerox 4110 Style Fuser Repairs By Britt Horvat 70 EXIT STRATEGY

EXIT STRATEGY

Scott Cullen Scott Cullen Scott Scott Cullen

TECHNICAL TIP

Editorial Director Editorial Director Editorial Director Editorial Director

Scott Cullen

Editorial Director

DISPLAY ADVERTISERS INDEX

CALENDAR OF INDUSTRY EVENTS ® ®

®

Ronelle Ingram Ronelle Ingram Ingram Ronelle Ronelle ContributingRonelle Editor Ingram Contributing Editor Contributing Editor Contributing Contributing Editor Editor

By Britt Horvat

By Britt Horvat

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La Revista del Distribuidor Dealer Source La Revista Revista del del Distribuidor Distribuidor Dealer La Dealer Source Source La Revista del Distribuidor Dealer Source

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Contributors Charles Brewer | Charles Brewer is the founder and president of Actionable Intelligence, the digital imaging industry’s leading market research firm. He was an editor for Inc. magazine and ComputerWorld during the 1990s, and more recently, the managing editor of The Hard Copy Supplies Journal. Mr. Brewer’s analysis is currently featured at his firm’s website, www.Action-Intell.com.

Charles Lamb | Charles Lamb is the President and CEO of Mps&it Sales Consulting. His firm delivers proven methodologies and processes that assist dealer principals seeking a successful transformation into the managed services space. He’s created complementary solutions including Funnelmaker, Gatekeeper, and Shield IT services. For more info, call 888.823.0006, e-mail him at clamb@mpsandit. com, or visit www.mpsandit.com.

Troy Harrison | Troy Harrison is the author of “Sell Like You Mean It!” and a Speaker, Consultant, and Sales Navigator. He helps companies build more profitable and productive sales forces with his cuttingedge sales training and methodologies. For information on booking speaking/training engagements, consulting, or to sign up for his weekly E-zine, call 913645-3603, e-mail Troy@TroyHarrison.com, or visit www.

TroyHarrison.com.

Jim Zipursky | Jim Zipursky is the Managing Director of CFA-MidWest, an investment bank serving the middle market.

Jim is a registered representative of Silver Oak Securities, Inc., member FINRA/SIPC. For more information visit www.cfaw.com/omaha.

Follow Jim on Twitter (@jazcfane) for articles and information about M&A. For more information about Exit Strategies or Selling Your Business, feel free to contact Jim at (402) 3302160 or jaz@cfaomaha.com.

Technical Article Contributor Britt Horvat | Britt Horvat works for The Parts Drop, a company whose primary business is providing parts, supplies and information for Xerox brand copiers, printers and fax machines. You can find more information www.partsdrop.com.

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www.enxmag.com | July 2015

B E T W E E N

T H E

L I N E S

The Managed Services Scam There’s a myth being perpetuated across the document imaging industry in that there are riches to be made in Managed Services.

Go to any BTA conference, most dealer meetings, or read online or print publications like this one and you can’t sit through more than 15 minutes of seminars or flip through fourteen pages without hearing or reading about Managed Services.

Do the document imaging industry prognosticators and power players really think that getting involved with a customer’s network is going to keep dealers relevant? What about the foundation of their business? The document imaging industry was built on boxes and to focus on anything else, especially a segment of the customer’s business that involves IT is pure lunacy. Ever met an IT person or seen one up close? I rest my case.

In case you’re missing my point, Managed Services is the biggest scam to hit the document imaging industry since Managed Print Services. And we’ve all seen what’s happened with that. Does anybody even offer Managed Print Services anymore and has anyone ever made any money from it?

I’m sure your blood pressure is rising to an unhealthy level as you read this, especially if you’re with one of those OEMs or consulting firms that are weaving this Managed Services black magic across the document imaging industry. I’ll bet there are plenty of dealers falling for your line too. It’s so easy to be seduced by the smell of green.

Turns out I’m weaving that black magic too right here in this issue in my article “Managed Services Made Easy.” It’s not easy, but it’s a good title. And as far as everything I wrote prior to this paragraph, I don’t believe a word of it, I was just trying to get your attention.

I’m convinced there is something to this Managed Services thing even if it may not be for everyone. If you’re not in yet, there’s plenty of help out there to assist you in navigating your way to success without totally drifting away from your core business. If you’re in already and not doing as well as you’d like, I spoke with some people this month that may be able to get things moving in the right direction for you. And I only scratched the surface of the experts who have a proven track record in this arena.

Thanks for reading.

Scott Cullen Editorial Director

We Saw It In ENX Magazine

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NBS / ENX | July 2015

State of the Industry

Managed Services Made Easy

I Scott Cullen

f offering Managed Services were easy, then every office technology dealer would be offering it. But not so fast, it’s not all that easy. And not many dealers offer it yet despite the many pundits who are promoting Managed Services as a way to offset declining hardware sales and sinking page volumes.

The reality is Managed Services can’t be ignored. Consider the high profile organizations that are making an impact in this space such as Konica Minolta’s All Covered, GreatAmerica’s Collabrance, Ricoh’s CHAMPs, Muratec’s Leapfrog, and so many others. Add to those a host of consultants who can help a dealership get started and maybe there’s a way to make the transition easy after all.

With that in mind we spoke with a few people who know a thing or two about Managed Services. They discuss how to get started in Managed Services and whether or not buying an IT company is the easy answer.

Getting Started

David Pohlman, Office of the President/COO GreatAmerica Financial Services Corporation, who oversees the David Pohlman company’s ColGreat America Financial Services labrance Managed Services program, Corporation views education as an elementary first step, particularly for understanding what this business is all about and what drives success.

“It’s an entirely different business from the office imaging

world,” states Pohlman. “When people fail to do the education piece they tend to approach it in a way that ultimately doesn’t lead to success.”

After some basic education comes the business plan.

“Define the new direction, objectives, and a market strategy, which should expose your target [audience] and prospect profile,” says Charles Charles Lamb Lamb, president Mps&it Sales & CEO Mps&it Consulting Sales Consulting, about creating a business plan.

Focusing on these areas will help define what the dealership wants to do and who they want to do it with, meaning what types of services will be offered and what types of customers will be targeted.

“It should also include a thorough consideration of what changes need to be made in their business to support a successful outcome,” adds Lamb. “And projections must be reasonable. Like changing the direction of a ship; sometimes it’s not instant, it has to work its way through.”

He recalls one dealer who told him that his dealership was going to sell $1 million more this year than the previous year. When Lamb asked him, “How are you going to do that?” the response was, “We’re going to sell Managed Services.”

That meant an additional $250,000 per quarter. Considering it was already the middle of January it was obvious to Lamb that the dealer had no plan and he wasn’t surprised when he asked

him, “You already have some of that money, right?” The dealer’s response was, “No, not yet.”

“Now you kind of get my point,” says Lamb. “You have to define your objective and what is a successful transition, and if they’re starting out, what is success and ultimately who are you going to tell that value story to?”

Lamb also emphasizes the need to communicate this change in direction with your customers and prospects, particularly in the way the business is portrayed on its website.

“Your website can no longer be just a copier billboard, you’re going to have to provide confidence in everything you portray in the marketplace,” advises Lamb. “[It should show] that your technology skill set is five years ahead of the customers, that you’re pulling them forward, and there is a reasonable value for them to secure you.”

Dean Swenson, president of The Swenson Group has been taking advantage of Konica Minolta’s All Covered proDean Swenson gram for nearly The Swenson two years now.

Group His inspiration for doing so was the recurring opportunity in the IT Services market. For Swenson the initial steps involved understanding how Managed Services was going to fit into his existing business. The dealership created its business plan using data points from All Covered once he had a better idea of their average project revenue, what the recurring contract looked like, who was selling it, and how continued on page 24

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www.enxmag.com | July 2015

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Managed Services Made Easy reps were paid.

“Admittedly, we knew nothing about how to start it and the All Covered Playbook came out a little while afterwards, which was a nice way to jump start it,” observes Swenson.

Even with the assistance of All Covered, a lot of the onus for long-term success is still on the dealer.

“We do a lot of the heavy lifting of the service delivery, but the dealer plays a critical role in the client relationship, the sales process, and the onsite response, so in order Nick Pegley to get those plans together All Covered we’ll often have our local team sit down with them and talk through the overall advice we’d give them,” explains All Covered’s Nick Pegley. “We have a playbook—a how-to manual—that describes how to go to market, compensation plans, what the services are, and how the services will work operationally.”

For Britt Siedentopf, Managed Services Manager for Leapfrog Managed Services by Muratec, a critical first step is identifying the target customer. The second is Britt Siedentopf building out a technology Leapfrog Managed Services staff around that target customer.

by Muratec He suggests targeting customers with 20-80 users in their IT environment.

“The reason is anywhere below 20 users, those customers tend not to value IT,” says Siedentopf. “Look for a prospect that values IT, wants things to work, wants out of the IT business, and wants to hand it off to the dealer.”

He acknowledges that narrowing the focus to certain types of customers is a difficult concept for some traditional office technology dealers. “In the world sales reps live in today, they see every business as a potential target customer,” notes Seidentopf. “That’s fine for selling a copier or a printer, but in Managed Services they need a laser-focused approach and must be able to say no to certain customers.”

Lamb also believes that employees need to be taught the difference between a strategic and tactical plan and understand who within the customer’s or prospect’s organization needs to hear those values.

“Our industry continually drives towards our front-line contacts, but that’s not how Managed Services excels,” he says.

Lamb recommends educating the sales team to avoid middle and low management positions.

“Outsourcing is almost always a C-level decision,” emphasizes Lamb. “CFO. com says 83 percent of companies mandate that their CEO or CFO be involved in contract decisions. If that’s what they’re expecting from their CFO there’s got to be someone who can get to that person.”

Part of that comes down to hiring the right people who can get in front of the right people.

“This isn’t something most copier sales reps can go out and sell,” says Siedentopf.

“This is not a technical conversation with the customer. It’s a business conversation with a C-level. They have to have some business acumen so they become more of a customer’s virtual CTO.” David Sobel, Director of Partner Community at Logic Now, offers another perspective on how to get started in Managed Services.

“What I recommend as David Sobel a first step is to introduce Logic Now a monitoring service because it is an effective and profitable way to add and learn the logistics of delivering Managed Services. Right now [the dealer] has a healthy relationship with their customer, they’re billing them for work they’re doing on an ad hoc basis, and generally most dealers are going to find, if you ask them, their customers are going to say nice things about them such as, ‘I like working with you, I don’t think I need any more service, everything runs fine, you’re doing a great job.’”

This approach allows the dealer to proactively anticipate issues and fix them before they become a problem. He suggests doing this on a simple fixed fee style engagement, particularly for SMB customers.

“All you’re going to do is alert the customer and call them when something happens and ask them if you want them to fix it or not,” states Sobel. “It’s still the break-fix relationship they’re used to and now they have much better telemetry.”

He adds that the cost of delivering a service is much lower and can deliver margins in the 80 percent range. This approach can also include anti-virus upgrades, backup monitoring, and asset management.

“Typically those environments have between 5-20 devices,” says Sobel.

“Instead of trying to count the number of devices, sell it for a fixed fee, something like $199 a month. That’s kind of a magic price point, and people are willing to buy at $199 on an impulse, and it teaches them how to pay for things on a recurring basis.”

For larger customers with 100 devices or more, Sobel suggests selling the service for $299 or $399.

“Sell it at a price that’s appropriate to their need,” he suggests. “The point is to avoid any per device or per user charge because it’s easier to sell to them when there is no objection around variability. And as a growing MS provider I’ve given myself a base to learn the logistics of recurring revenue and how to make the predictions of cash flow around that because I start having a revenue stream.”

Buying an IT Company

Asked if buying an IT company is the solution, Lamb responds, “I wish it was.

You have to ask yourself, if you’re buying an IT company based on transactional sales, are you really moving forward?

My research shows that most IT companies are not selling long-term contracts.

They’re selling mostly blocks of time at best with 12 month agreements. The fact is copier dealers are in a better position for driving long-term contracts. Buying a transactional IT company simply adds payroll without a promise of longer term revenue. If it doesn’t have contracts that are long term, you’re just rolling the dice.”

He recalls one dealer that rolled the dice and bought a small IT company that was month to month on almost everything.

Ultimately those customers decided to go continued on page 26

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Managed Services Made Easy in another direction, leaving the dealer with the payroll, but not the account.

Others aren’t as dead set against an acquisition.

“That’s dependent on the dealership,” says Pohlman. “If you’re a good sized dealership with good financial capabilities, it all comes down to buying the right organization. You’re probably going to pay a premium, but you’re going to want to buy someone who’s operationally mature in this space and can demonstrate the ability of scale and to scale this business profitably.”

Siedentopf thinks dealers should consider other options first, although he has a caveat. “If they are already successful and understand the model of Managed IT services and how to deliver it and how to sell it, then if they go out and buy an IT company, they know what they’re looking for and the base they’re looking for.”

However, for those looking to get in for the first time, he doesn’t advocate acquisition.

“What will happen is they end up buying a company that may not be mature in Managed Services and the customers they’re buying may not be customers they want,” says Siedentopf.

“If you’re in a position to grow by acquisition, I’m not going to dissuade you,” adds Logic Now’s Sobel. “There’s a lot of legitimacy to the idea of doing that. The trick is it’s not just the matter of buying an IT company because not all are created equal; are you buying an IT company that understands how to deliver Managed Services? Do they offer Managed Services now, or are you buying a break-fix organization and just acquiring the technical skills? If they don’t understand the business of bringing in recurring revenue you haven’t actually solved the problem.”

Even though he’s headed down the right path with All Covered, Swenson still thinks about buying an IT company. “It’s kind of got to be the right fit at the right time,” he

says. “If we have that opportunity it will bring additional talent in house, additional base, and hopefully complement the relationship we have with All Covered.”

You Got to Be in It...

Ultimately, Lamb considers Managed Services a must for the document imaging dealer.

“In today’s business culture, transitioning to services is mostly driven because they have to as much as they want to,” he says.

Swenson has never doubted that Managed Services was the right direction for The Swenson Group.

“If you’re going to grow your business and bring more value, you can’t sit on the sidelines. We can add more people and sell more copiers or we can diversify our portfolio. This is where we’re going and it’s a big chunk of our business model now and will be an even bigger chunk in the future.” ✦

A Partnered Approach It’s been a few years since Ricoh introduced its CHAMPS program, but it’s only been within the past 12 months that it’s truly taken off. “We had a lot of starts and stops, and it wasn’t really taking hold for a lot of different reasons,” acknowledges Jim Coriddi, vice president, Dealer Division, Ricoh USA. Today, between 30-35 percent of Ricoh’s 436 dealers are taking advantage of the program.

One of those Ricoh dealers leveraging CHAMPS is Dawn Abbuhl, president, Repeat Business Systems, Inc. of Albany, NY and a member of Ricoh’s National Dealer Council.

The program has enabled her to jumpstart her Managed Services business by meeting requests for projects that prior

to CHAMPS might have been too big for her company to handle or for when a certain level of expertise is needed that Repeat doesn’t have.

“We forward this to CHAMPS and they can put someone on that project or they send it back to me. All I have to do is add our margin to it and CHAMPS and Dawn Abbuhl myself present it to my Repeat Business customer,” says Abbuhl.

Systems, Inc. of “It’s great and has given Albany, NY us a depth we’ve probably never had.”

Even though Managed Services is not a path that every dealer needs to travel or is equipped to travel, some like Abbuhl

have discovered that these services allow them to make themselves stickier with their customers while establishing themselves in their market as a certain type of provider.

“Dealers are telling us, ‘If we did not have this we would not have landed this deal,’” reports Coriddi.

“That’s how we know it’s starting to take hold and that’s what’s grabbing the attention and the imagination of our dealers.

We feel like we have a Jim Coriddi solid foundation and are Ricoh USA starting to broaden the portfolio and broaden the view of how the customer looks at our dealer and that will ultimately result in growing the business.”

This Month on Our Website and in Our Newsletter Be sure and subscribe to the ENX/The Week in Imaging newsletter or visit our website at www.enxmag.com for more articles on Managed Services, including The Biggest Fears Dealers Have about Managed Services, Common Mistakes Made by First Time and Long-Time Managed Services Dealers, and Is Managed Services for Everyone?

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Profile Charles Brewer Business News Briefing

Latest OEM Results Offer More Indications that Markets are Weakening in 2015

L

ast month, I wrote in ENX magazine that various hardware manufacturers were reporting that they got off to a slow start in the opening months of 2015. Most Japanese firms reported in May that things slowed in 2015 after having a good run in 2014. Many hardware firms in Japan have now lowered their guidance for the current fiscal year. The U.S. hardware manufacturers also reported demand has slackened over the past few months. Such a softening of the market is particularly painful for these companies because they lack the competitive advantage the weaker yen provides their Japanese rivals.

U.S. firms have had to endure punishing market conditions for several years and they have lost market share as a result.

In the days before ENX went to press in early May, Epson, Fujifilm, and Ricoh had

reported their numbers for the fiscal year, which ended for the firms on March 31 as it does for many companies in Japan.

Of the three firms, two—Epson and Ricoh—said their business was off during the first three months of 2015. Since then, the remaining Japanese vendors also closed their books on the previous fiscal year and, once again, most of the companies indicated that this year was not looking good for them. Compared to the same three months in 2014, for example, Brother and Konica Minolta also reported softer sales this year. Likewise, following lackluster earnings calls in April from Lexmark and Xerox, Hewlett-Packard reported in May that its printer business has declined this year.

Don’t get me wrong; the hardware vendors had plenty of good news to share with their stakeholders. HP’s printer business,

for example, continued to deliver operating margins in excess of 18 percent this year despite the fact that revenue from hardware has continued to drop year-on-year for the past several consecutive years.

OKI also continues to prove it is executing on its turnaround plan and Konica Minolta says it will grow sales this year as it did last year. Despite these bright spots, however, I’m getting a whiff that the worldwide market for hardware and supplies is slipping into a funk, and the market may remain “funky” in the second half of the year.

Brother’s Mixed Bag

On May 7, Brother International reported that net sales were up for the fiscal year ending on March 31 and it enjoyed strong operating and net earnings. However, for the first three months of 2015, revenue was weaker than expected and as a result Brother missed its projected sales target for the year.

With annual revenue up just over 10 percent, Brother’s Printing and Solutions business, which includes printers, all-inones, fax devices and consumables as well as other products such as typewriters, performed well during its most recent fiscal year. Annual net sales grew to ¥474.3 billion, compared with ¥430.8 billion the year prior and the operating income ratio grew 300 basis points to 7.5 percent as operating income improved from ¥31.0 billion during the prior fiscal year to ¥35.7 billion during the fiscal year ending in March. continued on page 30

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Markets are Weakening in 2015 Looking specifically at communication and printing equipment, annual sales climbed to ¥421.8 billion from ¥384.1 billion during the year before. The firm said that it is investing to maintain its retail market share in developed markets as it increases sales in emerging economies.

It also seeks to grow its OEM business and increase sales to SMB customers.

Specifically, communication and printing equipment annual sales totaled ¥421.8 billion versus ¥384.1 billion during the year before.

Regionally, annual sales of Brother’s communication and printing equipment experienced double-digit gains in the Americas as well as in Asia and revenue hit ¥168.0 billion in the Americas and ¥69.4 billion in Asia, which represented gains of 11.7 percent and 19.8 percent, respectively. With sales up nearly 7 percent to ¥141.7 billion, Europe came in as Brother’s second largest market for communication and printing equipment after the Americas. Domestic sales were down almost 1 percent to ¥42.7 billion, making Japan Brother’s smallest market for printers during its last full fiscal year.

Although the company’s sales grew, the growth was not as great as Brother had predicted earlier in 2015. In February, the company said it anticipated net sales of ¥710 billion, but it managed only ¥707.2 billion. Looking ahead to fiscal 2015, which ends in March 2016, Brother is now guiding it will have net sales of ¥760.0 billion, operating income of ¥58.0 billion, and net income of ¥35.5

billion. Compared to the year ending on March 2015, Brother expects its sales to improve about 7.5 percent but profits are being squeezed as operating income essentially goes sideways and net income plunges 34.2 percent. Sales of communications and printing equipment are expected to grow to ¥450.6 billion, which if true would mark a gain of about 7.8 percent. However, in the year ahead, the company forecasts the operating income from its Printing and Solutions’ segment will decline 5.7 percent to ¥33.7 billion, which would result in the operating income ratio being compressed nearly a full point to 6.6 percent.

OKI’s Turnaround Looks Complete

The day after Brother reported its annual results, OKI Electric Industry Company did the same. On May 8, OKI reported it had net sales of ¥540.2 billion last year, up 11.8 percent from ¥483.1 billion in the year ending March 2014, and slightly more than the ¥535 billion revised projection issued with its first-half earnings in October 2014. OKI President Hideichi Kawasaki cited OKI’s solid financials for the strong performances of each business segment, specifically crediting stronger operating income to a sales volume increase in the Info-telecom business and product mix improvements in the firm’s printer business. OKI’s operating income was ¥32.4 billion up 19.2 percent from the prior year’s ¥27.2 billion and ¥2.4 billion greater than the firm’s projection

of ¥30 billion. Net income of ¥33.1 billion was up 5.7 percent year-over-year from ¥27.4 billion, while net income per share was ¥40.3 billion, up 10.6 percent from 2014.

Net sales for OKI’s printers segment grew 3.6 percent year-over-year, climbing from ¥124.8 billion to ¥129.3 billion.

Sales of color LED printers were nearly flat, going from ¥78.1 billion in 2014 to ¥78.8 billion and sales were also flat for dot-impact printers, which remained at ¥14 billion. Monochrome LED was the growth area for the printer segment, with sales increasing from ¥29.2 billion to ¥33 billion as OKI’s dealers scored some big orders. Operating income for the printers business increased from ¥5.1 billion to ¥6.7 billion, which OKI continues to attribute to the revamping of the business structure as well as improving the product mix.

OKI predicts net sales growth will continue during the current fiscal year, which ends in March 2016. Revenue is projected to increase ¥4.8 billion yearover-year to ¥545 billion but operating income is projected to decrease slightly, down ¥2.4 billion to ¥30 billion due to fixed costs including rising personnel expenses and depreciations in overseas manufacturing sites. Thanks to new products and strengthening sales-channel support, the firm is projecting annual net sales will grow to ¥140 billion in its printers business from ¥129.3 billion last year with ¥65 billion coming during first half, up from ¥61.6 billion in the first half of last year. The firm is projecting color LED net sales of ¥89 billion, a nearly 13 percent increase from this year’s sales and monochrome LED sales are expected to grow more modestly from ¥33 billion to ¥35 billion. Operating income is projected to increase to ¥7 billion.

OKI’s continued growth suggests that it has managed to turn itself around. The company as a whole was rocked in 2012 by the discovery of accounting irregularities at OKI Systems Ibérica S.A.U., which had misreported business results for over six years. The firm’s printer business also experienced years of declining sales and significant losses. In March 2013, OKI announced plans to revamp continued on page 32

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Brother, Canon, DEC/Digital, Dell, Epson, HP, IBM, Konica Minolta, Kyocera Mita, Lanier, Lexmark, Muratec, NEC,OCE, Okidata, Panasonic, Ricoh, Samsung, Savin, Sharp, Source Technologies, Tally/Genicom, Toshiba, Troy, Unisys, Xante, Xerox

Markets are Weakening in 2015 the business and slashed hundreds of jobs and eliminated certain suppliers as well as reduced the number of printer and software platforms it marketed. Initially, the improvement was largely seen not in terms of sales but rather operating profit. Thanks to the weakening yen, sales began to improve and strengthened last year. Although OKI expects to continue to grow its printer business this year, it seems to me that the growth can be attributed more to the company’s ability to make up lost ground rather than any growing strength in the current market.

Konica Minolta Chugs Along

One of the industry’s stronger performers over the past few years has been Konica Minolta and the firm’s winning trend continues as it managed to beat its own expectations during the fiscal year ending on March 31. For the full year, Konica Minolta’s net sales totaled ¥1.011 trillion versus ¥943.8 billion in the previous fiscal year. This 7.2 percent increase beat the company’s earlier net sales guidance of ¥1.01 trillion. With total operating and net incomes of ¥66.2 billion and ¥32.7 billion, respectively, Konica Minolta also exceeded its profitability forecast.

Noting that sales climbed past ¥1 trillion for the first time in seven fiscal years, the firm credited its revenue growth to the performance of its main line of business, Business Technologies.

The Business Technologies unit is responsible for marketing Konica Minolta’s MFPs, copiers, printers, supplies, and

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related services and it had annual sales of ¥817.2 billion, up 10.5 percent from ¥739.9 billion in the year prior. Annual sales also exceeded Konica Minolta’s forecast for net sales of ¥810 billion. The group’s full-year operating income was ¥71.8 billion versus ¥66.6 billion in the previous fiscal year, an increase of 7.7 percent.

The office services business accounted for ¥604.2 billion of the Business Technologies segment’s full-year sales, up 7 percent from ¥567.1 billion in the year prior. Sales volumes of A3 color MFPs expanded year-over-year in all regions as sales of A4 color MFPs increased. The company reported that it has enjoyed a steady increase in contracts and sales of its Optimized Print Services (OPS) managed print services. It has also been successful in targeting small to medium-sized customers, particularly in the United States and Europe with hybrid-type sales that combine IT services and equipment and says it is now offering managed content services (MCS) for these customers. More sales of MCS should enable the company to secure new customers and grow print volumes. The company said its commercial and industrial printing business also delivered solid results and sales reached ¥213.1 billion, up 23 percent from ¥172.9 billion in the previous fiscal year thanks in part to the launch of the color bizhub PRESS line.

For the current year, Konica Minolta anticipates total annual sales of ¥1.1 trillion along with an operating income of ¥77.0 billion and a net income of ¥50

billion, which would mark year-over-year increases of 10 percent, 17 percent, and 23 percent, respectively. The Business Technologies segment is expected to deliver net sales of ¥890.0 billion and operating income of ¥84.0 billion. The company predicts that demand for its A3 color MFPs will continue to grow overseas and sales of production and industrial printing devices and services will improve and drive print volumes up.

HP Little Improved

The industry’s earning season effectively wrapped up on May 21 when one of its best-known firms, Hewlett-Packard, reported its mid-year results. As it has for 16 consecutive quarters, revenue from the printer group slipped during the firm’s second quarter, which ended on April 30, compared to Q2 FY14.

The printer group is only one of HP’s six business units and all six reported declining revenue in Q2 FY15 on a yearover-year basis. Overall, the company had total revenue of $25.5 billion in Q2 FY 15, which represented a decline of 7 percent compared to Q2 FY14.

Revenue from HP’s printer business hardware and supplies also dropped 7 percent, falling from $5.8 billion during the second quarter of last year to just under $5.5 billion during the same period this year. Consumables sales dipped 5 percent on a year-over-year basis as the company struggles with its overly stuffed channel. Last year, HP’s Q2 consumables sales amounted to $3.9 billion but that fell to $3.7 billion during the same period this year. Although there was some margin erosion, HP’s printer business remains profitable with an operating margin of $996 million, which amounted to 18.3 percent of the unit’s total revenue.

Catherine Lesjak, HP’s CFO and executive vice president, explained that hardware revenue suffered in Q2 as the printer group’s “top line was pressured by a highly competitive market and aggressive pricing.” Dragged down by relentlessly sluggish demand for inkjet devices, hardware shipments fell 4 percent compared to Q2 FY14. Commercial unit shipments managed to climb 1 percent as shipments of consumer devices tumbled 6 percent. Most of the machines in HP’s Commercial category are LaserJet units continued on page 34

We Saw It In ENX Magazine

Markets are Weakening in 2015 along with higher-end devices such as Indigo production printers and HP’s highspeed inkjet digital presses. Most of the machines in HP’s Consumer category are SOHO inkjets.

While it appears the situation is improving, executives for the firm continue to report inventory levels of consumables are high as they have been for the past few quarters. Ms. Lesjak explained, “We exited the quarter with supplies channel inventory slightly above our desired range due to slowdown in sales in April.

We expect to reduce channel inventory levels in the second half and will continue to closely monitor demand trends.”

She said the firm is focused on “placing higher value hardware units with greater supplies attach.”

Worse before Getting Better?

I’m expecting that when earnings season rolls around again, companies will report that many markets worldwide have remained soft and business continues to slip. Regionally, there seems to be no lack of concerns. The European Union is jittery as everyone in the euro zone watches Greece to see what it will do when certain payments come due in June. In many countries like Spain, unemployment remains persistently high.

Once seen as growth engines, the economies in various so-called BRIC (Brazil, Russia, India, and China) countries are sputtering. According to The Economist, Brazil’s Gross National Product (GNP) will slip 1.2 percent this year as Russia’s GNP drops a full 4.0 percent. Japanese

companies will most likely remain disappointed in domestic sales as Japan’s economy grows an anemic 0.8 percent despite the government’s efforts to devalue the yen to spur growth.

With all that said, the demand for hardware and supplies in the United States ought to be okay this year.

Although the SOHO market appears destined to continue its decline with no flattening in sight, indications are that office printing should not slip.

Printing in the office is tied to employment and the U.S. Bureau for Labor and Statistics put the unemployment rate at 5.5 percent in May, down from 6.3 percent in May 2014. This was the fifth consecutive May the percentage has fallen on a year-on-year basis. Moreover, employment looks to be stable. A recent survey of 18,000 U.S. employers conducted by the human resource consulting firm ManpowerGroup indicated that 94 percent of employers plan to hire or keep their workforce levels steady in the near term.

At the end of June, the current quarter will close at many hardware manufacturers. I’ll be watching the results closely as they are released during the next earnings season, which will start in late July. It’s a safe bet that we’ll get some clarity on the market conditions for the rest of the year when the June numbers are released. Most likely things will slip more before they start to recover. Stay tuned! ✦

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Inside the Numbers: Indiana Business Equipment Takes Service Excellence Seriously

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here’s so-so service, there’s good service, and then there is the kind of service that Indiana Business Equipment (IBE) provides, service based on measurable metrics that clearly identifies just how well the dealership is doing compared to everyone else in the industry using the same metrics.

And what those numbers show is nothing short of impressive.

We’ll get around to that shortly.

First let’s meet IBE.

Humble Beginnings

IBE began in 1987 as a two person manufacturer’s rep selling copiers and typewriters. Since then the dealership has grown to

IBE’s Owners and Service Manager: Tom Goss, owner(standing); Dave Goss, owner(sitting) and Forest Raines, service manager.

15 employees and has moved into a new 10,600 square foot facility.

The dealership, run by co-owners David and Tom Goss, services customers in nine counties in West Central Indiana and six counties in East Central Illinois within a 90-minute radius of the company’s headquarters in Terre Haute.

“The nice thing about being in

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a rural area is we have a variety of customers from single unit locations up to large government, college, and medical installations,” says David. “All customer sizes are important to us and we have a good representation in all market segments and sizes.”

Four full time technicians and a couple of part timers who take additional service calls when necessary are responsible for servicing 1,500-1,600 machines under contract.

IBE is a single-line Canon dealer, something that’s an exception in the industry.

“We thought it made sense to focus on doing one thing really well vs. being adequate at two or three things,” explains David. “We also are probably an exception in that we use all OEM parts and supplies in servicing our Canon machines.”

Prior to partnering with Canon in 2009, service was a modest part of the company’s revenues.

For many years the manufacturer was responsible for servicing IBE’s customers. Things changed with the switch to Canon and since then IBE’s service revenue has grown by double digits every year. That double-digit growth has ranged from a low of 20 percent to today where service represents 44 percent of IBE annual revenue.

“Our main focus has always been to treat customers the way we would want to be treated and always do the right thing for the customer,” says Tom. “Our focus on the customer by every employee in our business is the main reason for our tremendous growth over the years.”

Ramping Up Service

When IBE transitioned to the traWe Saw It In ENX Magazine

ditional sales/service dealer model in 2009, management understood that the biggest challenge would be building a competent and effective service organization to take care of customers and be a profit center for the business.

It helped that both of IBE’s owners possessed strong marketing backgrounds.

“We believed the way to do that was to invest in the best people, training, equipment, and software from the beginning,” notes David.

That started with hiring Forest Raines as IBE’s service manager.

Raines shared IBE’s company values and his 27 years of experience in the industry was an excellent foundation for the dealership’s service organization.

Canon has played a huge role in IBE’s service department’s success by supplying reliable equipment and excellent training support. “All of our techs go through Canon factory training on every product they service vs. in house training,” says Raines.

Not too long after bringing on Raines IBE signed on with BEI. “I can’t tell you how important that decision was,” emphasizes David. “BEI gives us objective data that allows us to plot a course of continual improvement.”

The Truth of the Matter

As much as David doesn’t want to bring up an overused phrase regarding why dealers typically select BEI Services, he can’t ignore the reality. “BEI shows us ‘what good looks like.’”

IBE’s numbers are excellent with a first call fix rate running in the 65 percent range. Their call back rate is exceptional too, according to BEI’s Steve Sharkey. continued on page 38

IBE Takes Service Excellence Seriously “Our goal is 25 percent; these guys are consistently in the low 20’s; right now they’re at 22 percent,” reports Sharkey.

“And their incomplete for parts rates run in the teens. Right now it’s at 14 percent, but I’ve seen it as low as 10-11 percent in certain months. It’s a very good indicator that not only are the technicians well stocked from a prepared for parts standpoint, these guys have the technical skills so when they get in front of a machine the vast majority of the time they’re able to address the problem and get the customer up and running.”

It’s not like IBE was doing a poor job prior to implementing BEI. “We were actually pretty good to start with,” reports

Raines. “BEI came in and worked with us and saw that our numbers were good, and were able to help us fine tune car stocks for the geographical area we cover. That’s been a huge help; our hold for parts percentages have improved the most because of BEI.” Using BEI data, IBE revamped its entire parts inventory and car-restock process in an effort to improve hold for parts numbers. “It’s critical, especially in our rural geography, that we fix machines on the first visit and get them to run as long as possible between calls,” says Tom. Another benefit is that management can sit down with techs individually on a monthly basis and review their performance using objective data and plan out where they can improve.

“That’s where a big part of the value comes from,” states David. “The goal is to improve our customer experience and by doing so the techs can leverage the BEI Comp Plan. We are all rowing the boat in the same direction.”

These reviews are something that BEI’s Sharkey finds essential. “Whether you’re using BEI or not, you owe it to your people to give them regular and routine feedback, let them know what they’re doing well and recognize that and 38

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also identify areas where individuals can improve and become a more valuable asset to the company. Technicians are dying for that information and attention and the fact that these guys do that every month is a big part of the reason they’ve been as successful as they have been.”

Is Raines satisfied with the numbers or does he see areas where IBE can improve?

“I don’t think you can ever be satisfied,” he says.

And with David chiming in about ‘parts,’ Raines adds, “We want to make sure the guys are using parts instead of assemblies whenever possible.”

Diamond of Excellence

Everyone at IBE was ecstatic to learn that it achieved the Diamond of Excellence Award. This is particularly impressive considering they only started laying the foundation for their service organization six years ago. Management views this award as a testament to Raines’ direction and dedication and IBE’s continuous commitment to customer satisfaction.

Plus, IBE techs who have been with the company for at least one year have earned individual BEI Services awards, including one tech that achieved the highly coveted Diamond level, which places him in the top 5 percentile of the more than 6,300 techs monitored by BEI nationwide.

“It’s something we’re all proud of here, not just the techs,” acknowledges Tom. “Everybody that touches our customers on a daily basis from the dispatcher to the delivery people played a part in that award.”

And earning this award can’t help but contribute to customer retention, something that IBE excels at already.

“Once we get a customer we don’t lose them very often; we have a loyal customer base,” adds David.

“Everything we do here is customer first, whether it be the person answering the phone or dispatching service calls, and the technicians do a great job of carrying that out,” emphasizes Raines. “It’s the customer that determines our ultimate success and everyone gets that here.”

Additionally, the Diamond Award is a great motivator for everybody in the organization.

“It’s like reaching the playoffs in sports,” says Tom. “Once you are there, you want to keep improving and come back again.”

Asked if he has any advice for other dealers looking to improve their service operations, Tom says, “It’s the best way to objectively monitor and benchmark not only your service department, but individuals as well, and to help techs become better. Without the data we wouldn’t have the road map to go forward. ✦

Indiana Business Equipment 1301 Ohio Street Terre Haute, IN 47807 www.goIBE.com Number of service technicians: 4 full time and 2 part time Number of machines under contract: 1,500-1,600

How they’re doing: • First Call Fix Rate of 64% • Call Back Rate of 22% • Incomplete for Parts Rate at 14%

IBE’s owners and service team

We Saw It In ENX Magazine

Business Profile

Town Business Center:

Sticking to an Uncomplicated Strategy

W Steve Libenson Town Business Center

40

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ith companies in the document imaging and office technology industries vying for the spotlight as industry players, the fight to stay ahead of the competition and capture significant market share has never been fiercer. Businesses are investing countless dollars to beat out their competitors who are all headed in the same direction by capitalizing on technologies including cloud capability, mobility, and seamless IT integration systems as integral components of their product lines.

Town Business Center (TBC) has used this industry landscape to head in a completely different direction, which resulted in carving a niche business. Instead of running the retail rat race, its strategy focuses on the products most companies consider to be last year’s or even last decade’s news. TBC buys and sells used photocopiers that small to medium sized businesses are discarding for the newer, shinier, cloud-enabled, high functioning office machines.

Instead of these companies wasting their used machines and simply tossing them to a recycling company, TBC provides an equally environmentally friendly option.

Not only that, TBC pays a higher premium for the used equipment than a recycling company will.

“We are a green company because we provide profitable marketing solutions for used equipment,” explains Steve Libenson, the company’s founder, as one reason customers find it attractive to sell their copiers to Town Business Center.

“Who is going to want these

www.enxmag.com | July 2015

pieces of junk?” you may ask, quite relevantly, considering we are bombarded with advertisements showcasing the most recent technologically enhanced office equipment.

“Not all businesses have the budget or the desire to have the latest model on the market,” says Libenson. “They just need a copier that can get the job done with reliable print, scan, and fax capabilities that work quickly and produce high quality copies.”

Libenson saw a need in this relatively untapped market when he got into the business over 20 years ago, initially focusing on the domestic market. During the pre-Internet days, Libenson built a business around companies who wanted new machines, but didn’t have the budget for a retail priced copier.

Today, TBC primarily sources their inventory from end users and dealers, which are then transported to its newly acquired 94,000 square foot warehouse in WilkesBarre, PA. Here the copiers are refurbished by onsite technicians, who have more than 20 years of experience in the business.

All machines are thoroughly tested for functionality because no one wants a copier that jams or prints gibberish as is commonly depicted in officethemed comics. In order to protect the privacy of the previous owners, each hard drive is completely erased.

Everyone Starts Somewhere

Town Business Center has come a long way since it opened its “shoe box sized operation in February of 1993,” as Libenson We Saw It In ENX Magazine

refers to his very first location.

To put the growth his business has generated into perspective, his current location (which he switched five times over the course of time to accommodate the influx of inventory), is 90 times the size of that original shoe box sized office.

“I had six copiers as a starting inventory, $200 in cash, a $4,000 line of credit, and a beat-up Chrysler minivan,” he recalls.

Libenson says this matter-offactly, seemingly unaware of the odds he overcame.

Entrepreneurship is inarguably risky; a business surviving past its first year is equivalent to flipping a coin and choosing heads or tails. His coin landed right side up. In eleven months, TBC’s 1993 end of year revenues were over $100,000, a solid number for a brand new business in those days.

With the growth of the little invention called the Internet, an entire new world of opportunity presented itself.

Located in Northeastern PA, TBC is located only two hours from two port cities, New York City and Philadelphia. With this geographic advantage, the business was able to dive into exporting. For the past 15 years it has been cultivating relationships in countries with developing economies, primarily in South America and Asia.

The export-focused wholesale business model was the driving factor for the company’s ability to not only survive, but actually thrive throughout the 2008 economic crash. While most businesses were hurt or forced to close up shop during this time continued on page 42

BREAKING NEWS!

TBC Has Relocated Their Headquarters...

Wow! This place is huge!

Yeah... about three times the size of that old place.

Well, I got some used copiers to get rid of... but some of these guys take forever to pay!

What are they going to do with all that space?

Well that’s what I like to hear!

Fill it up with some more copiers I guess?!

So give them a call today!

I heard TBC pays cash on the spot...

Call 1-888-COPIER-2 Today and get CASH for your Copier!

Town Business Center 767 San Souci Parkway • Hanover Township, PA 18705 Ph: 570-602-1640 • F: 570-602-1643 Email: liron@tbccopiers.com • Email: steve@tbccopiers.com

We Take All Makes Models • Haul It Away for FREE

Town Business Center period, TBC gracefully weathered that storm and seized opportunity in foreign markets with a devalued dollar.

“As the dollar went down, down, down, business went up, up, up,” recalls Libenson of this period. On the contrary, most American business owners shudder at any mention of 2008, as most likely their income statements were in the red.

Relentless Asian Markets

“I get phone calls from companies in China, Vietnam, India, Singapore, even Pakistan. And they all want one thing: more copiers,” states Libenson.

When asked which country he enjoyed doing business with the most, Libenson answers without hesitation, “China. They have two things every business owner loves in a buyer, constant demand and lots of cash.”

Whereas the majority of businesses struggle in finding ways to grow their sales, Town Business Center has the opposite problem. “We need more stuff,” Libenson consistently tells his associates.

As the ecommerce industry began to boom, TBC was able to piggyback on the success of companies such as eBay and its Chinese equivalent, Alibaba. Foreign buyers are endlessly filling up the team’s e-mail and voicemail inboxes requesting more machines. And the orders are not for half a dozen machines—oftentimes orders are for upwards of 100 or 200 units.

“Do these guys ever sleep?” asks Libenson, jokingly referring to his clients in East Asia. “They call the office here at noon, but it’s 2 a.m. their time.”

Domestic Location, International Culture To say the company is a melting pot is an understatement. It’s not uncommon to walk into the warehouse and see visiting

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customers who have traveled 7,000 miles from Buenos Aires or Hong Kong to Wilkes-Barre to look at the 100+ units they are purchasing. Amongst each other, they may be speaking in Chinese, but that is not the extent of the foreign languages spoken on the company’s premises.

Two of Libenson’s employees, a sales representative and an office assistant, are Israelis who communicate with each other in Hebrew. The head technician is from India and often speaks Punjabi with fellow native visiting customers.

Libenson’s college language classes have paid off as well—you can often hear him on the phone conducting business in Spanish with his Central and South American customers.

Having a multi-lingual staff certainly has its advantages. “It provides us the opportunity to communicate and work with interesting people from all over the world,” comments Libenson enthusiastically.

With Growth Comes Scalability Challenges

For the past year, TBC has been facing a challenge most businesses would dream to include on a list of problems—a lack of space due to increased purchases and sales. Of course with every obstacle, there is a solution. In the beginning of the year, Libenson was presented an opportunity to switch locations to a building triple the size of the warehouse he owns in Exeter, PA. As of April 1, TBC has been in its new location with over 94,000 sq. ft. of warehousing and office space. The expansive building has an impressive five loading docks, 12 offices, a conference room, and even a bathroom with luxury shower.

Internally, employees enjoy the rare

privilege of working autonomously. TBC has salespeople based in St. Louis and New Jersey in addition to its main office.

Libenson’s decision to bring on remote sales representatives has been another factor in TBC’s explosive growth, which would have been impossible to achieve if the company had a culture based on micromanagement.

Customer Benefits: Consistency and Speed

Overpromising and under-delivering may be common in business transactions; however, TBC consciously strives to not interact in such a capacity with its clients.

“We do not compromise on paying top dollar for inventory and pick up the equipment promptly,” expresses Libenson confidently.

Beyond a comprehensive list of makes and models, TBC purchases from end users and dealers and what customers appreciate is that they pay in full and in a timely manner.

“Since we are a small business, there is no red tape like there is with large corporations. We take care of everything fast,” adds Libenson.

TBC shows no signs of slowing down.

“We are looking to grow aggressively at a rate of approximately 20 percent a year,” predicts Libenson. “With a building that is triple the size of our previous location, we are definitely open to exploring new opportunities and creating partnerships with other companies in the industry. We are always looking to develop new relationships with suppliers to accommodate the demand for our exporting portion of the business.”

TBC welcomes business inquiries from companies all over the United States and Canada.

As the financial journalist B.C. Forbes stated, “If you don’t drive your business, you will be driven out of business.”

With the past two decades as a benchmark for future performance, Town Business Center isn’t giving up the car keys anytime soon. ✦

We Saw It In ENX Magazine

Charles Lamb

Sales Management News Briefing

What Do You Expect for Your Salary?

A

cross our industry there is often an underlying understanding with dealer principals that the salary they provide to attract sales talent is only bait used to catch the next sales rep. It’s an attraction and comes without clear expectations or authority to define any of the daily sales activity requirements for those you hire.

With each engagement, I see lower expectations and less structure around what is expected of the sales team. I rarely discover anyone being held accountable for anything and that includes the sales leadership. I am amazed at the number of sales reps who are allowed to wander through their month without accountability and if a new hire comes from the industry, there’s often an unspoken defiance just under the surface that says “if you push too hard, I’ll leave” and so, no one pushes. In this case the salary was the hook and the dealer is hoping that the rep brings their renewals and relationships. But remember, giving a salary should have rewards for your side as well. Hooking a sales rep from the industry who may bring their portfolio could have a disastrous effect on other quality sales reps, so be careful about how you use your salary and who it attracts.

Often this is the situation I’m asked to jump into. Dealers don’t always like my answer when I tell them to get rid of the bad apples, or at least the apples that are going bad so we can build a salary and comp plan that will attract quality and build momentum. So what do you expect for your salary? Make it clear!

There are a lot of reasons

why this situation exists. It’s not uncommon to find that the dealer hasn’t put any definition into his or her job offer, its expectations or included a fair wage for it. A salary and compensation plan shouldn’t be just a document you copied from an industry workshop. It’s a unique set of benefits and requirements custom to your company. It defines your desires and demands as well as the rewards, WITH CLARITY! I’m working with several companies right now who have a mismatch of salaries and no sales rep is paid like another.

How do you manage that? I’m told, “Well Bobby didn’t demand as much as Johnny so we just don’t rock the boat.” That’s great until Bobby finds out he’s been working for years way below other reps and quits! Right!

Most likely this type of job isn’t really one that is irreplaceable and so mediocrity attracts mediocrity.

If your job and salary is superior to the competition, few would want to lose it and the cream of the crop out in the marketplace will fight to have it! Manage them well and you’ll have a team that will take direction and will want to perform because they have a lot to lose and MOST IMPORTANTLY they’ll want to stay forever. Isn’t that one of your goals?

It amazes me that many dealer principals expect high turnover!

Continually FUNDING and WASTING dollars when creating a lower salary program is ALWAYS a more expensive way to go. I most recently evaluated a sales program where the dealer had spent $326,000 in a single year on “come and gone” sales reps and managers. And yet, he

continually talked about the guy he would have loved to hire but couldn’t afford! Are you getting the picture? Could he have hired two or three extremely high quality sales professionals for that amount of money? The answer is yes!

I’m not saying run back to the office and hire three excellent sales reps at $100k each, nor am I saying to overpay your sales team.

What I am saying is, if you want quality, loyalty and to create a career for someone vs. just a job, you’ll have to build it. The sales generated by those come and gone reps will always be less than the sales generated by true professionals. When I review their sales results, if there were any sales at all, they were either rolling leases from their previous employer or they were deals that you gave them to help prime their funnel; either way, it could be wasted time, money and effort.

Let’s do some simple math and look at a smaller sales team for my example. If you have six sales reps and two of the six are successful, that leaves four sales reps who are not. I know, I know, you want to nurture those failing reps to success. Most dealers who say that have absolutely no sales improvement plan, skillset or capabilities, so you might as well scream, “I like wasting money,” and then I will understand.

This 80/20 problem exists everywhere; it’s not just your company and in order to fix this situation, we have to define the problem clearly. So here it is: you have four reps who are failing, who each make $3,000.00 per month.

These four sales reps are nowhere near quota, consistently. So 4 x continued on page 46

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We Saw It In ENX Magazine

What Do You Expect for Your Salary? $3,000.00 equals $12,000.00 per month, and for those salaries you get nothing in return. Let’s also mention that those territories are not covered well at all. Am I getting this right? So stop wasting money and fix it! The number one question I’m asked is, “How in the world do you find great sales talent?” And my number

one answer is, “Show me your salary and compensation plan and how many failing sales reps do you have?”

Wouldn’t it be a smarter use of money to release the failing sales reps, create an excellent job description, salary and compensation plan and take the $12,000.00 per month

Contact us today at 888-565-5907 ext. 211 or dwsales@docuware.com

It Pays to Sell Document Management Solutions DocuWare’s products and proven business plan provide you a strong bottom line.

Executive Leadership Council

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($144,000.00 per year) and hire two professionals and an appointment setter? With the salary as the attraction you can demand a higher skilled professional, which gets you out of the nurturing business and provides you on day one someone who can close a sale. Now train them on your value proposition, products and services and hold them accountable for higher levels of sales prospecting activity. The amazing thing is, your company isn’t spending any more money than it was before and you now have reps who can carry the responsibility successfully.

I have folks all the time tell me, “We did that and it still didn’t work,” and then I find out that their sales leader (often the dealer principal) did not deliver the necessary sales activity requirements or hold anyone accountable. The sales team has to be managed, daily.

I don’t have every answer, but I do know that if I am evaluating and attracting sales talent I want to be reviewing candidates from the top of the pool vs. the bottom-feeders. At times I help a dealer engage a sales recruiter and I’ll get a call from that recruiter telling me, “The talent the dealer is seeking doesn’t work for 35k per year!” So, you have to live on planet earth!

move?” they looked at me as if I were crazy. When we reviewed the bottom-line and reviewed all of the inbound and outbound dollars associated with these two reps, these companies were significantly in the hole. Too much salary and most of the leases were renewed way too early so they had a lot of buyout and very little profit. Of course the reps wanted commission too! The bad news is, as soon as the lease renewals ran out, so did the reps—they both left.

What do you expect for your salary? Your salary is a tool and when it’s a well-defined part of your plan, it ensures that both sides benefit.

Have you ever had to clear a field and remove the trees? You can go get your shovel and pickaxe and dig for a week on a single tree without success or you can call a company with a bulldozer and in 15 seconds they push the tree over and drag it away.

Some will continue to dig for six months and tell me that they removed the trees and were successful. If you can only afford a shovel and pickaxe, so be it.

But if you can afford a bulldozer and wasted the six months digging with four shovels and a pickaxe, then you blew it.

You’ll never get that time back and the chance to build mo Let me chase a rabbit for mentum within your company a second and share this warnand marketplace is gone. Who ing. In 2014 I’ve observed two knows, maybe you will even different dealers in different lose a customer or two while marketplaces hire competitive you’re digging. If you need a sales reps who both negotiated bulldozer, hire a bulldozer. an enormous salary by offering What you expect for your their market connections and salary has to be crystal clear and lease portfolio. Both dealers presented UPFRONT at the time were on Cloud 9 and proud of hiring. A salary, regardless as punch to secure these reps. of the job to be done, has got to You’re wishing you were them match earnings for effort. It has right now aren’t you? When I to be fair, but it’s not a gift—it asked them, “Was it the right comes with expectations! ✦

We Saw It In ENX Magazine

Dealer Spotlight

Northern Exposure:

Dean Johnson of Royal Business Systems on Servicing Office Technology in the 49th State

E Dean Johnson Royal Business Systems

arlier this year at the Kyocera dealer meeting in Las Vegas, I met Dean Johnson, service manager for Royal Business Systems in Anchorage, AK, one morning at breakfast. He had a wealth of stories about living in Alaska and the challenges of servicing office technology throughout the state.

We usually interview dealer principals for the Dealer Spotlight, but in this case we’re making what I hope will not be a rare exception as we expand our Dealer Spotlight column to include individuals from all corners of a dealership. They’ve got good stories to tell too.

Johnson has been with Royal Business Systems for 14 years, starting as a service technician before becoming service manager. He’s good at what he does, and he and his team are doing it in a way that most service managers and service techs here in the lower 48 might think, “Better them than me.”

How’d you get started in this business?

JOHNSON: : I was working as an IT support technician for a company that had the contract to service the Alyeska pipeline.

They had all the pump stations up and down the pipeline and we had to remote in and take care of the computers for them. We lost the bid to renew the contract so there were a bunch of IT people out of work; the market was flooded with IT people and you couldn’t get a job. I saw an ad in the paper for a copier repair technician. I had never done that type of work before; however, I grew up working on farms and equipment in Montana and my father was a mechanic so it seemed like a natural transition.

How did you progress into the position you have now?

JOHNSON: I’ve been lucky throughout my life and always seem to move up into management positions. I don’t know why it happens, it just tends to, and this just kind of happened and I became the service manager.

Tell me about the geographic region you service and how far that extends?

JOHNSON: We service the entire state of Alaska. Just to give an example, Alaska is over twice the size of the state of Texas with a population of roughly 736,000 people.

Anchorage has a population of about 310,000 people with the 48

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We Saw It In ENX Magazine

next largest city of Fairbanks having around 32,000 people.

The rest are shot gunned around the state in small villages or towns with limited road access.

The whole state is 586,000 square miles and we cover all of it.

Is there any way to describe who your customers are, SMBs, certain verticals, etc.?

JOHNSON: We service universities, hospitals, oil field support companies, construction companies, and mom and pops.

I always joke around here, we have winter and then we have construction. Most of the equipment we sell and service is below 100 pages per minute.

Tell me about your average day?

JOHNSON: I like to get in at 7:30 a half hour before we open so I can look over the call board, see what we have going on, and take care of any e-mails and things I need to do before the day starts. Then it’s off to the races.

As the service manager I don’t get out in the field as much as I used to even though I still do 90 percent of the networking. We service the entire state and have such a diverse field of machines out there you never know what’s going to come in. The other day we received a call from a company on the North Slope that had a copier down. One of my techs had to walk them through how to fix it over the phone. If he had not been able to fix it that continued on page 50

Northern Exposure way it would have been a long plane ride and two days of him being out of the office.

machine to work on, especially from the IT side. The web interface for networking and device setup is outstanding.

How many customers are you servicing?

How many techs do you manage at Royal?

JOHNSON: We have over 1,500

JOHNSON: Currently we have four technicians, not including myself, with an opening for another. I am always able to go out into the field if needed.

customers.

Do you see that growing?

JOHNSON: We have had continual growth since I started with Royal. Our business model of ‘Service First’ wins us deals and continues to bite into the 1,800 “who cares” business markets of the larger corporate companies.

What’s the best part of your job?

JOHNSON: The people. That’s one of the things about being a service manager; I’m behind the desk more than I’d like.

I prefer being in front of our customers, but it is what it is. I still do 90 percent of the installs; I see people for the first time, I impart my enthusiasm for the product and the company to them and I really like that part of it. They’re almost always glad to see you. And there’s great satisfaction in fixing their problems and leaving them with a smile.

What’s the most challenging aspect of your job?

JOHNSON: The logistics of working in

a state this large with such a limited road system. If you can’t get there by road you’re flying, and they aren’t always big comfortable planes landing at nice big airports. The challenge is getting out to them and getting back.

You service Kyocera, HP, and OKI, any challenges servicing any of those machines?

JOHNSON: Copiers in general have become way easier to work on over the years. Everything is becoming modular and component based. We don’t spend as much time working on a machine as we used to. Gone are the days of rebuilding fusers, drums or developing units. It’s really sped up our response times and our ability to get people up and running faster. Out of all the machines that I have worked on over the years, we rarely turn down an opportunity to work on any brand. Kyocera has by far been the better

How difficult is it finding good help in your market?

JOHNSON: It is very hard to find someone that is willing to show up and give an honest day’s work. We just interviewed four people the other day and the best out of them we rated about a six.

That being said we don’t allow ourselves to be held hostage by the idea that we can’t let someone go because there won’t be another person to replace them.

What kind of IT services do you provide?

JOHNSON: We provide IT for the connection of our devices for print scan and Hypass applications for the Kyocera devices. I also help smaller businesses without an IT company with light network support as a courtesy.

A lot of dealerships talk about response time, how do you measure response time in your market?

JOHNSON: We run our company tech

heavy. We do that because we never know when a guy is going to have to go out somewhere and be gone for a couple of days. When we don’t have a tech working out in the bush or having to drive three and a half hours one way to work on a machine, then our response time in town is amazing. We get a lot of business with our response time, especially up here. There’s only two local companies, the rest are [direct branches]. Our response time for local calls is sub three hours. For calls outside of Anchorage such as Nikiski, which is a 350-mile round trip, it is next day.

At the Kyocera dealer meeting you talked about being delayed by avalanches, what are some of the biggest obstacles you and your techs have faced over the years?

JOHNSON: The big thing is weather. You never know when it is going to strand you somewhere. The weather moves in on one of these small villages and you can be stuck there for three days waiting for it to be clear enough for the small airplane to take off. Also when you get to these places, there’s no store, no hotel, so you’re bringing your own food, your sleeping bag, and you’re sleeping on the floor in a gym in a high school. I’ve even slept in a laundry room once. You’ve got to pack your own stuff and when you get off the plane it’s not like there’s a car waiting for you. So you’re taking a four wheeler or a small boat up a river. It’s a unique environment to work in.

And your techs are okay with that?

JOHNSON: We have a friend who owns his own copier business who was in a plane crash and went through the windshield of the plane and ended up on the ice on the river. He lived, but that kind of thing sticks in some of these guys’ minds. I have a couple of go-to guys and some who pretty much refuse to do it.

How long did it take you to get acclimated to that type of environment, sleeping on the floor after a call, etc.?

JOHNSON: I just did what I had to do.

That’s the job and that’s what it requires in this area. I don’t always like it, but I also like going out and seeing some of those places because it’s really beautiful out there. And the people are great, especially because they rely on each other so much for everything. When you show up and you’re there to work on their equipment, you’re not just working on their equipment, you’re probably going to be working on every piece of equipment in town because they’re just happy to have somebody in town to fix something.

Are these weather-related issues seasonal?

JOHNSON: Unfortunately it’s year round for the weather. You can get stuck with rain—most of the villages on the outlying coast are all flat tundra and the winds come whipping through there.

continued on page 52 50

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Northern Exposure Planes are taking off almost sideways in order to get in or get out. It’s weather and terrain. Sometimes you’re flying through these mountain passes. That’s the big thing, just getting to where you need to go and getting back. There are only three major roads in the state and only one to get out of the state.

What do you do for fun when you’re not servicing equipment?

JOHNSON: My wife and I have two kids and we have a cabin on Big Lake close to Anchorage so we spend most weekends in the summer boating and jet skiing. We have four wheelers and snow machines. When it’s nice you’re outside because in the winter you’re inside. As soon as summer hits I get the itch.

How does the rest of today look for you?

JOHNSON: Our salesmen have been selling like crazy; I have six new builds I have to get done today, then the Coast Guard needs a card authentication install. I have to do that today and then I have a delivery this afternoon. It’s going to be a busy day.

Can you imagine yourself doing anything else?

JOHNSON: No I can’t. When I’m interviewing guys and I tell them about the job, I tell them how you’re out of the office a lot and the days go by quick. Even being in the office, the days go by quick. And it’s the people, I like helping people. Ninety percent of the time they’re happy to see you and happy when you get their machine fixed. I always tell people it’s one of the only jobs where you can be happy telling somebody I hope I don’t see you soon. ✦ 52

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We Saw It In ENX Magazine

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Sales & Marketing

Coaching Your Salespeople

G

ood sales managers spend a significant portion of their time on the coaching and development of their salespeople. This is your opportunity to become a difference maker in your salespeople’s career. Something you need to understand is this: Your entire value to your company is based on the difference between your sales force’s performance unmanaged and their performance under your tutelage. That’s how you earn your money – by getting your people to perform better than they could on their own.

Of course, coaching salespeople could entail an entire book – and will when I write that book – but this article is designed to give you the basics.

You aren’t trying to get your salespeople to sell like you; you are trying to produce profitable behavior change. This means that, anytime you can improve their abilities, it’s a win – even if they’re selling differently than you. I emphasize this because too many sales managers want salespeople to sell in their own image. That doesn’t work, and in fact, it’ll shut salespeople down.

So, with that, here is an elevenpoint plan for effective coaching:

1. Observe them in the real world. Yes, you can coach through role-playing or training. However, to be the most effective, you should coach based on an actual sales call. Get out of your office and ride along, preferably on multiple calls. On multiple calls, you can observe patterns of behavior.

2. Define the call objective correctly. Your salesperson

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should have an objective for the call – deepening a relationship, advancing a sales process, initiating or closing a sale, etc.

You should define their objective prior to the call. Then you should define your objective, which is to observe the call and the salesperson in the real world.

Make it clear that you won’t be helping, and that you’ll speak as little as possible. You’re there to help them on future calls, not this call. NOTE: there may be joint calls where you are there expressly to help win the business (for instance, a very important account). That’s okay, but define that with the salesperson beforehand. And you should have a good mix of coaching calls with “assisting” calls.

3. Have the right attitude in the calls. The reason most sales managers fail in coaching is that they have the wrong approach during observation.

They’re focused on winning the business and selling, not on improving the skills of their salespeople. On coaching calls, you must not involve yourself and change the direction of the sales call! You are an observer, not a participant. Your entire focus should be on analyzing your salesperson’s in-call behavior. That means – and this is one of the most painful parts of sales management – that you must let them fail, if they are failing.

4. Observe the right things.

Your focus should be on the customer. Watch for moments where the salesperson moves the customer closer to the call objective – and where they fail in doing so. Take good notes – not on the customer’s needs and situation, as you

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would if you were selling – but on the salesperson’s questions and presentations, and how that affects the customer. Is the customer participating and moving things forward, or is the customer pushing a rope uphill?

5. Don’t curbside coach.

Here’s another aspect of effective coaching that can be really hard. As soon as the call is over, your salesperson will be saying, “So, how did I do?” You’ll have a head full of information that you want to give them. Don’t. At least not now. There are two reasons for this. First of all, you want to observe patterns; repeated patterns are the best place to coach. Secondly, you need to take the time to organize your thoughts and prioritize your help and advice. You can’t do either of those things if you’re curbside coaching on the spot.

6. Prepare and prioritize.

Take time after the joint calls to create a coaching feedback.

List the major things that the salesperson did right, and then list the major areas where the salesperson needs improvement. Now it’s time to prioritize – you shouldn’t attempt to change more than three behaviors at a time. If there are more than three behaviors that need coaching, prioritize. Which three will generate the best ROI? Focus narrowly – you can always revisit the other behaviors.

7. Set the right environment.

When coaching your people, you want a neutral environment.

The conference room (with both of you on the same side of the table), lunch, even coffee at Starbucks – all of these are good. At your desk

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Coaching Your Salespeople with you on one side and the salesperson on the other – not so good. (The only exception is when you’re coaching to prevent failure). The office environment creates a power dynamic that prompts a salesperson to set up their defenses. The message you want to send is that you are on the same side.

8. Avoid “Do it like me.” Your salesperson isn’t you, nor do they have to be in order to succeed. But if you try to get them to sell just like you, you’ll put up their defenses and they’ll be reluctant to adopt new behaviors. Instead of, “I

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would have done this,” your philosophy should be, “This will produce a better result.” Don’t be afraid to allow your salesperson to adapt techniques to their own selling style.

9. Sell, don’t dictate. This is where your selling skills come to the fore. Ultimately an improvement in the salesperson’s selling skills will benefit them through higher productivity.

The temptation is to dictate what they ‘must’ do; however, it’s better to sell them on what they ‘should’ do. Present the benefits of adopting the new behavior, and then close and gain commitment.

10.Role Play. After selling the new behavior or technique, you should immediately role-play the new behavior. Go back to the situation in question during the call. You be the customer, and have the salesperson role-play the scenario, implementing the new technique. Repeat until they get it right.

11.Revisit. To make sure that the salesperson is implementing the new techniques or behaviors, you should go back out on joint calls within 2-3 weeks after the coaching session. Don’t get discouraged if you have to go back and redo the coaching.

Sometimes it takes repetition to truly teach the new behavior. ✦ This is an excerpt from the upcoming book, “The Pocket Sales Manager,” by Troy Harrison.

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Jim Zipursky

Exit Strategy

5 Biggest Deal Killers

I

n last month’s article, we concluded the three-part series on the Biggest Mistakes Buyers Make. In this article, we examine the 5 Biggest Deal Killers.

Deal Killer #5: Misunderstanding Risk

Any transaction involves a certain amount of risk for both buyer and the seller. The key point here is to understand and measure the risk and determine your own specific level of risk tolerance.

Several years ago, we worked with a seller client who was in her late 60s and owned a modestly profitable distribution business.

The owner and her attorney told us they would not make any representations and warranties about the accuracy and validity of the information they would provide to potential buyers. Furthermore, they would not provide any indemnification to buyers. The attorney said, “Our client wants absolutely no risk after she sells her business.” We told the client we might find buyers willing to

tion. This is especially important to remember as you move into negotiation of the legal documents and when meetings with your attorneys devolve into discussions of “worst case scenarios.” While we appreciate the minimization of risk, running a business is a risky venture in and of itself. By selling your business, you are trying to minimize risk, but you will not be able to eliminate all of your risk… unless you are willing to take a huge discount to do so.

Deal Killer #4: Poor Process Preparation

We often tell our seller clients, “Selling a business is a marathon, not a sprint. You have to be prepared for a long process.” Too often, sellers and buyers are not prepared for the process of selling or acquiring a business.

We encourage sellers of businesses to seek the counsel of trusted advisors who have experience in transactions to guide them through the rocks and shoals of the selling experience. Too often, we speak to sellers who say, “My best friend sold his company in 30 days.” Unfortunately, selling your The key point here is to understand and company in that time span just measure the risk and determine your own isn’t realistic…especially if we specific level of risk tolerance. consider the entire process, from start to finish. accept these conditions, but the First and foremost, are you buyers would factor the increased mentally prepared for the process level of risk into the prices they and are you committed to the prooffered for the business. End of cess? (See Deal Killer #3 below the day, our position was proven for more on this point.) There are when buyers, faced with accepting going to be peaks and valleys and 100% of the risk in the transacyou may feel as though you are tion, offered the seller less than on a roller-coaster. If you are not 25% of what we all thought the ready for the ride, you shouldn’t business was worth. get on.

Buyers and sellers each need Second, are you ready for buyto assume some risk in a transacers to visit you at your business

and to provide them with all the information they need, both for the marketing of the company and the due diligence process? It is unreasonable to think you can sell your business without sharing information about the company with potential acquirers. If you are unwilling to share any information about your company, you will have big problems trying to sell it.

Marathon runners train for weeks, months or years to run a marathon. You need to train and prepare yourself for the sale or acquisition of any business before you enter the race.

Deal Killer #3: Emotions

There is an old saying, “Business owners should not fall in love with their iron.” Broadly speaking, what this means is business buyers and sellers should not fall so deeply in love with their ideas or their “stuff ” that they are unable to part with them.

We have seen deals tank and crater over the most ridiculous reasons: the seller who torpedoed a deal because the buyer would not agree to provide the seller’s daughter with a lifetime employment agreement (even after the buyer pointed out the seller was not willing to give such an agreement to his daughter); the buyer who scuttled a transaction with our seller client because the seller had the temerity to ask to keep the artwork in her office, much of which was created by her grandkids; the seller who killed a deal because the buyer would not guarantee to keep the business in its current location….forever; the seller who terminated discussions with the buyer after the acquirer mentioned their plans to replace continued on page 60

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5 Biggest Deal Killers the seller’s older equipment, much of which was built personally by the seller, with more modern, efficient (and lower operational cost) machinery.

Buying or selling a business is an emotional experience, especially for founders of businesses. When you enter the process to sell or buy a business, you need to remember to check your emotions at the door and remember the words of Don Corleone, “It wasn’t personal, it was only business.”

Deal Killer #2: Surprises

When you are a child, surprises are exciting. However, when you are selling or acquiring a business, surprises are not fun and tend to kill deals.

If you have issues or problems you need to “hide,” rest assured, the other party will find out about them and the consequences will not be pretty or enjoyable.

We have a saying, “If we disclose the problem to the other side, it is like a small cut that can be easily bandaged and repaired. However, if the other side discov-

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ers the problem without us telling them, it discussions with buyers. We disclosed the will require major surgery to repair. The magnitude of the issue and the potential surgery may kill the patient—in this case, risks to the acquirer. End of the day, we received several offers from buyers who the deal.” all said they understood the IP risk and We also tell our clients, “Disclose, were willing to proceed with the transDisclose, Disclose.” Of course, there may be things you cannot action in spite of this disclose until a certain perceived risk. Had we ...there is no bigger point in the deal (espenot approached the iscially if the other party sue of IP risk head-on, deal killer than Time. is your direct competiwe would not have had tor), but you are always the successful outcome better off disclosing issues than hoping we achieved for our client. the other side does not discover them.

When in doubt, disclose and avoid For example, we were engaged to sell surprises in a deal at all costs. a client who is a distributor of compatible Deal Killer #1: Time cartridges and related products. As we Simply said, there is no bigger deal killer all know, IP litigation is an industry risk than Time. Move too fast or too slow and and our client had been embroiled in a you will certainly kill the transaction. couple of the major suits we have all read For sellers, deals seem never to move about. The buyers we approached for this quickly enough. Once an owner makes up seller were not familiar with the industry. her/his mind to sell her/his business, the Rather than bury the IP litigation risk in process can never move as quickly as they hopes the buyers would either not learn would like. They want to get as quickly to about the risk or would not be concerned, a close as possible. However, buyers often we put the issue front and center in our get spooked by sellers who insist on mov-

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5 Biggest Deal Killers ing too quickly, telling us, “If the seller is so eager to sell, there must be something they are afraid of happening soon.”

For buyers, deals seem never to move slowly enough. Most acquirers are very careful and want ample time to review data and financial information about the company. A typical refrain we hear from the chorus of buyers is, “What will they do this month? We want to wait and see the current results before we move forward.” This seemingly endless do-loop of “wait and see” from buyers is a sure-fire deal killer.

Sellers must understand the process of selling a business takes time; we estimate the due diligence and closing process alone may take between 60 and 120 days to complete. If an SBA-backed loan is involved, the process can take longer.

That is the time needed to close the deal and does not account for the time it takes

to get an offer. Patience is a virtue for sellers.

Buyers must understand by continuing to drag out a deal, they risk trying the patience of the seller and losing the deal by “leaving it on the street” too long. This is especially important for buyers who are not involved in a “formal process” where they are the only buyer negotiating the deal with the seller.

There is a very delicate balance between too fast/too slow in transactions.

My 25 years of experience in the M&A business has taught me time in deals is a little like Goldilocks: we aim for “just right” but it is an inexact science at best.

Plus, surprises, emotions, deal preparation, and risk factors also play into the timing of a transaction. If you remember you are preparing for a very long race and need to be prepared for everything, and most importantly, you need to be patient,

you will avoid all 5 of the Biggest Deal Killers.

I am happy to answer any of your questions regarding this subject or any previous articles. In my next article, I’ll discuss the subject: Foreign Buyers, Myth or Reality. ✦

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67

Britt Horvat

Technical Tips

Xerox® WorkCentre® 5945 / 5955 Fuser Modules

Repairing and Rebuilding the Fusers for the WC-5945 & 5955

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5945 Fuser Assembly

ast month we took a peek at the drum cartridges (imaging units) for the brand new WorkCentre 5945 style. I like the looks of these new models so I was curious about the consumables. Now let’s have a shot at the fuser modules.

The WC-5945 / 5955 fuser modules are sold under the part number 109R00847 in the U.S. (110 Volts) or 109R00848 in European markets (220 Volts).

According to the brochure, this fuser is rated for a stated yield of 250K. If a Google search is to be trusted, the price of this fuser lands around $300.

I have to admit I was originally lured into taking a closer look at this fuser because from the outside, many of the parts looked familiar. I hoped I would find that some of the parts

Photo #1: Inner Cover Removal (3 screws)

were already available. Well, looks can be deceiving. Very few parts in this fuser are available as of yet, although I’m certain this will change with time. The heat roll looked familiar at first glance, but it is not like any earlier heat rolls we have seen. Also the picker fingers looked like those found in a much older model (think circa 1990 with the analog copier models 1012, 5011, 5012, and 5014), but again they did not prove to be the same, in spite of being the same basic design idea.

The one thing which was very nice is that the CRUM chip is already available (5945FCN). So the fuser count can be reset easily by replacing just the CRUM chip.

This CRUM chip is easy to get to too, mounted right on the outside of the fuser with one screw.

Let’s get right into the procedure starting with the location of the fuser CRUM chip (Customer Replaceable Unit Monitor). It can be found mounted to the inner face of the fuser by one screw—piece of cake. This piece tells the machine which version of fuser it is (110 volt vs. 220 volt) and the machine counts on the CRUM chip, keeping track of the copy count which the fuser has used so far.

PROCEDURE:

Photo #2: Exit Baffle Cover (4 screws) 68

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www.enxmag.com | July 2015

1. First, remove the inner cover (3 screws – 5.5mm nut driver or #1 Phillips head) (see Photo #1). This gives you access to the 2 fuser thermostats and the thermistors.

2. Replace the fuser CRUM chip

(1 screw), which is mounted on the inner cover which you just took off.

3. Next remove the outer cover (the piece which faces you when you see the fuser in the machine. It has the two handles and the two thumbscrews on it.

It is held on by 2 screws from the outer face—one near the front end and the other near the rear end.

4. Now you’ll go after the exit baffle which is just opposite of the picker fingers. Start by taking off the plastic cover on that baffle (4 screws, see Photo #2).

5. The exit baffle has a pair of pull springs (one at either end) which work to keep the baffle closed. Use a spring hook to release the springs (first take note where they hook in because it’s not that obvious later. See Photos #3 & 4). Once the springs are off, you can pivot the baffle away from the heat roll and the picker fingers.

You’ll want to pay attention from this point on, taking care not to allow this metal baffle to flip back against the heat roll as it could cause damage.

6. The picker finger assembly can now be removed (4 screws, see Photo #5).

7. Next, take off the outer frame which is a metal frame piece held by 2 screws from the front end and 2 screws from the rear end (refer to Photo #6 which shows the front end).

8. Disconnect the heat lamp’s continued on page 70

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Repairing and Rebuilding the Fusers for the WC-5945 & 5955 spade lug connector from the front thermostat (see Photo #7).

9. Take note of the positions of the front and rear pressure tower screws. Mark them if you need to, so you can return them to the same positions when you reassemble the fuser later. You’ll want to end up with even pressure from end to end. Back out each of the pressure tower screws halfway first, then continue to back each out the rest of the way till they’re all the way out.

10.With the pressure tower screws released, the pressure roller’s holder arms can pivot open till you can lift the pressure roll out of its cradle (see Photo #8).

Before you remove it, take note how the outer exit baffle frame pivots on the two press roll bearings. The press roll bearings have their flanges positioned outside of the press roll frame’s cradles and they’re held onto the press roll’s shaft by a pair of e-clips.

11.The two thermistors need your careful attention. They are fragile. The

thermistor heads are metal coated with a very thin layer of Teflon or a similar material (see Photo #9). They are like the ones in the C123 fuser modules which were known to wear out shortly into the second cycle. The recommendation is to put one layer of thermistor tape (Kapton tape) around them, fixed in place so the tape cannot fall off. This tape will protect the surface of the thermistor head and add longevity to your repaired fuser module.

It is important that the tape is only one layer thick at the contact point and that it cannot buckle the head away from where it makes contact with the heat roll’s surface.

12.Next you’ll be gunning for the fuser heat roller. Remove the front lamp holder bracket (1 screw, refer back to Photo #6), and loosen the rear lamp holder bracket by removing the one accessible screw (refer back to Photo #8). Note that the rear lamp

holder bracket also has the main fuser connector attached to it and there is a second screw tucked in behind the wires which you need not remove. You only need a little wiggle room so you can sneak the bulky heat roll gear out of the frame in the next step.

13.Now gently raise the heat roller’s front bearing out of its frame, followed by the rear bearing. Slide the fuser heat roll out over the heat lamps and their wires.

(Note about the fuser heat lamps: the Hi-Watt lamp is 115V / 825W with a white wire, and the Low-Watt lamp is 115V / 655W with a red wire).

14.Reassemble the fuser being careful in particular with the thermistor heads and the pressure tower screws’ positions like we talked about earlier.

Nicely done! Now that you know how to tear into one of these, hopefully the heat rolls and press rolls will become available soon for us all. Enjoy your summer everyone! ✦

Photo #5: Picker Finger Assembly (4 screws)

Photo #3 & 4: Exit Baffle Springs

Photo #8: Press Roll Holder Pivots Open

Photo #6: Front End of Outer Frame

Photo #7: Disconnect Heat Lamp Terminal Photo #9: Fragile Thermisotr Heads

70

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