Enx June 2015 issue lr

JUNE 2015

VOLUME 22 NO. 6

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

engage ‘n exchange engage ‘n exchange

Leasing & Financing: What’s New for 2015?

Weak Yen Still Benefits Japanes Firms but Signs of a Cooling Market Emerge

Service Excellence Diamond Award Winner

Corporate Business Systems

What’s Your Selling Style: Standup or Improv?

IT Services

for Office Equipment Dealers

Marketing at the Speed of Business Home Field Advantage:

Business Profile

Plus Inc.’s David Carson on Selling Production The 10 Biggest Mistakes Business Buyers Make

ENX Magazine ENX Magazine PO Box 2240 Suite 729 PO Box 2240 Suite 729 Toluca Lake, CA 91610-0240 USA Toluca Lake, CA 91610-0240 USA tel: 818-505-0022 tel: 818-505-0022 / fax: 818-505-9972 fax: 818-505-9972 email: enx@pacbell.net email: enx@pacbell.net www.enxmag.com www.enxmag.com

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e e n n xx EDITOR’S NOTE 16 Between 14 the Lines: Calling All Elite Dealer Candidates Between The Lines EDITOR’S NOTE EDITOR’S NOTE EDITOR’S NOTE

In This

24 Leasing 22 & Financing: What’s New for 2015? of 2015 2015 Trends and Trendsetters of INDUSTRY STATE THE INDUSTRY STATE OFOF THE INDUSTRY STATE OF THE INDUSTRY

Issue

ByBy Scott Cullen Scott Cullen

By Scott Cullen

NEWS BRIEFING 28 32 Weak Still Benefits Japanese Firms Signs of a Cooling Emerge HPYen Sheds More Resellers As Implements New Qualified As It Itbut Implements NewMarket Qualified NEWS BRIEFING NEWS BRIEFING NEWS BRIEFING

e n x

By Charles Brewer EDITOR’S NOTE Program 16Supplies Between The Lines

In This36 24By Charles Brewer BUSINESS PROFILE

STATE OF THE INDUSTRY Mito Color Imaging Company Limited: A Model of Consistency for Color BUSINESS PROFILE PROFILE BUSINESS PROFILE TrendsCartridges and Trendsetters of 2015 Laser Toner

Issue3840 44 32

Static Control

By Scott Cullen

Staff Staff

DEALER SPOTLIGHT NEWS BRIEFING DEALER SPOTLIGHT: SPOTLIGHT: DEALER SPOTLIGHT:

Field Advantage: Plus Inc.’s David Carson New on Selling Production 44 Home HP Sheds More with Resellers AsJustus, It Implements A Going Conversation Keith President of Keith Justus, PresidentQualified of Business Business and Up Against Bigger Competitors Supplies Program Copier Solutions

By Charles Brewer

44 SERVICE EXCELLENCE at the Speed of Business 48 Marketing 40 Services and ENX Magazine Static Control Magazine to to Acknowledge Acknowledge Service Service ByBEI Charles Lamb SALES & MARKETING SERVICE EXCELLENCE SERVICE EXCELLENCE BUSINESS PROFILE

Excellence in 2015

DEALER SPOTLIGHT: Excellence in 2015 48 44

Staff

SERVICE EXCELLENCE DIAMOND AWARD WINNER A Conversation with Keith Justus, President of Business SALES MARKETING MARKETING SALES & & MARKETING Corporate Business Systems’ Legacy of Quality Service Continues

Solutions 54 Improve TheCopier Year Ahead

by Managing the Metrics

SERVICE EXCELLENCE

By Brad Roderick 48 BEI Services and ENX Magazine to Acknowledge Service SALES MANAGEMENT

Susan Susan Susan Neimes Susan Neimes

52 What’s Excellence MANAGED IT in 2015 Your Selling Style: Standup or Improv?

58 ByHow Brad Roderick to Win Over a New Prospect Prospect

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

Susan Neimes

to

MANAGED MANAGED IT IT

SALES & MARKETING 54By Dave The Year Ahead Sobel

By Brad Roderick 56 IT EXIT Services for Office Equipment Dealers STRATEGY 60 By58The Bill Lowrey 10 Biggest Mistakes Business Business Sellers Sellers Make Make –– Part Part 11 of of 33 How to Win Over a New Prospect

By Jim Zipursky

By Dave Sobel 60 TheDisplay 10 Biggest Mistakes Business Buyers Make – Part 3 of 3 Advertisers Index Index 62 By60JimThe Zipursky 10 Biggest Mistakes Business Sellers Make – Part 1 of 3 of Events Calendar of Industry Industry Events

By Jim Zipursky 65 Calendar 69 Printer Tech Tip Display Advertisers Index Printer Tech Tip Laser Pros 66 By62By Laser Pros Prosof Industry Events Calendar 65By Laser 70 Tech Help Printer Tech Tip and Rebuilding the Print Cartridges for the Xerox Free Tech Help 66Free 68 Repairing MANAGED IT

Publisher & Managing Editor

EXIT EXIT STRATEGY STRATEGY MANAGED IT

EXIT STRATEGY

EXIT STRATEGY

Scott Cullen Scott Cullen Scott Scott Cullen

Editorial Director Editorial Director Editorial Director Editorial Director

PRINTER TECH TIP

Scott Cullen

Editorial Director

TECHNICAL TIP

By Laser Pros WC-5945 & 5955 By

By Smarka!

Smarka!

By Britt Horvat Free ® ® Tech Help 68Xerox 4110 Style Fuser Repairs Repairs

Ronelle Ingram Ronelle Ingram Ingram Ronelle Ronelle Contributing Editor

Contributing Editor Contributing Editor Contributing Editor Ronelle Ingram Contributing Editor

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By Smarka!

By Britt Britt Horvat Horvat 64 70By Xerox 4110 Style Fuser Repairs

By Britt Horvat 68 DISPLAY ADVERTISERS INDEX ®

CALENDAR OF INDUSTRY EVENTS

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engage ‘n exchange

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Christina Kim Kim Christina Christina Kim Christina Kim Christina Kim Associate Editor Associate Editor

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

Corporate Office Corporate Corporate Office Office Susan Neimes -- susan@enxmag.com Corporate Office Corporate Office Susan Neimes susan@enxmag.com Susan Neimes susan@enxmag.com Susan Neimes susan@enxmag.com 10153 1/2 Riverside Drive., Suite 729, Toluca Lake, CA 91602 Susan Neimes susan@enxmag.com 10153 1/2 Riverside Drive., 729, Toluca CA 10153 1/2 Riverside Drive.,- Suite Suite 729, Toluca Lake, Lake, CA 91602 91602 10153 1/2 Riverside Drive., Toluca CACA 91602 tel.

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818-505-9972 Editorial Office: Editorial Office: Editorial Office: Editorial Office: Scott Cullen scott@enxmag.com Editorial Office: Scott Cullen Scott Cullen - --scott@enxmag.com Scott Cullen - scott@enxmag.com scott@enxmag.com Scott Cullen scott@enxmag.com 21 Llanfair Lane, Ewing, NJ 08618 •• 609-406-1424 tel. 609-406-1424 21 Llanfair Lane, Ewing, NJ 08618 • tel.

21 Llanfair Lane, Ewing, NJ 08618 609-406-1424 21 21 Llanfair Lane, 08618 • tel. tel.

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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.

Bill Lowrey | Bill Lowrey is the Services Marketing Manager of All Covered, IT Services from Konica Minolta

Brad Roderick | Executive Vice President, Brad Roderick sets Sales and Marketing strategy for InkCycle across all channels and is responsible for the entire “Customer Experience” from products to partnerships.

You can reach him at broderick@inkcycle.com or find him on Twitter @BradRoderick.

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. Feel free to contact Jim at (402) 330-2160 or jaz@cfaomaha.com.

B E T W E E N

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L I N E S

Calling All Elite Dealer Candidates And so the countdown begins to the December issue of ENX when we announce the 2015 Elite Dealers.

We had tremendous participation last year and we encourage you to participate again this year, or for the first time if you haven’t participated before. We’re already receiving completed nomination forms.

The Elite Dealer issue celebrates entrepreneurship in the document imaging industry, as well as success, creativity, perseverance, and community involvement. We feel that it’s important to acknowledge from the start as we often do that the dealers who achieve Elite Dealer status are not limited to those whose revenues are through the roof, although some of those are among that group.

Whether it’s a $150-million dealership or a dealership doing less than $5 million in business, we invite everyone to participate. You don’t need to be selling $150 million in products to be creative, a caring member of your community, or a great place to work—all traits that help define an Elite Dealer.

You can find the nomination form on our website www.enxmag. com when you scroll down to the left side of the page to the Elite Dealer logo. Clicking on the logo will take you to the nomination form. Short answers are fine, but the more information you provide, the easier it is for us to make our selections. A few areas you might want to delve deeper into are innovative marketing programs, what makes your company a great place to work, and why customers like doing business with you above and beyond the great service you provide. It shouldn’t take all that long to fill out. You’re also welcome to mail me your submission along with any additional information to support that nomination to Scott Cullen, 21 Llanfair Lane, Ewing, NJ 08618.

I truly enjoy putting this issue together and appreciate the opportunity it provides to learn more about the dealerships that contribute so much to the document imaging industry. This issue also serves as an introduction to dealerships who I may not already know.

The deadline to get in your completed Elite Dealer nomination form is September 1, 2015, but the sooner you send them in the better. Those selected as Elite Dealers will be notified by the middle of October and profiled in the December issue.

Thanks for reading and we’re looking forward to learning more about your dealership.

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.

T H E

Scott Cullen Editorial Director

We Saw It In ENX Magazine

EQUIPABILITY Deep expertise and experience from CIT in equipment finance.

CIT provides lending and leasing services to businesses that manufacture — and use — the equipment that powers the economy. Our customized financial solutions for small and middle market businesses, as well as transportation companies, deliver the capital and ideas they need to grow.

Learn more about our lending and leasing services.

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™

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State of the Industry

Leasing & Financing: What’s New for 2015?

T Scott Cullen

he leasing and financing companies aren’t sitting back and doing what they’ve done last year. No way.

They continue to create new programs to meet the needs of their customers and keep up with changes in the market. It’s inevitable and what needs to be done in order to keep pace.

This month we contacted some of the industry’s top finance companies to learn about the new programs and products they’re bringing to dealers this year and what’s in the pipeline for the rest of the year, many of which are the result of key trends such as digital signage, 3D printing, and the emphasis on services that are sweeping through the document imaging industry.

A separate article focusing on the trends impacting their current and future leasing and financing program offerings will appear online in the June issue of ENX/ The Week in Imaging.

CIT Equipment Finance

At CIT Equipment Finance, the products and capabilities it’s bringing to market are consistent with the changes in the market, according to Nick Small, managing director, U.S. “We’ve seen a real shift in the marketplace— office imaging manufacturers and dealers are starting to acquire Nick Small CIT Equipment or develop capaFinance bilities around technology, service, and solutions offerings.”

As a result he says, end user customers are asking their equipment suppliers to provide them 22

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with a total solution that includes equipment, services, software, etc. That ability to provide a total solution is something that’s sweeping the finance industry.

“Customer interests seem to have changed to the point where they want it as a utility—one price for total services,” says Small.

However, total services come with a caveat in that it’s difficult to identify where the risk lies in the transactions.

“From an administrative perspective you may actually be handling billing from multiple parties, and in some cases a higher percentage of soft costs in transactions as some of these solutions have moved away from traditional hardware and more towards solutions and services,” states Small.

As a result, CIT is concentrating its focus on two things in 2015. First, the company is preparing to roll out more flexible offerings powered by its proprietary home-grown software.

“It’s two pieces,” explains Small. “One is a deal structuring engine so it’s different than the traditional lease receivable systems we’ve all operated in. It allows our vendors and our customers to be more creative in how they want to structure the solution for the finance offering. And it allows us to build that without the constraints of traditional receivables platforms.”

The second piece is an application called Flex Invoice, which allows CIT to customize invoice presentment to fulfill unique customer or dealer requirements.

“In addition to customizing the invoice data, messaging and design, FlexInvoice makes it easy for CIT We Saw It In ENX Magazine

to pay multiple parties involved in the transaction for their variable services provided. For example, if a dealer serves a client with offices throughout the country, and they outsource the breakfix services to partners in other markets, FlexInvoice seamlessly reimburses those customers for services rendered whether at fixed or variable rates and whether the frequency is planned or as delivered,” says Small. “That administrative capability is what’s going to allow dealers and their customers to pursue more of these total solutions versus the traditional lease with hardware, and maybe a service bundle. Now they can pursue a complete offering based on what the customer is looking for without concern for the complexities of the administration.”

Another area CIT is focusing on is vendor integration. “We’re going to a whole new level with our vendors, not just with the standard B2B connectivity, but working in conjunction with our systems and our vendors’ systems so deals can be built in one place, eliminating redundant inputs, and most importantly ensuring complete reconciliation of the data between us and our manufacturer and vendor partners,” states Small.

For the OEMs, this eliminates a lot of manual steps. “With the integrations and systems we developed, they don’t need to do any complicated calculations internally,” says Small.

That, he adds, encourages them to be fully integrated with their partner.

At press time CIT was planning to roll this out with one of the OEMs, followed by a roll out to the dealer community. “That continued on page 24

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Leasing & Financing: What’s New for 2015? will be a real benefit to the dealers that work with us because it will give them a wholly different experience for how they process their business and ultimately their reporting and the availability of information,” adds Small.

As OEMs acquire services and solutions providers, they don’t always have the capability to integrate their systems quickly. CIT is responding to that need too.

“By integrating with us, they just feed us the data and we do the integration behind the scenes,” says Small. “They can do a consultative sell to the customer, sell their solutions and services, and we can package it into one deal, handle the administration and provide the key accounting back to their system. It greatly improves data integrity and data alignment between CIT and the dealers, leading to a positive customer experience.”

Everbank Commercial Finance

The two key words for Everbank Commercial Finance and its dealer partners in 2015 are “Total Solution.” That’s in response to changes in the firm’s marketplace strategies and changing dealer expectations.

“Many dealers have multiple segments of their business—copiers, printers, as well as Managed Services, Managed Print Services, and Document Management— so we’re looking to put a master agreement in place so they can go to an end user and bundle all of those solutions together in one finance product,” reports Fred Carollo, vice president of originations Fred Carollo Everbank Comfor EverBank Commercial mercial Finance Finance’s Office Products Platform. “As simple as it sounds, there’s a real need for it.”

A Total Solution sounds great, but when asked if it’s all that simple, Carollo responds, “Yes and no. The concept is simple, the execution is not.”

The most important thing, he says, is the output and what the invoice looks like to the end user.

“The documentation and invoice have to be flexible because for varied solutions they want the invoice to look different,”

explains Carollo. “It could be an entire group of solutions listed in a total payment, it could be each one of the solutions broken out individually and summarized in any variation.”

Everbank is also focusing more on higher volume devices such as production print, a segment Carollo believes has been somewhat overlooked or underserved by some of the finance companies.

“They’re different from a regular copier from a pricing and agreement perspective,” he explains. “It’s different from some CPP and print out programs because it’s not your standard product where it’s in constant use by the end user. Usage often varies quarter by quarter and it’s difficult to estimate [usage] at the beginning, so we’re working on a product with a lot of flexibility to protect the dealer and the user.”

Another area of focus in 2015 is its internal technology. By that Carollo means gathering information from meters more efficiently. “We’re trying to take that to a different level for our vendors,” he says.

“We are regularly told that our dealer portal, where vendors submit transactions and manage all of their portfolio information, is best in class. We’re trying to expand that and make it even more relevant as well as easier to use and administer.”

Mobile technology is another area that Everbank Commercial Finance is concentrating on. “We’re trying to give dealers’ sales reps more tools so when they’re doing a transaction they have the information they need to get it done while in the field as well as real-time updates on their devices,” states Carollo.

Two product segments where Everbank sees a lot of promise and growth are digital signage and smartboards.

“At this point in time, from a residuals standpoint, it’s kind of tough to get your arms around,” states Carollo. “We’re already financing digital signage and smartboards but are looking to do more, and, for lack of a better word, do it smartly.”

GE Capital

It continues to be business as usual at GE Capital as the finance company examines ways to help its customers sell more in a challenging marketplace. Using feedback

from its Customer Advisory Board, GE Capital’s Glen Clark identifies challenges, including multiple competitors and similarity between machines, which have made it difficult to differentiate the products in the marketplace.

One area GE Capital has identified where it can help is sales training. “Obviously we sell the biggest commodity out there and that’s dollars,” says Clark. “We spend a lot of time internally on how to provide value and how to get to the crux of the customer’s issue, and how to solve their problems, not necessarily sell them something.”

Those issues are important to GE CapiGlen Clark tal’s dealers as well and GE Capital it offers a two-day workshop for dealers’ sales people. “We also do short snippets,” adds Clark. “Our regional sales manager might show up at a dealership for a Friday sales meeting and spend 10 minutes on overcoming objections, for example, and just add these little pieces into that presentation.”

Clark says he’s received great feedback from dealers who tell him that GE Capital is helping them sell, which is a strong value add.

The ultimate goal is delivering results for its customers. “Along this line of helping our dealers find new customers, we’ve developed a prospecting tool for them that they can access online,” says Clark. “The tool provides folks with a list of prospects in a particular area and we’ve done some enhancements to it so a sales manager can go in and get a list by zip code, for example, and hand that out to his people.”

GE Capital also has a feature that allows the dealer to look for opportunities within a particular industry, which is ideal for dealerships with a vertical sales strategy. “They’ll have one sales group, for example, focused on law firms,” explains Clark. “We developed a tool, and in fact had a customer use this, where they were completing a delivery for a law firm in a big office building; they pulled up our tool and identified other law firms in the building, made cold calls and got a lead on a deal.” continued on page 26

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We Saw It In ENX Magazine

Leasing & Financing: What’s New for 2015?

GreatAmerica Financial Services Corp.

The name of the game at GreatAmerica for its upcoming fiscal year is Managed Services and Managed IT. “We gained a lot of momentum with the resources we brought to the table in FY15 and there’s strong interest right now,” states Jennie Fisher, Sr. VP/General Manager Office Equipment Group at GreatAmerica Financial Services Corporation.

That interest is reflected in the company’s Managed IT groups, encompassing 48 dealers and five groups, plus GreatAmerica has four prospects Jennie Fisher on the verge of starting Great America another group.

Financial Services “These are office Corp. equipment dealers that are furious about going down the IT path and they’re figuring out how to do it right,” states Fisher. “When they think about what they need to do in the IT sector, they’re thinking about acquiring a company and transitioning it into their organization or outsourcing, they’re not thinking of their finance company as being a good resource first and foremost.”

With the focus on Managed Services/ Managed IT, GreatAmerica is educating customers on what it can do around financing options for Managed Services.

“We’ve put a lot of time into introducing our value-added products and resources like Collabrance and GSL Gamut because dealers don’t truly know what we can do on the finance side,” states Fisher. “When I talk about that, I’m talking about bundling the services group with IT financed equipment, I’m talking about financing software, up front services, and software only agreements. We’re going to be charging down that path in addition to IT.” With interest in the channel building for 3D printers and digital signage, GreatAmerica is rolling out products by providing financing for products from the likes of Stratasys, 3D Systems, and Envision Tech. “We’ll continue to charge down that path too,” emphasizes Fisher.

Digital signage is another product segment that GreatAmerica can finance through a new product for the channel 26

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called Vistify. The company has even entered into a digital signage financing partnership with Toshiba.

“We haven’t had an official launch yet,” reports Josie Heskje, director of strategic marketing, Office Equipment Group.

“The reason it’s branded as an AV financing product is because we see growth in AV products and product adoption by the channel down the line.”

GreatAmerica is also looking into financing the content development piece of digital signage as well. “We’re evaluating how to come up with a finance solution to fund ongoing blocks of content,” adds Fisher. “As we venture into some of these newer areas we need to make sure that we have our arms wrapped around all the legality and risk factors that come along with that.”

Another area of focus in the coming year is integration. “We understand where the world is going—the more sophisticated we can be with our dealers and vendor partners in bringing it all together and making it easier for our customers will bode us well to tag along with the already sophisticated invoicing capabilities we already have,” says Fisher.

UniFi Equipment Finance

Last year was a great one for UniFi Equipment Finance with unparalleled growth in the independent dealer channel and the roll out of its Pass Through program, a new CPC program, and a rental program.

“Our growth is coming from the independent dealer space and UniFi grew over 278 percent,” reports RJ Grimshaw, president & CEO. “There aren’t many companies in our space that can speak to that type of growth.”

What’s going on?

“We’ve reengaged the marketplace with a fresh new brand, a new name, and we brought back RJ Grimshaw UniFi Equipment more of a personal touch Finance where [dealers] can pick up the phone and call someone,” responds Grimshaw. “Dealers look favorably at that and want to work with a company that has the longevity of a UniFi. We’ve served the marketplace since 1978. We’re not

looking to be the next Wells Fargo, or GE, or Everbank who are all great competitors. Our goal is focused on serving the independent dealer marketplace, not going after manufacturers’ programs, and adding a personal touch to differentiate ourselves against the competition.”

UniFi is currently in the final stages of development of its web portal, Velocity.

Dealers can access the portal to submit applications, view their portfolio, and manage upgrades and trade outs. The plan is to have a full roll out by the end of the year.

“We’re beta testing it with certain dealers before we roll it out across the country to make sure we have a product that is extremely user friendly and well positioned for the dealers,” states Grimshaw.

U.S. Bank Equipment Finance

For U.S. Bank’s dealers, knowledge is power.

“We have put an emphasis on providing dealers with access to more information to help them succeed,” states Phil Buysse, SVP, general manager, Office Equipment Vendor Services. “We have introduced additional benchmarking tools, providing dealerships with added Phil Buysse U.S. Bank Equip- metrics and measurements ment Finance for their businesses. We have also updated our online portfolio reporting, allowing our dealers to better manage and secure client opportunities.

Additionally, we have successfully implemented an organization-wide Client Advocacy initiative that is driving strong care and support of our dealerships’ employees and their clients. We’ve also enhanced invoicing and tracking capabilities to offer our dealer clients more solutions to introduce to their customers.”

Meanwhile, the company is actively working on digital documentation/signature capabilities to allow for a streamlined lease process for its dealers and their customers.

“With this will also come several improvements to our online offerings, which already get strong reviews for ease of use and client management,” notes Buysse. ✦

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Profile Charles Brewer Business News Briefing

Weak Yen Still Benefits Japanese Firms but Signs of a Cooling Market Emerge

L

ike many businesses in Japan, March 31 is the day the fiscal year ends for most Japanese copier and printer makers and a few weeks later we begin learning how the respective companies did. This year was no different, so in the days just before this magazine went to press, Epson, Fujifilm, and Ricoh reported their numbers for the fiscal year just ending.

Canon, which has a fiscal year that ends December 31, was the first Japanese vendor to report putting forth its first quarter earnings data on April 27. And as of this writing, I was still waiting to hear from Brother, Konica Minolta and Oki and expect to write about them in the next issue of ENX. Most of the Japanese companies reporting in April said that business was good but indicated the market is weakening. Many said that they struggled to meet their targets in the fourth quarter especially in Japan. Buoyed by the devalued yen, which has remained weak since 2013, the Japanese hardware manufacturers continue to enjoy a bit of a competitive edge over their U.S. rivals. Revenues for the various firms are not surging as they have over the past couple of years, however, and profits appear to be feeling downward pressure.

Overall, it looks as if demand is beginning to flag, although there are some pockets of growth.

The First Reports

The industry’s initial earnings calls in April were downbeat

especially those from the U.S. manufacturers. Both Xerox and Lexmark reported that their respective businesses performed poorly during the first three months of 2015 due in part to the strength of the greenback against the yen. Print volumes also dropped along with consumables sales. Canon reported net sales declined slightly year-over-year but net income slipped more steeply. The company lowered its net sales and net income forecast for fiscal 2015 but that was mainly due to the company’s ailing camera business.

The first numbers to cross my desk came from American hardware manufacturers and did not augur well for their Japanese counterparts. Xerox’s equipment revenue plunged 13 percent yearover-year in the first quarter of FY15 to $624 million as prices declined and demand for low-end units and production equipment flagged. The firm said that the total number of pages printed with its machines dropped along with demand for consumables.

Xerox revised its guidance for the year downward and now says its revenue this year will be down 1 percent instead of remaining flat compared to last year.

Lexmark then delivered its own lackluster earnings report saying first-quarter revenue, margins, and earnings declined year-over-year. The firm said total hardware and supplies sales shrank by 9 percent and 6 percent, respectively, to $152 million and $568 million. Its all-important laser business was

ailing and total revenue from hardware sales dropped 9 percent as toner cartridge sales dipped 2.3 percent. Lexmark blamed declining laser supplies revenue on unfavorable currency exchange, saying that laser supplies revenue was up 5 percent in constant currency.

As noted, Canon’s camera business was a drag on the firm’s earnings during the first quarter of FY 2015 but unlike its American competitors, hardware and consumables sales were up.

Net sales increased 3.9 percent to ¥529.1 billion (about $4.4 billion) for Canon’s Office Business Unit, which is responsible for marketing various devices including office MFDs, laser printers and MFPs, production systems, continuous-feed printers, and document solutions. Net sales of Canon’s monochrome copiers rose 4.1 percent, while color copier sales were up 7.5 percent, which resulted in an overall net sales increase for copiers of 6.0 percent. Net sales of laser printers were also up increasing by 4.5 percent over the first quarter of last year.

The results were not as good from Canon’s Imaging System Business Unit, which is responsible for desktop and large-format inkjet printers and photography products like digital cameras, camcorders, lenses and commercial photo printers as well as scanners, projectors, and calculators. Net sales totaled ¥262.7 billion (approximately $2.2 billion) in the first quarter of 2015, a 10.3 percent decline continued on page 30

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Weak Yen Still Benefits Japanese Firms from the ¥292.8 billion recorded in the year-ago period. The other numbers from the Imaging System Business Unit all went in the wrong direction with its operating profit plunging 30.7 percent year-over-year to ¥29.1 billion and its operating margin shrinking to 11.1 percent versus 14.4 percent in the yearago period. Inkjet printer unit shipments declined 3 percent compared to the first quarter of last year and net sales were off 4.5 percent. Although U.S. sales of Canon’s MAXIFY business inkjets and units that support mobile devices were up, it was not enough to offset declining inkjet sales in Japan and various emerging markets.

Canon’s crummy camera and inkjet business forced the company to cut its overall net sales forecast from ¥3.90 trillion to ¥3.86 trillion for the current fiscal year and adjust its net income downward from ¥260.0 billion to ¥255.0 billion.

The company left its operating income forecast unchanged, however, at ¥380.0 billion. While Canon says its inkjet business will not grow this year, it anticipates continued moderate growth in demand for MFDs, mainly color models along with moderate growth in laser printers sales in FY 2015.

Ricoh Misses

After seeing its revenue growth slow throughout the past fiscal year, Ricoh had a surprisingly bad fourth quarter, which caused the firm to miss its revenue, oper-

ating profit, and net profit targets for the fiscal year ending on March 31. Ricoh’s quarterly year over-year revenue declined for the first time in nine consecutive quarters during Q4 (see Chart 1) causing Ricoh to come up short of its projected performance after confirming in January that sales and profitability were on track to show improvements for the full fiscal year.

On April 28, the company reported that despite growing total sales to nearly ¥2.232 trillion ($18.8 billion), up 1.7 percent from ¥2.196 trillion one year ago, Ricoh’s operating profit for the year was down 3.8 percent from ¥120.3 billion in the year prior to ¥115.7 billion ($973.4 million) in part because SG&A expenses increased 5.1 percent due to the yen’s depreciation and certain acquisitions.

Ricoh’s Imaging and Solutions segment, which consists of Office Imaging, Production Printing, and Network System Solutions, accounts for the bulk of the company’s sales. For the full year, the Imaging and Solutions segment revenue was up a modest 1.6 percent to ¥1.997 trillion ($16.8 billion). The firm’s full-year net profit was ¥68.5 billion ($576.3 million) versus ¥72.8 billion one year ago, a 5.8 percent decline. These numbers fell short of Ricoh’s outlook for operating profit of ¥140.0 billion and net profit of ¥80.0 billion.

Ricoh placed much of the blame for its declining revenue on drooping domestic sales, which were down 7.2 percent

for the year. With sales in the Americas up 10.1 percent, the company indicated that the U.S. economy is enjoying a solid recovery while the European economy “showed signs of a rally.” Ricoh reported sales in the EMEA region were up 2.6 percent. In addition to slumping domestic sales, the firm saw a slowdown of growth in emerging markets such as China, although total sales in Ricoh’s socalled “Other” region grew by a healthy 15.7 percent. The overseas sales growth owed much to the favorable currency exchange, and Ricoh reported that while overseas sales were up 7.9 percent, that growth would have been tamped back to a more modest 1.2 percent in constant currency.

Breaking down its printer and copier businesses, Ricoh said sales of its office imaging equipment increased 2.2 percent year-over-year to about ¥1.51 trillion—or $12.7 billion. Again, Ricoh credited the yen’s depreciation for the gains along with an uptick in demand for color MFPs both domestically and overseas. Ricoh claims it has managed to hold onto the number-one slot in terms of global A4 color MFP market share, and said it is doing its best to expand and maintain market share in other MFP categories as well. An increase in sales of color cut-sheet production printers along with increasing demand for parts and services combined to drive sales of production printing machines up 6.6 percent to ¥191.9 billion ($1.6 billion).

Ricoh expects to continue to grow during the current fiscal year ending in March 2016. The company forecasts ¥2.4 billion in sales, ¥140.0 billion in operating profit, and ¥83.0 billion in net profit. If achieved, this will represent a 7.5 percent uptick in sales, 20.9 percent growth in operating profit, and 21.1 percent growth in net profit over what Ricoh achieved in the year just ended.

Good Year For Epson, But…

Like Ricoh, Epson’s fourth quarter was not as strong as the company had hoped, and as a result some of the firm’s full-year numbers fell short of its earlier guidance. For the full-year ending on March 31, Epson reported revenue of continued on page 32 30

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Weak Yen Still Benefits Japanese Firms ¥1.086 trillion, which is approximately $9.0 billion. The firm’s revenue grew year-over-year by 7.7 percent compared with ¥1.008 trillion in total revenue the year prior but fell just shy of the ¥1.09 trillion target Epson set back in January.

Epson’s full-year business profit, which similar to operating income, grew 12.4 percent to ¥101.3 billion ($842.8 million) versus ¥90.1 billion in the year-ago period. However, business profit fell 3.5 percent short of the firm’s forecast of ¥105.0 billion. Epson’s profit for fiscal 2014 was ¥112.8 billion ($938.5 million), up 33.6 percent from ¥84.4 billion in the prior fiscal year and exceeding the firm’s target of ¥111.0 billion.

In 2013, Epson adjusted its business plan through the current year in order to maximize the potential of its inkjet business. The goal of the new plan was to improve the model mix in the SOHO segment, accelerate the deployment of office inkjets, and expand Epson’s commercial printer business. The firm appears to be executing on its revised business plan and the results are good (see Chart 2). In fiscal 2013, sales grew 17.9 percent and the operating income skyrocketed nearly 300 percent as the firm turned a net loss the year before into net income. Growth last year was not as strong as in 2013 but it was nonetheless still impressive, and the firm managed to top the profits it delivered in 2013, setting a new high for the company.

We’re most interested in the performance of Epson’s Information-Related

†

Equipment business, which includes its large-format inkjet machines and the assorted desktop inkjet, POS, impact dot matrix, and page printers the firm markets and all the related consumables for the various devices along with its color image scanners, visual communications systems, commercial and label inkjet printers. For the year, the Information-Related Equipment segment brought in ¥907.2 billion ($7.5 billion) in revenue, which represents a 7.9 percent year-over-year increase. The segment’s profit was ¥133.6 billion ($1.1 billion), up 8 percent from last year. The printing systems business brought in ¥699.7 billion ($5.8 billion), which is up 7.5 percent from the previous fiscal year. Epson said that this was due in part to favorable currency exchange.

Inkjet printers accounted for 74 percent of Epson’s printing systems revenue in fiscal 2014, up from 72 percent the year before. Revenue from inkjets grew despite a decline in shipments, indicating that the firm is raising the average sales price of these machines. Unit shipments of devices with large-capacity ink tanks have gone up sharply since their introduction in 2010, climbing to over 12 million units last year. Unit shipments of office inkjets remained steady in fiscal 2014 at under 3 million units, about the same as in the year prior. Due to all the new introductions made over the past year or so, Epson anticipates unit shipments of office inkjets will grow in fiscal 2015. Regionally, Epson said that

demand for its inkjet devices remained firm in Europe last year but decreased in both Japan and the Americas. In the large-format category, demand was firm in the United States, moved sideways in Europe, and was down in Japan.

For all of fiscal 2015, Epson projects revenue of ¥1.13 trillion, a business profit of ¥102.0 billion, and profit for the period of ¥70.0 billion. If achieved, these targets will represent an increase of 4.0 percent, an increase of 0.7 percent, and a decrease of 37.9 percent from last year.

The firm expects its business profit will be depressed due to temporary factors such as about ¥30 billion from the revisions of its pension system and the sale of fixed assets; hence, the sluggish growth expected for 2015’s business profit and the anticipated decline in profit for the period.

FujiFilm Closes the Year with a Flourish

On April 30, FujiFilm Holdings reported that it had revenue of about ¥2.493 trillion ($20.8 billion) for the year ended in March, up 2.2 percent from ¥2.440 trillion in the year prior (see Chart 3). The firm’s revenue also exceeded the guidance it provided in January, which called for revenue of ¥2.48 trillion. Likewise, its operating income climbed from 22.4 percent increase from ¥140.8 billion to ¥172.4 billion to beat the earlier ¥167.0 billion full-year operating income projection. Net income grew a robust 46.4 percent year-over-year to ¥118.6 billion, up from ¥81.0 billion in the previous fiscal year. Like the other numbers, Fuji Xerox’s net income exceeded the firm’s guidance provided in January of net income of ¥110.0 billion.

Operated by the Fuji Xerox Company, Fujifilm’s Document Solutions business is the one we’re most interested in because it is responsible for the sales of office copiers and MFPs, printers, production printers and services, office services, paper, and consumables. Document Solutions’ full-year revenue was up 4.0 percent from ¥1.133 trillion in the prior fiscal year to ¥1.178 trillion for the year ending in March, which about $9.8 billion. The unit’s operating income continued on page 34

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Weak Yen Still Benefits Japanese Firms rose to ¥101.3 billion from ¥96.0 billion, which represents an increase of 5.6 percent, and the operating income grew 5.6 percent to ¥101.3 billion versus ¥96.0 billion in the year prior. The operating income was adversely affected by continued price declines and an increase in the cost of imports stemming from the yen’s depreciation against the dollar.

According to Fujifilm, total sales volumes and revenue increased yearover-year for its office products business.

Overall, sales volumes of color office products increased while sales volumes for monochrome products decreased.

Fujifilm said that sales volumes of both color and monochrome office products increased in Asia-Oceania but both color and monochrome sale volumes decreased to Japan. Its sales volumes of shipments to Xerox reflected a slight uptick for color and decrease for monochrome units in the business segment as a whole thanks to sales of MFP units. Like Epson, overall sales volumes of Fuji Xerox office printers were down last year but revenue increased suggesting the company has increased the average sales price

of its printers. Sales volumes of both monochrome and color printers to Xerox decreased. Fujifilm’s production services business had flat sales compared with the prior fiscal year.

For the fiscal year ending on March 31, 2016, Fujifilm anticipates revenue of ¥2.58 trillion, an operating income of ¥190.0 billion, and net income of ¥120.0 billion, which would represent year-over year increases of 3.5 percent, 10.2 percent, and 1.2 percent, respectively. If achieved, the revenue growth will be slightly higher than in the fiscal year just ended, but year-over-year growth in operating and net income is expected to be more modest than in the year ended in March 2015. The Document Solutions business is expected to bring in revenue of ¥1.22 trillion and operating income of ¥105.0 billion in the year ahead. Fujifilm aims to increase sales by shipping more new products to emerging markets and expanding global services and production services.

Things Are Cooling Off

Reviewing the performance of the companies during the opening months

*

of 2015 reveals that markets are softening. Of course, overall economics drive hardcopy markets and not all the news we are hearing about the global economy is good. The U.S. is among the strongest in the world, but job growth here is not robust and there are signs that GDP growth is slowing. Europe is wrestling with a number of problems and the specter of recession dogs the region. Other important markets, including China, Japan, and Russia, are all wrestling with different sets of problems each unique to the individual market and as a result I don’t think any of them will offer OEMs any growth in the short-term.

The good news is that while few economies are enjoying strong, robust growth, few (except perhaps Russia) appear to be in real trouble. As a result, it seems that manufacturers are expecting conditions to remain more or less stable.

A few years ago, when we were in the teeth of the Great Recession, some clever person coined the phrase “flat is the new growth.” This is an apt phrase for the hardcopy industry, as print volumes continue to fall, which in turn weakens demand for machines that generate hardcopy. With demand down, flat is about the most we can hope for.

It will be interesting to see how the remaining Japanese firms did in their last fiscal year. I suspect that like Canon, Epson, Fujifilm, and Ricoh, the other vendors such as Brother, Konica Minolta, and Oki did okay last year and business was up. But I suspect they will all say moving into the new year that their business was off. By the looks of market conditions during the first few months of 2015, it seems safe to say we are not going to get a banner year. Let’s face it; a weak yen can only take manufacturers so far; end users need to print more and that simply is not happening. ✦

Stay Connected Share Your Views The Largest Circulation in the Document Imaging Industry 30,000 Copies Distributed Each Month!

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Business Profile

Mito Color Imaging Company Ltd: A Model of Consistency for Color Laser Toner Cartridges

T Mary Ouyang CEO

he document imaging industry is changing at a rapid pace and nowhere is that more visible than with color technology, which is rapidly supplanting monochrome technology. With that shift comes a need for consistent quality, high value remanufactured color toner cartridges. For a growing number of dealers and resellers that need is being fulfilled by Mito Color Imaging Company Ltd. Mito has been remanufacturing high quality color toner cartridges for more than 12 years and marketing them worldwide, including here in the U.S. for more than 10 years. Its mission is to become one of the largest professional color remanufacturing companies in the world while providing the best products with consistent quality and high performance.

tech enterprise specializing in the manufacturing, research, and sales of laser toner cartridges. Mito Group consists of two wholly-owned subsidiaries: Mito Color Imaging Company Ltd. and Zhuhai Un-Tern Imaging Products Company. In September 2013, Mito Group became the first Chinese publically traded company in the printing consumable industry after being acquired

by Hubei Dinglong Chemical Company Ltd. Mito Color Imaging Company Ltd. based in Hong Kong is responsible for global sales and marketing. The Mito and Siege brands encompass more than 1,000 alternative models of color laser toner cartridges which are compatible with an array of printer models.

“Instead of competing with their customers, what Mito provides from their overseas offices is support,” says Liu.

Focus on R&D

“Although we offer both mono and color remanufactured products, we earned our unrivaled reputation by remanufacturing color toner cartridges,” states Lucy Liu, general manager for North America.

Background Information

Established in 2003 with world headquarters based in Zhuhai, China, Mito Group is a high-

As the manufacturing facility for Mito group, Zhuhai Un-Tern Imaging Products Company Ltd. is primarily focused on R&D and production of color laser toner cartridges. Un-Tern has invested significant financial resources into R&D driven by its strong belief in integrity and innovation.

The result is a line of consistent quality, exceptionally engineered products from Un-Tern’s professional technical team. This focus on constantly striving for excellence has made Mito well recognized as one of the leading remanufacturing companies in the

world, particularly for color toner cartridges.

“When everybody else was focusing on monochrome cartridges 10 years ago, Mito chose to focus on color,” states Liu, who acknowledges that color toner cartridges are a lot more difficult to remanufacture than mono cartridges.

Mito’s acquisition by Hubei Dinglong Chemical Company Ltd. has resulted in even greater investments in R&D. “We spend the money on the patents and take time to understand the OEMs’ patents to create non-infringing, high-performance remanufactured products, explains Liu.” Maintaining its high standards of quality and consistency is paramount and Mito continues to offer its customers around the globe the best choices available at the best value.

“We will continue our commitment of remanufacturing the best toner cartridges with uniform quality and stable performance,” emphasizes Liu. That’s the number one reason why Mito has been successful and what sets it apart from competitors in the color remanufactured toner space. As Liu points out, “Our success is mostly related to our consistent quality standards that our customers can depend on. At Mito we provide real value continued on page 37

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The Mito Difference

add, with the price and the quality standards that wholesalers and their customers can depend on.”

Liu acknowledges the challenges of being a Chinese company of remanufactured color toner cartridges doing business in the U.S., but when one takes the proven quality and consistent performance of Mito’s products into consideration, any concern usually disappears. “The consumer decides when they come back for more, and that’s the test to our success, our customers always come back for more.”

Indeed, Mito makes a difference.

A Respect for IP

As compatibles and remanufactured consumables have gained prominence in the supplies channels, the issue of intellectual property and patents continues to attract worldwide attention. As one of the leading companies in the industry, Mito has been dedicated for more than a decade to remanufacturing the best products to avoid infringing on OEM patents. That’s another important reason why wholesalers in the know choose Mito.

“We are compliant with all the remanufacturing laws,” says Liu. “There are so many cheap compatibles entering the U.S. market, but our customers are still willing

to pay a little more for Mito products because of our dependability and high quality, and because we respect OEM intellectual property.”

Customer Service

Even a company producing some of the most reliable remanufactured color toner cartridges in the industry needs to provide superior customer service and that’s something else that Mito is known for. Mito Color Imaging Company’s global offices, including its U.S. office, respond promptly and courteously to customers, if they need help or if they simply have a question. In the unlikely event a problem occurs, Mito will take the product back or resolve the issue, quickly and efficiently.

The Sum of Its Parts

The one consistent take away when it comes to talking about Mito is its consistency. It’s what’s driving the business and Mito’s success. As the market for remanufactured color toner cartridges grows, it’s safe to assume that Mito Global Color Imaging will be setting new standards for consistency in a closely watched industry, where every customer is looking for the best quality at the right price. Mito has a proven track record and business model that meets its customers’ expectations. ✦

We Saw It In ENX Magazine

1. Virgin empties guarantees the quality for remanufactured cartridges from the very beginning.

2. Major investments in test lab facilities and equipment to monitor every facet of the cartridge and its performance.

3. Printers are sourced from all regional areas of the global market and imported to ensure the compatibility, functionality and performance of every cartridge.

4. Professional equipment and facilities, as well as procedures, are certified and required by STMC and QC080000, such as X –Rite spectrodensitometer for testing 2 major parameters—optical density and color gamut and spectrometer for RoHS standards, as well as other meters for testing the hardness specifications of rollers and melting point of toner powder to ensure correct fusing.

6. Print quality comparable to OEMs in terms of page yield, optical density and color gamut.

7. Expensive Downflow II dust collecting system is built for 100% cleaning of the cartridges during production run.

8. Well trained and qualified staff for R&D, engineering and production in order to well produce and control each cartridge with the highest quality.

9. Only pre-qualified materials and components are applied to each cartridge in order to meet industrial quality standards.

10. Comprehensive IQC and QMS which are conforming to international standards – ASTM / ISO /IEC and QC080000.

11. Co–work and develop the quality requirement with professional customers, partners and experts to seek continuous improvement is a Mito principle.

12. Mito’s reputation has been built one cartridge and one customer at a time.

Contact Information Lucy Z. Liu General Manager of North America Mito Color Imaging Co., Ltd. lucy@mito.com.cn www.mito.com.cn Sales Office: Tel: (86) 756-2535256 / 2535246 Fax: (86) 756-2535769 E-mail: Sales@mito.com.cn

June 2015 | www.enxmag.com

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Dealer Spotlight

Home Field Advantage: Plus Inc.’s David Carson on Selling Production and Going Up Against Bigger Competitors

I David Carson President, Plus Inc.

It’s common knowledge that there is often a home field advantage for many local dealers even when competing against manufacturer direct branches who aren’t hesitant about giving away the store in order to win the deal.

That’s why local dealerships often emphasize the community angle, their ability to make quick decisions, and their ability to provide the kind of service that most direct branches can only dream of offering. That’s the story of Plus Inc., a family owned dealership based in Greenville, SC, operated by brothers David and Chris Carson along with Danny Summers, Frank Gonzalez and John Campbell.

The dealership, started by the Carson’s father in 1958 remains a staple of the community even if its product offerings have changed from typewriters and calculators to MFPs, production print devices, and IT Services.

One of the joys of writing about this industry for so many years is that I get to talk to dealers of all sizes. Each has a unique story to tell, but a story that their peers—no matter how big their dealership—can often identify with as well. I first heard from David Carson, Plus Inc.’s president, in early April when he sent me an e-mail critical of my feature article in April on production print and wide format because it omitted comments from a couple of the larger

vendors, including one of his own. (That vendor was unable to schedule an interview prior to my deadline even with an extension.)

What I did learn in our e-mail exchange was that Plus Inc. is starting to enjoy success in the production print space, a credible achievement for a $4-million dealership. That exchange intrigued me enough to schedule an interview with David to learn more about Plus Inc.’s strategy for selling production print and to learn more about this family owned dealership that continues to hold its own against larger and better funded competitors.

How’s the first half of the year been for Plus Inc. so far?

CARSON: It’s been good.

What’s doing well for you?

CARSON: Production print has done very well for us, general mid-range hardware is doing well, and we do a lot of IT Services.

Overall, everything is going pretty smooth.

On the production print side you sell Konica Minolta and Ricoh, have you been partnering with them for a long time?

CARSON: Production print wise we’ve been with Konica for probably a good 10 years, but we’ve never been heavy in it until the middle of last year when we decided to change our commitment level. We had probably 10-12 production units out in the field—Konica only at that point.

We’ve been a Ricoh dealer since 2004, but we just made a commitment last year [for their production devices] and now have a Ricoh on our demo floor.

What’s the biggest difference today compared to how you were doing at the beginning when you first took on those products?

CARSON: In the beginning when we took them on we did it simply because we had customers looking for the product, so in my opinion we did it the least expensive way. We sold some units to existing customers and some people we knew through referrals, but we weren’t overly dedicated to it.

“…You need to have machines in your showroom to show customers what they can do.”

Last year Ricoh and Konica came out with new models. For almost two years we didn’t have any production print machines in our showroom and when we decided we wanted to go all out we realized the only way we could do that was by having machines on the floor. You need to have machines in your showroom to show customers what they can do and to run their projects for them.

We now have three production print units in our demo room and it makes a huge difference. continued on page 40

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Home Field Advantage: Plus Inc. You’ve also found that the support you receive from Konica Minolta and Ricoh has been helpful as well, right?

CARSON: Konica has been good with local support; they have a dedicated production print rep that is readily available for us. He’s been in quite often to help us with our prospects. We’ve sold five Konica production print units in the last six months, which is a lot for us.

Ricoh’s support for us is good too, but not as good as Konica Minolta’s, but we’re hoping to get ramped up on the Ricoh side.

Going back to the last five production units you sold, were they sold to existing customers or new customers?

CARSON: Both. Several were to new customers and we fought hard against competitors to get them. Xerox has taken some of their commitment level out of our market. We’re a large area, but not a major metropolitan area. They’ve had some changes so we went into some production print facilities that have been Xerox customers and of the five machines we’ve sold, two have replaced Xerox machines. Another we were up against the Ricoh direct, but this facility went with us because we’re local and they saw a much stronger commitment level from us all the way from the top to the bottom, including providing them with supplies and service.

What’s the biggest lesson you’ve learned about selling production print since you first started carrying these products?

CARSON: You need to have units on your floor. And you need good manufacturer support and both Konica and Ricoh have been good for us.

As far as your competition, you mentioned Xerox; who else are you competing with on the production side, Ricoh and Konica Minolta direct?

CARSON: Yes, those are our two main competitors. We put a big new color unit in a university that almost went with the direct side until somebody recommended they take a look at us. That was a bizhub PRESS C1070. There’s very little coverage in our area from local dealers. None have a commitment level in this area. Most of the branches, such

as Ricoh, which has a large office here in Greenville, which used to be an IKON hub, have a big commitment level. Konica does well because they have a lot of major accounts in this area, so we compete with them regularly.

When you win against the direct branches, is it that customer service element that typically convinces the customer to go with Plus Inc.?

CARSON: Absolutely.

I’m a second generation owner of our company. My father started the business in the fifties and growing up in this business it’s been extremely competitive. It’s become much easier for us to get business in our area than in the past because of the distinctions with the companies selling the product.

Thirty years ago, twenty years ago, it was a lot of people, the same size as us up and down the street saying the same thing. Now you’ve got the direct side of Xerox, Konica, Ricoh, and they’re just a corporate entity. They’re good at what they do, but it’s easier to distinguish yourself as a local company. There’s a big push to buy local and to be quite honest with you, the corporate people can’t say the same thing we do.

“My father started the business in the fifties and growing up in this business it’s been extremely competitive.”

You’ve also identified another differentiator?

CARSON: Ricoh and Konica do not keep parts or supplies in their warehouses on a local basis and it’s something you can go in and pinpoint as a big difference.

That doesn’t mean they don’t push their corporate size; ‘Why would you buy from a third party when you can buy direct from the manufacturer?’ And that’s something you have to compete with.

Are there certain verticals that have been stronger than others for you when selling production print?

CARSON: Not really. We have several churches and print for pay customers. We

have the one university that also functions as a print for pay for the local area, but there’s no particular vertical.

How is it working in a family business, has it always been easy?

CARSON: It has. When my father passed, my oldest brother, while he was always good at what he did here, wasn’t interested in staying in the business. My younger brother and I are very different in our styles as far as what we like to do.

He just likes to work and prefers not to be involved in management and I like to be the leader in some aspects. When my older brother wanted out, I had three people who were leaders in the company and I brought them in as partners.

Any segments of the business you’d like to see do better?

CARSON: We’ve made a commitment last year to double the size of our company.

We do about $4 million in revenues and we want to get to $8-$10 million. The one area where we realized we could push that forward on a fairly quick basis was production print. Otherwise there’s the continual push to grow the mid customer base.

The time is right, a lot of people don’t seem to be happy with their vendors and I think it’s related to the Big Bank syndrome—they don’t know that there’s anything better out there. They just think poor service and having to have toner shipped to you in three days when you run out unless you want to pay more, all of that basic regular support, they just think that’s how it is. Our big push is to go out and talk about the personal service just like the local bank. It’s amazing how well it works when you can convince somebody there is another choice.

I understand you’re also strong in IT services, how did you get involved in that?

CARSON: My oldest brother who is no longer in the business was really good in computers back in the late seventies and eighties. We got involved with computers around then and never really stopped.

Back in the mid nineties we got good at providing IT Services. I called it “Small Business Services.” And we’ve done well.

continued on page 42 40

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Home Field Advantage: Plus Inc. What percentage of your customers use you for IT Services?

CARSON: About 15-20 percent.

Do you see that growing?

CARSON: Yes.

What’s that going to take?

CARSON: We’ve been happy with where we’ve been as far as our size so we’ve never made any push to grow rapidly.

During the past five or six years the recession had us just kind of sit there and maintain a certain level and be good at it.

For us the growth will come in that area and the overall business. We’re probably going to add about four employees this year to help with our growth.

The IT goes hand in hand with the mid-range copiers and the growth from there comes from either side. If we get an inquiry on IT Services we go in and take that over and they start buying their copiers and printers from us, and a lot of

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times vice versa. The growth there comes naturally—if you do a good job on one or the other, they want you for both of it.

What’s the biggest challenge of selling IT Services?

CARSON: We have to be very careful because there are a lot of IT companies offering IT services—other small businesses and you don’t want to make them enemies when it’s time to place copiers. On the IT side you tread a little more lightly when you make calls on existing customers simply because you don’t want the IT world trying to keep you out of the copier end of it. Most people have somebody else doing their IT work and if they think you’re going to take their IT work from them, they’re going to tell their customer don’t buy from that company whether they like you or not.

How many years have you been in the business?

CARSON: I’ve been full time since 1980 when I graduated from college. I actually worked in the business since high school, went to university here in Greenville and worked in and out of the business while going to school. I participated in athletics in college so I was limited in the amount of time I could put in.

Do you still enjoy it?

CARSON: I’m having the most fun I’ve

ever had.

One final question, how does the rest of the year look for Plus Inc.?

CARSON: We feel we’re going to have a strong year. We see about 15 percent growth and we’re looking for that over the next three to four years. We have a lot of business lined up and see a lot of potential.

This area seems to be booming; we have a lot of manufacturing moving in and it seems to be where people want to live.

There’s a lot of new business to go get. ✦

We Saw It In ENX Magazine

Charles Lamb

Sales & Marketing News Briefing

Marketing at the Speed of Business

S

ales and marketing are often considered to be the same thing, but nothing could be farther from the truth. In our industry, or any industry for that matter, you often see positions offered for a VP of Sales & Marketing. While I do believe there are talented and qualified candidates out there, I will say that seldom do you find greatness in both sales and marketing in one single person. These are both positions where you would want strong experience and education. I have to laugh when I review their job descriptions, which mostly define and require a strong sales background and very little marketing experience, and the marketing skillset is clearly positioned as a second place requirement. It brings to mind the age old question of, “What have you done for me lately?” It’s not something a sales leader jokes about these days.

The Difference between Sales and Marketing:

The pressure on sales leaders for solid sales results is intense and as such, it’s not uncommon for owners and sales leaders to push harder on sales activity and actions (the areas they know more about) vs. developing new marketing strategies. In as much, the dayto-day execution of business, like the job postings mentioned above, you often find a college intern holding the marketing position, which seldom delivers the greatest possible results from a marketing standpoint. No one questions the heart of a very talented and willing college intern, but the best experience for your company will come from a true marketing professional who can deliver professional marketing.

Sales needs marketing and

marketing needs sales. When both positions are present within a company, it doesn’t take very long to notice that these two leaders are worlds apart in many aspects.

Sales wants everything immediately while marketing, I promise, will want to study, review and analyze the impact of everything. Both have to change for the better.

Why You Need Marketing:

So if you don’t have a true marketing professional onboard, there’s your first problem, and if you do have one, they must have a servant’s heart to assist the company and sales in driving success. Your sales leader must provide constant (positive) feedback to adjust your sales team’s execution. With the speed of business today, no company can stand sluggish marketing performance, nor can they withstand poor sales results.

In every boot camp I’ve ever done, a VP of Sales asks me this question, “How can you help me differentiate my company?”

That statement screams, ‘I need a marketing professional!’ It really doesn’t matter what size company you are. I hear smaller dealers claim, “We just can’t afford a marketing professional right now, but when we get a little larger, that will be a serious consideration.”

Most don’t attribute the use of high quality marketing as a way to grow your business, but it is. It’s the chicken and the egg consideration; they say, ‘When we get large enough we’ll hire a marketing professional,’ but the thing is, if you hired a marketing professional you’d grow today. You need effective marketing now!

The truth is, there ARE companies who are not yet large enough to hire a full time marketing professional. My thoughts are

simple—we are all selling MPS which is an outsourcing model, so, eat your own cooking and seek to outsource your marketing. Find someone within the industry who has a full competency of marketing and buy some talent. It’s like life insurance—there is never a better time to buy than today. Buy what you can afford today and focus it on the more critical areas of need.

MPS and Marketing:

Since I brought up MPS, let me talk about a gigantic misconception around MPS that high quality marketing can completely satisfy.

First, I hear dealers all across the U.S. tell me they’re selling MPS. Their website says so, their sales reps say so, but they don’t really understand the values of MPS or what they’re selling. Within this acronym, MPS, the most important letter is “M.” I ask dealers or their sales reps, “What does the M stand for?” It’s not a hard question to answer and most say, “Managed.” But when I ask them, “What do you manage?”

I get a bazillion answers mostly about clicks, devices, printer fleets, copies, etc. This shows you that marketing is missing. A marketing professional will define to sales the value of each of their deliverables.

The facts are that you manage a portion of your client’s business typically better than they do and probably to a level of performance that they’ll never be able to reach, usually providing a significant financial benefit and always delivering an uptick in organizational performance.

Defining Your Marketing Plan

A true marketing professional will absorb your key business continued on page 46

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Marketing at the Speed of Business objectives and design an overall marketing execution plan to move your company forward. Once the 30,000-foot view is created, the details and individual programs and plans will be defined. Each of these areas must be defined in very specific steps with details on how they contribute to the key business objectives of the company.

1. Your company’s profile and position in the marketplace.

2. The products or services your company will take to market.

3. Primary targets within your marketplace for those services.

4. What type of advertising, website and support collateral will you need and what does it look like?

5. What is your value proposition to whom and for which deliverables?

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6. What is the profile and skillset required for your sales organization?

7. What specialized training will you need to provide?

8. What is your sales cycle and sales process?

9. What tools are needed to ensure success and accountability?

10. What does your “go to market” timeline and execution look like?

11. How and when do you make adjustments to your plan?

These marketing deliverables are so often misplaced onto great and loyal team members, but it shouldn’t take too much of a review to see and feel the seriousness of these tasks. Without the proper marketing plan you will look like everyone out there and you won’t have any type of differentiation.

Out-performing your competition doesn’t happen by accident. It typically comes from a marketing plan that almost always was dreamt up, created and worked through months or sometimes a year beforehand. With the speed of business today, you can’t work from behind—your marketing efforts must position your company ahead of the competition. Take a look at the list above to find out what you’re missing and if you don’t have the talent within your company, do some research and find someone who can fill that gap. But as I mentioned above, make sure you have a high quality, extremely detailed marketing execution plan, and then grow! ✦

We Saw It In ENX Magazine

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Service Excellence Diamond Award Winner

Office Technology Service Excellence Award

DIAMOND LEVEL

Corporate Business Systems’ Legacy of Quality Service Continues to Improve by Managing the Metrics

I

f there’s one thing you can say about Corporate Business Systems (CBS), it’s that customers appreciate the level of service that the dealership consistently delivers. Of course providing quality service is a given in the document imaging world if one wants to be successful, but one can’t minimize the concerted effort that goes into that mission across all segments of the dealership.

CBS, founded in 1993, offers a broad portfolio of software solutions, hardware, development tools, and IT services and is considered one of the leading (from left) Director of Service, Larry Walker; document manPresident/CEO Tyson Johns agement and office technology providers serving the southwest Missouri and northwest Arkansas markets.

Nowhere is CBS’s commitment to service and service excellence more evident than in its internal service operations. That’s why it has been acknowledged with a BEI Services and ENX magazine Service Excellence Award in the Diamond category.

How’d they accomplish that?

“CBS ranked 10th overall compared to all other dealers in the OTSEA rankings,” reports Steve Sharkey of BEI Services.

“They have done an exceptional job managing their Hold for Parts call activity. They scored 100 percent in that KPI, meaning their

Hold for Parts calls are consistently at 10 percent or less.”

Those are impressive numbers for a dealership that has been using BEI Services for 10 years and counting. The analytics and metrics provided by the program have been invaluable. Plus, as with most dealerships who implement the program, the bonuses that techs receive for being more efficient remain a huge selling point internally. It’s also a great marketing tool when customers understand how CBS compensates its techs. When customers discover that it’s in the tech’s best interest to do it right, and do it right the first time as often as possible, they understand that their organization benefits as well.

For a dealership whose legacy is top-notch service, CBS is well staffed to accomplish that goal.

They employ 19 techs, seven in service and support on the operations side of the business, a Help Desk staffed by six people, two customer support reps, and one in-house trainer. All of whom are instrumental in caring for CBS’s several thousand customers and a MIF of some 8,500 devices.

“They’re doing a great job,” says CBS President Tyson Johns who attributes the dealership’s success to ensuring the staffing of its service operations are right sized. “This has contributed to two consecutive years of nearly 20 percent top line revenue growth.”

Plus the metrics that Sharkey referred to earlier tend to be consistent year in and year out.

“Our numbers don’t slip and our staff takes a lot of pride and passion in what they do; it’s pretty

impressive,” adds Johns.

CBS puts its service excellence to the test every day with its “Total Satisfaction Guarantee,” which allows customers to cancel their CBS lease (with no obligation) if it ever fails to meet mutually agreed upon equipment and service benchmarks. That’s an easy guarantee to offer because CBS consistently hits those equipment and service benchmarks.

CBS was recently honored as one of the 12 fastest growing companies in southern Missouri for employees and revenue.

It’s not a stretch to assume that quality service has something to do with that. While some dealerships have been able to reduce the number of techs in the field after achieving greater efficiencies through BEI Services, CBS has been growing at such a rate that they’ve actually had to hire sales reps to cover more territory and additional techs to handle the expanding MIF. Johns notes that Director of Service Larry Walker and his team do an excellent job of following the sales pipeline and if enough new business comes in that warrants the addition of a new service tech, they’ll make that adjustment.

“To be perfectly honest we’ve added three or four techs over the past couple of years and we have a couple more in the hopper right now,” says Johns. “If we win a couple of more deals we’re going to have to pull the trigger on them just to make sure our customer-focused business model never slips.”

The analytics that the BEI Services program provides have been continued on page 50

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Corporate Business Systems particularly helpful to Walker, which when combined with drive time, allows him to see how many clicks each tech can manage.

Having this information available has created somewhat of a competitive environment among techs. Walker says they follow their numbers closely and are continuously looking to improve.

“All techs are very much in tune with the benchmarks and the numbers we’re striving for,” he says. “That goes back to how they see how everything affects the company and the bottom line. And that’s how I manage too.”

Both Walker and Johns are more than willing to share their success in the service arena with their peers. Johns, for instance, is active in the dealer community and attends industry events and dealer group meetings where he networks and offers advice to his peers and also new dealers who are looking to raise their service operations to CBS-like levels.

“When they ask me, ‘what are some of the things that have made a big impact?’ I tell them, ‘you can get all the information you want and all the analytics you want, but unless you manage them, it really doesn’t matter,’” says Johns. “BEI for us has been one of those things that it’s not something Larry can manipulate or the guys can manipulate. We’ve got benchmarks and budgets and it provides a quick snapshot in real time that says here’s how you’re doing—right, wrong, or indifferent; now let’s figure out how to get from point A to point B. It’s been very beneficial simply because of that.”

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What would life be like at CBS without this information?

For one, they might not be celebrating their status as a Diamond award winner.

“And it would be much more difficult for me to manage the budget and hit those goals Tyson wants to hit and continue to provide that top-notch quality of service to our customers,” acknowledges Walker.

Meanwhile, CBS plans to leverage this award within its customer base, ensuring customers are aware that the dealership is among the best in the nation when it comes to service. Although that’s something you can’t fake, third-party acknowledgement such as this only underscores just how good CBS is at delivering what in many ways is the ultimate differentiator in the market—service.

This information has also been instrumental in helping CBS realize its vision and mission statement as well as fit in perfectly with the dealership’s new purpose statement: “To enhance our community by providing solutions today to make your tomorrow better.”

“These metrics directly align with that,” says Johns. “We’re very culture based with the Jim Collins integrated methodology, so metrics like this allow the service department an opportunity to say here’s where we’re at today and here’s where we want to be at tomorrow and how to get there. Whether it’s internal competitiveness, pride, passion, or whatever it is, we’ve been focused on driving that.”

He adds that positivity creates positivity. “So the other departments have seen that and seen the benchmarks and we make that not only public information, but internal information. That drives other people to raise the bar.”

As good as the metrics currently are, is it realistic to expect them to get any better?

Both Johns and Walker answer in the affirmative. After all, the better the numbers, the greater the differential between CBS and its competitors and the more opportunities there are for new business and expanding into new territories.

“It’s just making sure that we’re equipped to handle that and not letting the numbers slip back down anywhere,” emphasizes Johns.

And with Walker scrutinizing those numbers daily and managing his service operations using that information, that’s not likely to happen. ✦

Corporate Business Systems Springfield, MO www.corporatebusinesssystems.com Owner: Jim Quesenberry President & CEO: Tyson Johns Director of Service: Larry Walker # of Service Techs: 19 Lines Carried: Savin, Kyocera Locations: 4 (Springfield, MO; Joplin, MO; St. Robert, MO; Bentonville, AR)

Why They Stand Out: • Ranked 10th overall compared to all other dealers in the OTSEA rankings • Hold for Parts are Consistently 10% or less • Exceptional at First Call Effectiveness

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Sales Management

What’s Your Selling Style: Standup or Improv?

I

count myself as fortunate.

Before Saturday Night Live, before Mad TV, before Comedy Central, a few of us (all too young to have done it and gotten away with it) went to Second City in Chicago. It’s been too many years to remember who was up that night but I do recall how much fun it was. And how much more fun it was to watch the improv portion than the standup routines.

A few years ago I was hooked for a while on “Who’s Line is it Anyway?” The crew was funny and there were some great skits but what got me was the improv!

Improv draws me in like a sales rep to commission. Improv engages us more deeply than a standup routine because we aren’t “watching and texting,” we are paying full attention. There is surprise, suspense and expectation. In other words, “Improv, you had me from ‘Didn’t I see you eating a hamster yesterday?’”

Standup is fine, but standup is more about the routine, the prepared speech, gestures, timing and delivery. Don’t get me wrong, Henny Youngman was a hoot, but the best he could get out of me was a clap and a chuckle. Watch Robin Williams doing improv… that’s a whole different level of engagement.

I know, “What does this have to do with your sales style and its effectiveness?” Let’s take a look at two “sales routines.”

Typical Sales Routine (Standup): Goes something like this, “my stuff, why I am great, your stuff, why my stuff would be great for you, a little testimonial here and there to add credibility and viola”! Pitch closed.

Dictionary.com defines “Standup Comedy” as, “A comic monologue performed by one person standing on a stage.” Unfortunately that describes a lot of sales pitches. The performance may not be all that comic but they do tend to be monologues delivered by one person who is in no way connected to the audience.

Engaged Sales Experience (Improv): As Robert Kulhan, Adjunct Professor at Duke University states, “Improvisation isn’t about comedy, it’s about reacting – being focused and present in the moment at a very high level.”

Improv teaches us how to accept what is thrown at us, really focus on listening and then add new information to move the person in the direction we need them to go.

Now let’s get something straight, we are NOT talking about “winging it.” I am not suggesting that you drop in to see Mr. Bigshot Prospect next week without a plan. And I am definitely not suggesting you “utter, execute or arrange anything without previous preparation” as is the definition of “improvisation” from dictionary.com.

A single viewing of any great improv comic at work and it is very apparent that they are not working without prior preparation. They are highly trained and highly prepared.

Andrew Tarvin lists “10 Life Tips from Improv Class.”

I think we can take his bullet point sound bites and find some application in the world of sales.

The bullet points are his, but the applications are mine, so if you don’t like or agree, don’t blame Andrew.

1. “Dare to be dull.” Application: Unless your product or ser-

vice is truly revolutionary, don’t oversell it. Cure for cancer? Sure, shout it out! Reducing the costs of inefficiencies in the office?

Don’t overhype it. I see proposals all the time that revolve around claims that no one is going to believe. Tone it down. Do the hard work. Leave the rooftop shouting to someone else.

2. “Make a connection with the other player.” Application: There are at least two of you in the selling situation, aren’t there? You will want to build the relationship a little before you pull out your magic hammer (supplied by those good people in marketing) and start beating the prospect into submission.

3. “Make it about the present.” Application: Learn what got them to where they are (you know this, it’s called, “Discovery” kids), give them a taste of what things can look like (the wonderful future you will deliver) and then keep the balance of the time focused on the present (the conversation here and now where we get to outline the steps of moving this forward).

4. “You have to understand why you’re playing the game.”

Application: What is driving your participation and what is driving theirs? I know, you’re in it for the commission, because you have to close X new accounts, because there is some requirement placed upon you (just kidding). Is that really the only reason you are on that stage, at that time, with that audience?

And what about the other half of your show – the other player?

Why did they come and why are they still there? As the unknown actor is famous for saying, continued on page 54

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What’s Your Selling Style?

“What’s my motivation?”

5. “Never expect a certain answer or reaction.” Application: Just listen and react to what was actually said. This is a biggie! It calls for actively listening.

As sales producers we can be guilty of jumping to our great verbal return volley after our ears receive their serve of information. When we do that we may completely misread the serve and brilliantly respond irrelevantly. Listen, listen, listen.

6. “Make your fellow players look like geniuses.” Application: I watched a senior sales leader debate a prospect recently (not my guys!). It appeared that he was more interested in proving how smart he was than in understanding what the prospect was saying. Remember, there is no audience here; both parties are participants. Make it an enjoyable experience and give some credit to the other players.

7. “It doesn’t matter what you’re doing on stage, as long as you sell it.”

Application: Ok, this is a bit of the old self confidence issue. I don’t mean you

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talk a load of shinola, but you do have to be confident. Confidence sells.

8. “Be more brave than impressive.”

Application: Cut the excuses. You don’t need to know more. You don’t need to do more research. All your smarts aren’t that impressive anyway. Pick up the phone and make the call.

9. “Just make a choice.” Application: Here’s the choice I suggest, choose to really listen. Choose to really focus on the needs of the client. Choose to really deliver what only you can deliver.

Choose… ok, maybe make one positive choice at a time.

10. “When in doubt, have fun.” Application: This is not “do or die” stuff. It is pretty unlikely that even if you totally blow the meeting or the opportunity that you will end up eating cold Alpo from a can under the freeway. So relax a little, enjoy the interaction. If it really wasn’t fun, you would probably be doing something else by now… wouldn’t you? Hint.

I sat through a canned pitch the other day. It was a monologue. It was incred-

ibly boring. It was a “selling seminar.”

You know the kind of thing; the speaker purports to offer some educational nuggets but in reality is wholly focused on hawking her wares. Done right, these events are powerful. Done like this one, and it was the worst kind of standup. The kind where the standup guy fell over and died. Why? Because he had a speech to deliver instead of creating an interactive event where the audience became part of the cast. To put this in context, later that same day I participated in a great session. The speakers had their material down cold. The information was relevant to the audience and they ended early!

Why? So that they could move from standup to improv (Q and A). Question after question, more and more of the audience was participating. The audience stopped being the audience and became part of the event as they began interacting with each other. Truly great improv.

Try a little more improv and a little less standup. At the very least, you will make some people smile. ✦

We Saw It In ENX Magazine

Bill Lowrey

Managed IT

IT Services for Office Equipment Dealers

T

he right tools are critical to getting the job done. Today, businesses are more and more reliant on the Internet as well as software and hardware technologies to complete all the routine tasks that underpin larger business processes. Launching new products, processing orders, supporting customers, handling employee relations, and driving innovation all require numerous emails, collaboration on strategy, telephone calls, access to databases and a myriad of other technical resources. The multi-function peripheral plays an important role in these, but is now just one of many components in the systems used to conduct business. Every business, regardless of size, now depends on its information technology infrastructure.

....Many office productivity businesses have already seen the tremendous value and the natural synergies that exist between office equipment and IT services…..

As a provider of copy, scan and print technologies, you provide key technologies to enable business processes for your clients. Additionally, document management, enterprise content management and collaboration solutions bring additional value to your clients. Of course, all of these technologies are running on top of the local network and the Internet connections. Being able to deliver IT services is a natural extension of the business solutions you already provide.

But which solutions provide the highest value to your clients?

What are the options for moving 56

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to add those services? What are the costs and barriers to entry?

Are there ways to accelerate market entry and mitigate risks?

Understanding your options and knowing the answers to these questions can make all the difference in your efforts to grow your business by offering IT services.

Why Add IT Services?

Have you ever been in the middle of something important when the computer systems became unavailable? We all have. In the extreme case, downed computer systems have caused flight cancellations, trading miscues and clinical errors, but even small examples, such as the inability to process a single credit card transaction, can prove embarrassing and create customer satisfaction issues. Many of today’s businesses simply do not have manual processes in place to keep commerce flowing when email, phone and payment systems are down. Everything is riding on their IT infrastructure.

Sadly though, many smaller businesses have found that their IT needs quickly outpace the abilities of their IT resources.

Many companies learn to get by with what they have or ask an employee to perform tasks themselves, such as updating software or installing a printer, but this often backfires. As a trusted business partner, it makes sense for business equipment companies to span the gap to fill the IT needs of your clients. The truth of the matter is that businesses use someone to help address their IT needs, so finding a way to capture that revenue for your company is well worth investigating.

We Saw It In ENX Magazine

Types of IT Services

There are plenty of IT services providers out there offering even more types of services. The important question to ask is how can you add value for your clients? This will make the conversation with them easier. Nobody wants to attempt to force a sale.

Picking the right mix of services is a good place to start.

Network Operations Management – this is the care and feeding of the network, ensuring that servers, firewalls, routers, switches, and other components are up, running and communicating the way they should be.

Typically, monitoring software is used to collect information from network devices and convey that information to a centralized management console. Messages are categorized based on severity and emergency, or preventative actions can be taken based on this data. The goal is to keep networks and servers up and running and to proactively address items that could cause disruption.

Help Desk Support – the goal of the help desk is to answer the age old question, “Who do I call for support?” A good help desk provider uses industry certified engineers and technicians to offer support for operating systems, productivity applications such as Office, Excel and e-mail, network connectivity, printer support and remote access. With the familiarity we all develop for technology, many companies make the erroneous assumption that users can take care of things themselves, but studies show that time is often wasted when people troubleshoot their own desktop and laptop computers. The goal continued on page 58

IT Services for Office Equipment Dealers of a good help desk is to accelerate problem resolution so that users can focus on things that matter, not their computer issues.

IT Projects – many companies have a single IT resource or an employee handling IT amongst other job duties.

Often, due to time or training constraints, there are high value technologies that simply don’t get deployed. Server virtualization, productivity tools, collaboration solutions, and many other technologies get left off the schedule when they could be used to make everyone’s job easier. Outsourcing these projects to a competent provider is a great way to improve productivity. A trusted resource to perform these tasks, much like a trusted auto mechanic, is someone you’ll turn to again and again.

Cloud Computing – cloud solutions don’t magically appear and many companies don’t know how best to leverage the cloud for their unique needs. A good cloud computing partner can help any business gain greater IT efficiencies by leveraging the power of high-density, secure cloud computing solutions.

Build it, Buy it or Partner?

As with any business expansion, there are typically three ways to enter the market: build it, buy it or leverage a partner. Each has its advantages and disadvantages.

Build it – building your own IT services practice shows your true commitment to this part of your business. This can be reassuring to your clients, but it comes at a cost. The cost of hiring the right personnel, training them and keeping them busy on revenue-generating services can be challenging. Additionally, it takes time to build an organization capable of providing quality services.

And yet, because you have to provide a consistent level of service, you must maintain staffing levels to support the technologies you service.

Buy it – there are countless small IT service providers in the market today and there has been significant consolidation in this space. Buying a company with the skills you need to enter this market is a quick way to get the trained talent you need with the proven methods of deliv-

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ering IT services your clients expect. Of course, buying a company is a significant investment and comes with no guarantees that the most valuable resources, the employees that you’ve just acquired, will stick around for the long haul.

Partner – partnering with a trusted IT delivery organization can help mitigate the risks of building or buying your way into this market. A partner will have a track record of providing the various types of managed IT services and, due to their size and scale, they will find it easier to hire and retain valuable technical resources. A partner can eliminate the risks you would face in staffing and training technical resources and can help you train your sales resources, as well as assist with marketing and promotions.

A partner can also help by offering a full range of tested and documented technology solutions from many vendors so that you won’t have to manage each vendor relationship individually. Of course, these benefits come at a cost.

The managed IT partner will need to add adequate margin on their services to cover their profit, but due to their size and resources there should be room for both of you to succeed.

The Value to Your Business

Since IT services are typically sold on a monthly basis, a well-structured agreement can provide a revenue stream for your business that nicely augments your office equipment sales. Let’s take an example of a 25 user organization with 2 multi-function peripherals. The equipment sales and services over a five year period would look something like this: • •

• • •

• Total annual services: $2,850/month x 12 months = $34,200 • 5 Year revenue: $196,000 This shows a revenue stream from IT that is more than four times the amount from MFP sales. In fact, this 25 person customer has now generated close to $250,000 in revenue for you over five years, if you capture both the MFP and IT spending. Moreover, this example shows just the monetary value of a single IT solution to this customer. There would likely be additional IT projects such as cloud computing backup or email solutions as well. The goal is to create recurring value to your clients that become recurring revenue for your business.

Many office productivity businesses have already seen the tremendous value and the natural synergies that exist between office equipment and IT services.

For many, the speed of entering the market that comes with partnering with a professional IT services provider, as well as the benefits of reduced risks, offers an attractive path forward. The right decision for your business will depend on your circumstances and goals. However, the biggest risk is probably in ignoring the IT services arena, as many of your competitors will surely not. ✦

2 MFPs @ $7,000 each $250 each, monthly service contract Total hardware: $14,000 Total annual services: $6,000 5 Year revenue: $44,000

Now let’s add Managed IT services to this customer: • Client with 25 PCs @ $1,000 each • $100 each, monthly IT service contract • $350 per month Network and Server contract • Total hardware: $25,000 We Saw It In ENX Magazine

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Exit Strategy Part 3 of 3

The 10 Biggest Mistakes Business Buyers Make

I

n previous articles, we discussed mistakes #1 to #6 of the 10 Biggest Mistakes Buyers Make when acquiring businesses. In this article, we examine the final four mistakes buyers make when buying businesses.

Mistake #7: Negotiating too soon

Deals are a lot like courtships.

Most people would never think of asking someone to marry them on their first date, yet we consistently see buyers fall into the trap of trying to negotiate a deal at their first meeting with sellers.

Perhaps one of the biggest mistakes you can make as a buyer during a first meeting with a seller is to ask the following question early in the meeting: “How much do you want for your business?” By asking this question, you have just signaled to the seller the only thing important to you about their business is the price. Every business owner wants to believe the buyer is more interested in their company than just getting a good deal.

to pay less than market value for the companies they are buying… or are acquiring poor performing companies.

I understand many acquirers are concerned about “falling in love” with a deal for fear of paying too much. However, giving a deal the time to properly run its course doesn’t necessarily mean overpaying. But if you begin the negotiations too soon, you risk jeopardizing the deal before you ever get started.

Mistake #8: Not having proper legal counsel

Even the smallest of transactions may have its complexities. Using a seasoned, experienced M&A attorney to assist you with the transaction is imperative. If you/ your company have not acquired a business before, you need to engage the services of appropriate legal counsel. If it is a larger, more complex transaction, you need an experienced legal team.

For example, we were working with a client who was acquiring distributors of imaging supplies.

The attorney they traditionally used for their transactions was a “Every business owner great guy who operated as a solo wants to believe practitioner. Unfortunately, the last the buyer is more deal we found for our client was a interested in their prospect who not only distributed company than just imaging supplies, but was also getting a good deal.” a remanufacturer who owned its own facilities, had made signifBuyers often tell me, “We always icant investments in Intellectual ask about price first because if Property and patents, and also had the seller wants more than we’re operations outside of the USA (in willing to spend, why waste any Europe and Africa). time?” While I cannot argue the While their attorney was logic, I have not seen this partic- certainly knowledgeable and ular method work well except in completely capable of working situations where buyers expect on relatively small transactions 60

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We Saw It In ENX Magazine

in the USA, he was not experienced working on transactions requiring environmental surveys let alone cross-border employment and complex domestic and international Intellectual Property issues.

At the end of the day, our client, in concert with us and their local attorney, identified and engaged the services of a larger, deeper law firm who had experience in all the facets of the size and type of transaction our client was contemplating. Without the involvement of the larger firm, this transaction would not have been completed.

Even if yours is a small, simple transaction, do not underestimate the importance of having strong legal counsel supporting you in the transaction.

Mistake #9: No clear plan for Due Diligence

Due diligence (“DD”) is the investigative process buyers undertake to appraise and assess the viability of a business prior to closing on a purchase of the company. The “formal” DD process generally begins after buyer & seller execute a Term Sheet or Letter of Intent (LOI) for the deal. The transaction does not close until the buyer has satisfactorily completed its DD process.

The DD process is intrusive to a business and makes even the most seasoned of sellers apprehensive. DD can cause frustration and tense moments between buyer and seller at a time where the parties are supposed to be strengthening relations, not straining them.

Thus, it is very important for continued on page 62

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The 10 Biggest Mistakes Buyers Make buyers to have a carefully designed DD plan developed BEFORE they issue an LOI or Term Sheet to the seller. There is a fine line between asking for too much and not enough information in the DD process. Furthermore, nothing frustrates a seller more than a buyer who continues to develop list after list of DD questions throughout the process, seemingly devoid of logic or explanation. Another frustration for sellers is buyers who supply a DD list without taking care to indicate the information they’ve already received and reviewed.

Recently, we represented the owners of an office/imaging supplies/equipment dealer with multiple locations. The company had total revenues of approximately $10 million. We received offers from multiple buyers and narrowed our choices to two parties. Along with their LOI, we asked each party to supply their DD request list. One buyer had a 25 page list with a total of 595 questions and data requests. The other buyer had a simplified list and took the time to explain why they were making some specific requests of what could be construed as very sensitive information.

With both offers similar in value and terms, our client chose the offer from the buyer whose DD process would be simpler and less invasive to the company.

When we queried the buyer who submitted what we called the “War and Peace” DD list, they admitted this was their first potential acquisition and they asked their CFO to put together a DD list. The CFO reached out to a colleague who provid-

ed a sample list his company used to purchase a manufacturing concern with factories around the world. Clearly, with DD lists, one size does not fit all.

Take care when developing your DD list and make sure to fit the process and your DD plans to the target.

Mistake #10: No clear postclose integration plan

Perhaps the biggest mistake we see buyers make is spending all of their time worrying about making the deal happen and virtually no time planning for what happens after the deal closes.

“Often, buyers are so focused on the process of getting a deal done that they forget to plan for the integration of their newly acquired business into their own company.”

Often, buyers are so focused on the process of getting a deal done that they forget to plan for the integration of their newly acquired business into their own company. There are myriad “to do” items to complete before closing including: integrating/transferring employees to the buyer’s benefits plan; opening bank accounts and ordering new checks; transferring contracts, customer relationships, vendor contracts, leases, deposits, and more. However, these are the relatively “easy” tasks to accomplish and do not involve integration issues.

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What are some of the bigger issues/ concerns to plan for? How will communications be handled from the buyer to the seller after closing? Who will be responsible for hiring/firing employees at the acquired company? How will you merge sales teams? How will you manage disparate order processing/customer service processes? How will you merge/ manage/use different software platforms used by the companies? These are but a few of the issues to consider.

We advise our clients to spend as much time thinking about post-close integration as they do the transaction itself. Furthermore, we also work with our clients to help develop a DD plan which will help identify any post-close integration traps or problems so they may be better prepared prior to completing the deal.

Buyers who do not plan properly for post-close integration are like the old analogy of the dog that chases after and catches the car only to say: “What do I do now?” Don’t get caught “with a car in your mouth” and not know what to do; take time to plan for a successful closing and integration.

I am happy to answer any of your questions regarding this subject or any previous articles about the 10 Biggest Mistakes Buyers Make. In my next article, I’ll present the 5 Biggest Deal Killers we see today. ✦

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Printer Tech Tip

TECH TIP

HP CP3525, CM3530, M551, M575 ISSUE: 59.F0 Error DESCRIPTION: Printer boots up to 59.F0 Error and is unable to print. This behavior may be caused by one of the following three conditions: 1. Transfer belt is locked up and cannot rotate.

2. Sensor SR17 (primary transfer-roller-disengagement) is bad.

3. Damaged or broken fuser drive gear. Typically, a grinding or clicking noise will be heard during boot up.

RECOMMENDED ACTION: 1. The first step is to reseat the ITB and power-cycle the printer.

NOTE: If the problem persists, an HP Certified Technician should be dispatched for further troubleshooting.

2. Inspect the ITB by taking the ITB completely out of the printer. Check to see if the flag rotates (callout 1) when the white knob is turned (callout 2). See the Figure following.

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If the ITB flag is broken, damaged, or does not rotate replace the ITB (CC468-67907). Otherwise, continue with step 3.

3. Test Sensor SR17. Perform the Manual Sensor Test. In order to run this test successfully, make sure the Fuser, ITB, Cyan

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Printer Tech Tip

HP P3015 and M525 Series printers Error: TRAY 2 OPEN

T

here has been an increase in cases with the above listed printer series reporting a constant “TRAY 2 OPEN” message.

In most occurrences we have found the only problem to be a weakened leaf spring – which is responsible for depressing a microswitch to signal the DC Controller when the cassette is closed.

To verify this, with the printer on and the cassette removed, simply use a small object to press in on the metal leaf spring located within the right cassette guide (FIG 1) and note the control panel:

1) If the control panel continues to read “TRAY 2 OPEN” the tray detection sensor would need to be replaced (FIG 2).

P3015 series # RM1-6487

M525 series # RM1-8620 2) If the printer displays “TRAY 2 EMPTY” the leaf spring would need to be slightly bent to make a better contact with the micro switch itself.

FIG 1

FIG 2

This Printer Tech Tip is contributed by Laser Pros (www.laserproscom). Email any questions to marketing@laserpros.com We Saw It In ENX Magazine

June 2015 | www.enxmag.com

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69

Britt Horvat

Technical Tips

Xerox® WorkCentre® 5945 / 5955 Drum Cartridges

Repairing and Rebuilding the Print Cartridges for the WC-5945 & 5955

T

5945 Drum Cartridge

he WorkCentre 5945 styles are new comers on the Xerox copier scene. These guys are black & white multifunction copiers.

I got my paws on one of the drum cartridges and thought they looked intriguing. Some of the parts of this cartridge have already begun to become available, so that’s always helpful.

This month, we’ll start with an overview of the cartridge, especially where the CRUM chip is situated. Then let’s take one of these babies apart and see how to rebuild the upper half.

We’ll leave the lower half (the developer station) alone for the time being.

The WC-5945/5955 print cartridge is sold under the part number 013R00669 (13R669). It can be found online currently for between $115 and $140 for a new OEM cartridge.

Not bad considering it has a stated yield of 200K according to the machine’s brochure. The cartridge has an upper half which has the drum, blade, charge roll, and a cleaning roll (a white foam roll). The lower half has a developer station including an ATC Sensor (Automatic Toner Concentration).

A first glance at the front end of this print cartridge would remind you of the C123 or WC-

5225 drum cartridge. The lower half being a developer station is also reminiscent of a C123 or 5225 drum cartridge. That’s where the similarities end. The

Photo #1: CRUM chip locations

parts in the upper half are longer than the C123, so nothing really crosses over up there.

The drum reset CRUM chip looks more like one of the C35 style drum CRUMs. It can be found just behind the right side of the front end cover (see Photo #1). It is easily replaced (one screw, T-10 Torx bit). Replacing the CRUM chip will reset the drum count and allow you to extend the life of the cartridge considerably.

Keep in mind that because the cartridge has developer in it, it’s important that it be handdelivered and not turned upside down during handling. This is because if it gets flipped over, the developer material can migrate up into the upper half where the drum and charge roll are at.

This means that for now at least, you’d not be able to ship a rebuilt cartridge. Unless you have

replacement developer material, you will not want to clean out anything inside the lower half (developer station). Eventually replacement developer and a new developer pull-seal will no doubt become available and then a true full rebuild will be possible.

Now let’s get into the procedure of taking off the upper half and replacing the drum, charge roll, cleaning roll, and drum blade. This can get pretty messy, so make sure you are working over a drop-cloth. You’ll also need a Torx T-10 sized driver bit.

Photo #2: Rear end cover

PROCEDURE:

1. Remove the CRUM chip from behind the right side of the front end cover (1 screw – Torx T-10) (see Photo #1).

2. Next remove the rear end cover (2 screws & release one clip on your lower left) (see Photo #2). Take care from here on that the white drum / mag roll bushing does not continued on page 72

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Xerox® WorkCentre® 5945 / 5955 Drum Cartridges

Photo #3: Front end

slip out, or else the drum becomes loose and can be easily damaged. Also watch over the cleaning auger coupling as it will pop off the auger if you pull on it at all.

3. Next comes the front end cover (2 screws) (see Photo #3).

4. Then take off the front inner plate (3 screws, T-10) (see Photo #4). Be very careful that both the front and rear white plastic drum / mag roll bushings stay in place.

5. Now very gently lay the unit on its right side so that the drum is facing upwards (see Photo #5). Hold the drum steady while you extract first the rear and then the front white drum / mag roll bushings. The developer station (lower half of the cartridge) can now be moved away from the upper half. Warning: the toner reclaim chute at the rear will dump a small pile of toner and make a mess for you.

6. The drum with its bearings can now be lifted out of its cradle. This exposes the charge roll and drum blade (see Photo #6).

7. Next you’ll want to remove the charge roll assembly off of the cleaning assembly (2 screws from the left, one near the front, and one near the rear end (see Photos 7 & 8).

8. The charge roll can now be replaced

Photo #4: Inner front cover

(use a little bit of conductive grease on the plastic cradles which the charge roller sits in). The white foam roll just behind the charge roll is the charge roll cleaning roll. It comes out easily at this point as well.

9. Finally you can remove the drum cleaning blade (2 screws) and gently vacuum out the waste toner auger behind the blade (be very careful not to hurt the Mylar recovery blade).

10. Clean everything up nicely and reassemble. Note that it is not good to use a vacuum on the lower half (developer station) as you don’t want to lose any of the developer material, and also because the ATC sensor is static sensitive (if you don’t use a static dissipating vacuum the sensor will be in danger of being blown by ESD static discharge). If you do plan to replace the developer and clean out the unit, you should first remove the sensor.

That’s it! Not so bad was it? Ok, maybe the drum getting loose when one of the white bushings accidentally slips out of place can be a bit frustrating, but you get used to paying attention to those two bushings pretty quickly.

Photo #5: Separating the halves - Rear Drum/Mag Roll Bushing (white plastic)

Photo #6: Blade, Charge Roll, & Cleaning Roll

Photo #7: Rear charge assembly screw location

I hope you all enjoyed the article. Next month we will have to crack open one of the fusers from this same new series. Can’t wait! Have a great month! ✦

Photo #8: Front charge assembly screw location 72

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