September 2018 Office Technology

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CONTENTS Volume 25 • No. 3

FEATURE ARTICLES 10

Large-Format Printing Are you missing revenue opportunities?

COURTS & CAPITOLS The Impact of Tariffs Use your terms & conditions to offset price increases

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by Robert C. Goldberg BTA General Counsel

by Brent Hoskins Office Technology Magazine

When is the last time you took a look at the large-format opportunity? Between 2018 and 2021, IDC forecasts the current CAGR for the large-format CAD/technical segments at 3 to 4 percent. For graphics large-format printers, the CAGR is more substantial, at 7 to 9 percent.

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Production Print Seeking to successfully enter the market?

Every day you hear about tariffs being imposed by the United States. How are tariffs affecting the office technology industry?

AIMED VIEWPOINT Dealership Profile: Lineage Company focuses on adjacencies; company culture

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by Elizabeth Marvel Office Technology Magazine

by Greg Buschman Strategic Account Marketing LLC

Entering the production print market can be a daunting task, but with strategic planning and execution, it can be a cash cow for office technology dealers. This article will provide insight into entering the market and what a good production print rollout looks like.

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With a long history in the mailing business, AIMED and BTA member Lineage has experienced tremendous growth over the years.

DEALERSHIP SPOTLIGHT Quality DOS Dealership owners share ‘new-building’ experience

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A Team Approach The key to a successful business sale

by Brent Hoskins Office Technology Magazine

Joe McMonagle and Gordon Stapleton met in 1989 when McMonagle was serving as a district manager for Monroe Systems for Business.

by Jim Kahrs Prosperity Plus

As a dealership owner, the sale of your business will be the biggest and, likely, the most important transaction of your life. As a business owner, you have spent your life learning and honing your craft. Surely you are capable of handling the sale of your business on your own. How complicated can it be?

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SERVICE CONNECTIONS Service Success Differences in service & sales management training

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by Ken Edmonds Service Management Coach

Q&A: Konica Minolta Errigo comments on MWA acquisition & the industry by Brent Hoskins Office Technology Magazine

On July 2, Konica Minolta Business Solutions U.S.A. Inc. (Konica Minolta) announced the acquisition of MWA Intelligence Inc. (MWA), a provider in the enterprise resource planning (ERP) space. MWA is now a part of All Covered, Konica Minolta’s IT services division.

In the office technology industry, two management roles are vital to dealership success: service manager and sales manager.

D E PA R T M E N T S 6

Executive Director’s Page

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BTA President’s Message

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Advertiser Index

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EXECUTIVE DIRECTOR’S PAGE

Join BTA in Asheville at Fall Colors Retreat

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s summer turns into autumn and the leaves on the trees start to change color, I always think of BTA’s Fall Colors Retreat, held each year in Asheville, North Carolina. This year’s retreat, planned and hosted by the BTA Southeast dealer volunteer leadership team, will be held Oct. 18-19 at the Renaissance Asheville Hotel in Asheville, North Carolina. The Fall Colors Retreat will give you an opportunity to learn from industry experts and your peers in a relaxing, beautiful setting near the Great Smoky Mountains. The event will begin at noon on Thursday, Oct. 18, with opening comments and lunch, followed by the keynote address, “Great Balls of Fire! Staying Motivated — No Matter What!,” led by Denise Ryan of FireStar Speaking. Breaks and round-table discussions with vendors will follow the keynote. Attendees will break into small groups for these round-table discussions, which will give them plenty of one-on-one time to learn about the exhibitors’ offerings. From 4 to 5 p.m., the first part of a two-part educational session, “Build, Buy or Partner?,” led by Hannah Erb of Collabrance, will be held. At 6 p.m., attendees will travel to the Broadway Arts building just a few blocks from the hotel for an evening celebrating the food and culture of Asheville. They will enjoy a dinner of Asheville specialities and local buskers — street entertainers — will provide the evening’s entertainment. Performers will include an acoustic guitarist reminiscent of James Taylor; an American jazz group, the Big Dawg Slingshots; and the Skinny Beats Drummers, who will give attendees an overview of drum language. The second day of the Fall Colors Retreat

will begin at 7:30 a.m. on Friday, Oct. 19, with a continental breakfast, followed by opening comments and the second educational session, “Economic Outlook,” led by Tim Quinlan of Wells Fargo Securities. Breaks, more vendor round-table discussions and the second part of Erb’s educational session will follow. At noon, the event will wrap up with closing comments and prize drawings. The exhibiting sponsors: Epson America, ESP AMETEK, GreatAmerica Financial Services, Imaging Solutions Direct, LD Products, LMI Solutions, Muratec America, NA Trading and Technology, Office Solutions International, OKI Data Americas, Panasonic Scanners, Print Audit, Static Control, Supplies Network, Supplies Wholesalers, TIAA Bank, Wells Fargo Equipment Finance and Xerox (breaks sponsor). Two-for-one BTA member dealer registration for the Fall Colors Retreat is only $199. Registration includes the Thursday and Friday educational sessions and round-table discussions; Thursday lunch, welcoming reception and dinner at the Broadway Arts building; and Friday breakfast. BTA members may also apply their $150 educational discount received with their membership toward this event, bringing 2-for-1 registration to only $49 for two attendees. The $250 member discount can be used for three or more attendees; additional attendees are $99 each. Non-member dealers may attend for $249 per person; an additional attendee from the same non-member dealership is $209. I encourage you to register today for the Fall Colors Retreat. This BTA educational and networking event will provide plenty of time to get to know your fellow dealers and exhibitors in a relaxing setting. For more information or to register, visit www.bta. org/BTAAsheville. n — Brent Hoskins

Executive Director/BTA Editor/Office Technology Brent Hoskins brent@bta.org (816) 303-4040 Associate Editor Elizabeth Marvel elizabeth@bta.org (816) 303-4060 Contributing Writers Greg Buschman, Strategic Account Marketing www.samllc.us Ken Edmonds, Service Management Coach www.kedmonds.biz Robert C. Goldberg, General Counsel Business Technology Association Jim Kahrs, Prosperity Plus www.prosperityplus.com

Business Technology Association 12411 Wornall Road Kansas City, MO 64145 (816) 941-3100 www.bta.org Member Services: (800) 505-2821 BTA Legal Hotline: (800) 869-6688 Valerie Briseno Marketing Director valerie@bta.org Brian Smith Membership Sales Representative brian@bta.org Photo Credits: Bigstockphoto. Cover created by Bruce Quade, Brand X Studio. ©2018 by the Business Technology Association. All Rights Reserved. No part of this publication may be reproduced by any means without the written permission of the publisher. Every effort is made to ensure the accuracy of published material. However, the publisher assumes no liability for errors in articles nor are opinions expressed necessarily those of the publisher.

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BTA PRESIDENT’S MESSAGE

BTA Service Success Training Starts Oct. 1

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or many years, the Business Technology Association (BTA) has offered a very well-received educational workshop for the service department — FIX: Cost Management for Service 2.0. This one-day classroom workshop explores the costs associated with the service department, as well as teaches attendees how to improve overall service department profitability. Recently, BTA announced a second educational offering for the dealership’s service department. Starting Oct. 1, BTA will launch the web-based BTA Service Success Training for supervisors and managers, addressing the fundamentals of supervision and management. The online live lecture and discussion will allow your supervisors and managers to continue working in their jobs while learning at the same time. Taught by service management coach Ken Edmonds, the program runs for 15 weeks, meeting twice a week. Each session will be between an hour to an hour and a half in length, depending on the subject and level of participant discussion. This training program approaches the art and science of dealer service management at a near-college level. There will be assigned reading and collaborative projects for students to develop the skills they are learning. Since the program is conducted online, students can begin to apply the things they learn immediately. The program will cover the following service management topics: introduction to supervision and management; leading and improving the team; working with other departments; service department costs; identifying areas for improvement; time management; dealing with customers;

understanding and using service metrics; and the service role in the dealership. The sessions will be recorded, so those who cannot attend a session can watch a video to cover what was missed. There will also be graded quizzes and a final test. The association will issue a BTA Service Success Training Certificate of Completion to attendees who successfully complete the training. By the end of the training, attendees will have a better understanding of their service departments and the actions they can take to increase productivity and profitability, while boosting their teams’ morale and competence. This course is the prerequisite for the BTA Advanced Service Management training program, which will be available in the spring of 2019. For nearly 16 years, Edmonds served at Sharp Electronics Corp. and then at Konica Minolta Business Solutions as a problem solver for both technical and service management issues. In early 2018, he retired from Konica Minolta as a district service manager. Before that, Edmonds had an extensive background in the imaging business, having owned a successful dealership and serving as a service manager for multiple dealerships. In total, he has more than 40 years of experience in the technical and computer fields. Edmonds is currently consulting with dealers on strategies to improve profitability. He also writes for ENX Magazine, Office Technology magazine and blogs for The Imaging Channel. Member tuition for BTA Service Success Training is $995 and BTA members may apply their $150 educational discount received with membership toward the program. A second attendee from the same member dealership is $895. Third or additional attendees are $795 each. Register your service supervisors and managers at www.bta.org/SST. n — John Eckstrom

2018-2019 Board of Directors President John Eckstrom Carolina Business Equipment Inc. Columbia, South Carolina johne@cbesc.com President-Elect Bob Evans Function4 Sugar Land, Texas bobevans@function-4.com Vice President Tim Renegar Kelly Office Solutions Winston-Salem, North Carolina trenegar@kellyofficesolutions.com BTA East Tim Seeley Jr. Seeley Office Systems Inc. Glens Falls, NY tseeleyjr@seeleyoffice.com Don Risser Advanced Laser Printer Service & Supplies Inc. Emigsville, PA drisser@alpslaser.com BTA Mid-America Greg Quirk JQ Office Equipment Omaha, Nebraska gquirk@jqoffice.com DJ Hastings Hogland Office Equipment Lubbock, TX dj@hoglandofficeworks.com BTA Southeast David Polimeni RITE Technology Sarasota, Florida dpolimeni@ritefl.com Michael Hicks Electronic Business Machines Inc. Lexington, KY mhicks@ebmky.com BTA West Mike Brandon ABC Office Equipment Co. Inc. Spokane, Washington mbrandon@abcoe.com Joe Escamilla Document Systems Oxnard, CA jescamilla@documentsystems.com Immediate Past President Dan Castaneda International Copy Machine Center El Paso, Texas dan@icmc-elp.com Ex-Officio/General Counsel Robert C. Goldberg Schoenberg Finkel Newman & Rosenberg LLC Chicago, Illinois robert.goldberg@sfnr.com

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Large-Format Printing Are you missing revenue opportunities? by: Brent Hoskins, Office Technology Magazine

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f you are not selling large-format printers, when is the last time you took a look at the opportunity? Consider this: Between 2018 and 2021, IDC, the market research firm, forecasts the current compound annual growth rate (CAGR) for the large-format computeraided design (CAD)/technical segments at 3 to 4 percent. For graphics large-format printers, the CAGR is more substantial, at 7 to 9 percent. Is it time to take another look? “Large format is a growing market and the supplies opportunity is robust,” says Tim Greene, research director for large format and 3D printing at IDC. “Typically, a company that spends $5,000 to $10,000 on a large-format graphics printer will spend one to three times that much on supplies through the course of the year — much more if it is in the print-for-pay business.” It is that residual income that captures the attention of dealers. “Definitely, the focus of the large-format printer model is on the aftermarket business — the ink and media,” says Rich Reamer, senior director of the Large Format Division in the Business Imaging Solutions Group at Canon U.S.A. Inc. “Once you get the machine out there, they are going to print to it, and what’s great is the versatility of media that you can put through the printers these days. For example, you can now print on water-resistant media for outdoor use, which is something you couldn’t do with aqueous ink printers a few years ago. You can print on vinyl for banners, peel-and-stick media for easy repositioning of signs and many newer media that were not available in years past. So, the revenue for the aftermarket is tremendous.” John Fulena, vice president of the Commercial and Industrial Printing Business Group at Ricoh USA Inc., concurs. Large-format (aka, wide-format) printing offers incremental revenue from hardware and break/fix service, “but where there is a lot of money to be made is in the consumables,” he says. “When you are looking at wide format, a lot of ink is being used; you are covering lots of area. So, that can be a very lucrative area for those who jump into it.”

Dealers can “jump into it” with various vendor partners. In early 2018, Ricoh, for example, began offering through dealers the roll-fed Pro L4130 and L4160 color latex printers, focused on signage and graphics applications and featuring Ricoh inkjet printheads. In addition, for many years the company has sold its various toner-based architecture, engineering and construction (AEC) models. “Those products are sold by our dealers more so than our direct sales force,” Fulena says. “We still sell a fair amount of them.” While Ricoh is among the participants in the market, which vendors claim the greatest market share? Greene points to Canon, Epson and HP as the leaders in terms of products available through the dealer channel. “All of them go to market with their aqueous inkjet solutions, primarily through distribution,” he says. “On the graphics side, Epson is the market leader from a ‘share of shipments’ perspective, because it sells a lot of its color inkjet printers into the photo and proofing segment. However, Canon and HP have both stepped up their competitiveness in that segment over the past 12 months. On the CAD/technical side, HP and Canon are the market leaders; Epson, KIP and Ricoh also have competitive solutions.” At HP, large-format printers are available across three brands — HP DesignJet printers, HP PageWide XL printers and HP Latex printers, says David Prezzano, vice president and general manager of HP Graphics Solutions Business Americas. “HP offers large-format printers across a complete range of applications, technologies, performance points and prices,” he says. “Applications include common output like posters, photos, drawings and maps, as well as specialized output, such as outdoor banners, stickers and wrapping paper.” Operating a large-format printer is not as arduous as some may assume, Prezzano says. “HP Mobile Printing, HP Click and the HP Application Center-Poster App make it easy to create and print professional output without special large-format expertise,” he says. “Ease of printing on an HP DesignJet printer makes selling large-format output easier than it has ever been.”

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Reamer similarly touts the is fully committed to ease of use of Canon’s largebuilding the right infra“Dealers must be committed format printers. “We’ve made structure, Fulena says. to building the right it easy,” he says. “We created “It’s a lot more than infrastructure to support something called Poster Artjust selling it,” he says. their customers. We’ve seen ist; we also have Poster Artist “Dealers must be comsome dealers do extremely Light, which is no charge. It’s mitted to building the well and others struggle just an easy, template-driven right infrastructure to and, in our experience, it’s program that allows you to cresupport their customate a poster in four easy steps. ers. We’ve seen some not based on dealership size.” Plus, we’ve taken it even further. dealers do extremely — John Fulena In corporate America, people well and others struggle Ricoh USA Inc. like to print from Microsoft Ofand, in our experience, fice, whether it’s Word, Powerit’s not based on dealerPoint or Excel. So, we created a wizard to make large-format ship size. The one thing the successful ones have in comprinting in these applications very quick and easy.” mon is a high level of commitment and the level of investAt Canon, three categories of large-format printers are ment in that infrastructure.” offered through dealers — 12-color (for the photo and proofWhich verticals and environments are the best targets ing markets), eight-color (for the production environments for large-format printers? Fulena notes that “it runs the that still require high-quality output, but at higher speeds) gamut,” but he singles out commercial printers. “They are and five-color (for the AEC and CAD markets). Reamer jumping into using the technology,” he says. “I was just visnotes, in particular, Canon’s success in the five-color seg- iting a commercial printing customer this morning; it is a ment with its MFP models, each featuring a monitor and huge direct-mail customer that recently added two widewide-format scanner in order to scan prints to a network or format devices. The person I was meeting with said, ‘Not PC, or to copy them. “We’ve been able to bring that solution only can I sell the direct mail, but now I am doing signs, disto market for under $10,000; in fact, we now even have a so- plays, graphics, etc., on a large scale.’” lution that is under $4,100,” he says. “The MFP wide-format Fulena adds that Ricoh is also increasingly finding success inkjet business has really taken off industry-wide.” within corporate reprographic departments. “They do a ton While vendors are increasingly working to make the use of signs internally, whether they are small-format posters or of large-format printers as easy as possible, does it require a large-format posters, banners, flags — you name it,” he says. specialist within the dealership? “The most successful dealer- “We’ve seen substantial growth inside of corporate in-plants.” ships have at least one large-format specialist,” Reamer says. While commercial printers and in-plants may ultimately “While we offer support, when they have this specialist in- be among a dealership’s targets, Reamer advises that dealers house, they see a greater level of success, and often sell more entering the large-format arena should simply start with their than just aqueous. Many dealerships will also work with current customers. “You see posters and large-format prints Canon Solutions America and sell the Océ-branded products, everywhere in so many applications, from schools to retail engetting into other types of large-format technology.” vironments to HR departments to marketing departments,” Reamer adds that the most successful dealerships also he says. “So, a dealership should just start with its base and make sure that the individuals who are selling large-format will be able to quickly place a few large-format printers to get printers are compensated on the aftermarket revenue as comfortable with the business, and it will develop from there.” well. “Since the aftermarket is a big part of this opportunity, Prezzano offers similar advice. “My recommendation for if a rep can benefit from the ink and media that printer is go- dealers new to large format: Start by looking at existing cusing to bring over time, then he or she is going to be more mo- tomers,” he says. “If they have posters around their offices, tivated to sell more printers,” he says. “If the rep is just sell- introduce them to the HP DesignJet printers and the HP ing a $3,000 printer, the commission might not be that great. Application Center. If a technical or engineering customer That’s why it then becomes a very secondary product. How- is already buying workstations or office printers, inquire ever, if the rep is benefiting from the aftermarket side, more about their large-format needs. Sales reps who understand large-format printers will be sold, and so will the ink and me- different large-format applications and can ask questions dia, which is a win-win for the rep and the dealership.” to get to different influencers and users, can get wider and Beyond having a specialist and offering compensation tied deeper into their existing customers and, eventually, exto the aftermarket, it is also paramount that the dealership pand into new accounts and fresh opportunities.” 12 | ­w w w. o f f ic et ec hno lo g y m a g.c om | S e p t e m b e r 2 0 1 8

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Reamer says. “They are seeWhile selling into existing “Many times, a dealership’s ing it as an opportunity. customer locations where When they first heard of large traditional imaging devices reps will ask customers, format, they likely thought, have been placed can open ‘What are you doing for ‘This really isn’t our part of the door to large-format large format?’ Before you the business,’ but large forprinters and the lucrative afknow it, the dealership has mat is everywhere. Many termarket, Reamer says the placed hundreds of units. times, a dealership’s reps will reverse can also be true, perDealers are realizing, ‘Why ask customers, ‘What are you haps providing the greatest walk away from this opportunity?’” doing for large format?’ Beopportunity. “The revenue fore you know it, the dealerfor large-format aftermarket — Rich Reamer ship has placed hundreds of can be a great addition to Canon U.S.A. Inc. units. Dealers are realizing, any dealership, but the real ‘Why walk away from this advantage is large format becomes a differentiator and can get your foot in the door at a opportunity?’ They are seeing it as a way to incompetitive environment. We often hear [comments such as], crease their business and keep their competi‘I placed a large-format printer and then was able to place 15 tors out.” n Brent Hoskins, executive director of the imageRUNNERS into this location at a later date,’” he says. “So, Business Technology Association, is editor large format helps to leverage the other side of the business.” of Office Technology magazine. He can be Are dealers, in fact, increasingly embracing the large-forreached at brent@bta.org or (816) 303-4040. mat opportunity? “Absolutely, and it is growing every year,”

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Production Print Seeking to successfully enter the market? by: Greg Buschman, Strategic Account Marketing LLC

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ntering the production print (PP) market can be a daunting task, but with strategic planning and execution, it can be a cash cow for office technology dealers. This article will provide insight into entering the market and what a good production print rollout looks like. The P&L figures are taken from leadership experiences from more than two decades in production print, but do not reflect any one dealership or sales organization. Every dealership principal has a goal for his (or her) company, whether it be growth; build to sell; build to acquire; build to retirement; or build a family or personal legacy. Regardless of the long-term goal, profitable revenue is the key. One area many dealers are investing in is production print. When rolled out strategically, production print can help bring vitality and new sources of revenue. Improvements in several key areas can be realized when a production print division is rolled out effectively: profit margin and revenue stability; turnover rates and morale; funding of sales support roles; service tech utilization rates; and customer retention and satisfaction. Market Entry Points The first place to start is to consider the types of customers in your current portfolio. There are several key questions to ask. Are most of my customers corporate accounts? Are they medium to large organizations or small businesses? How are my current customers fulfilling their needs for graphic arts, marketing and other typical production print needs? What are they outsourcing? Do I want to take on quick and commercial printers? In what vertical markets am I strongest? Doing due diligence in assessing the needs within your current customer base will help identify areas of low-hanging fruit with which to start the sales process. If your dealership is using CRM strategically, this process should be relatively painless. If not, a review of how you are using customer data would be the place to begin. Another consideration when choosing the target market to enter is the capability of your dealership to service certain customers. For

example, commercial printers are notorious for needing to be treated with kid gloves, not because they are difficult or have less business acumen than corporate accounts, but because the production printer is the key piece of equipment from which they earn their living. Imagine if a sawmill’s saw broke; the mill could no longer produce a sellable product. A good sawmill operator will do whatever it takes to get the mill back up and running. This is how a printer thinks. The question here is: Can your service department handle this type of pressure? This is also true when selling to corporate in-plants, however, in-plant operations typically have a wider production window depending on what is being produced. Make sure your management team members understand the additional service requirements production print takes. One of my favorite points of entry is what I call “blurring the lines between office and production color.” This point of entry is relatively low risk, focuses on selling light production and leverages the sweet spot where MFPs do not have the features needed to produce what your customers are outsourcing. There are several benefits to this market entry point. The first is training — the training that your sales, sales support and service techs receive — which will build on their MFP training and will impart expert knowledge that starts bridging the gap between selling and servicing MFPs and production units as well as digital front ends (DFEs). This will help sell more DFEs on MFP color units, the software and professional services that accompany them (such as EFI’s Fiery suite of products) and light production. As your team members understand more about advanced printing and the benefits to their accounts, they will begin to find more opportunities to help customers bring work in-house. Many times, this also opens the door to other types of software sales as well. Potential Revenue and Profit Once the target market is chosen, it is time to take a look at an 18- to 24-month rollout of production print color. Conservative goals for the division might look something like this:

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HERE’S TO THE

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improvement professional who undern Hardware revenue goal: 12 light stands business process and software Embedding your production units at $83,400 per unit = applications, as well as the advanced $1.0008 million company’s equipment, functions of the PP hardware, color mann Professional services: $5,000 per software and services agement and DFEs. This person must unit = $60,000 deep within a customer’s also have great people skills and business n Software sales: $5,000 per unit = business processes is acumen. The role of the PP business ana$60,000 lyst is to move the account toward a close the best way to ensure n Installation fees: $1,200 per unit = by uncovering and creating need within $14,400 true partnership ... the account and then setting up the sales n Service fees: An average of 100,000 team for a smooth, high-gross close. color clicks per month at $.04 per click = Finally, production customers cannot be provided the $480,000 per year same level of service as MFP customers. They require a highn Total revenue bump: $1.7112 million per year er degree of care. When their machines are down, they are eiDrilling down into profit margins: ther losing time, money or both. Can you imagine a corporate n Hardware margin: 50 percent from OEM (FOB) = $500,400 customer in the middle of a sales campaign or training event n Professional service dollars install margin: 100 percent and its machine goes down and cannot produce the needed = $74,400 collateral or documents? Production print equipment is not n Software margin: 30 percent = $18,000 a convenience piece of office equipment. The equipment ben Service margin: Being very conservative at 36 percent comes a vital part of the customer’s success and, therefore, it = $207,360 requires a dedicated PP service tech who understands color n Minus salaries: $70,000 for a PP specialist; $90,000 for management and can solve machine problems analytically. an analyst; and $70,000 for a PP tech = $230,000 n Minus commissions: 30 percent = $150,000 The Critical Success Factor n Total net profit: $420,160 in the first year Embedding your company’s equipment, software and As the program grows, the second year’s net profit should services deep within a customer’s business processes is the more than double because salaries for the three key production best way to ensure true partnership with your accounts. It print personnel were established in the first year. In year four, is far more difficult for a competitor to displace your gear the potential net profit comes close to $1.5 million per year, dewhen you own the workflows and business processes that pending on placements and service tech additions. require production print. As your management and sales teams get deeper within an account, you can more easily Key Personnel A successful production print venture requires three key become a trusted business partner. Your customers rely on personnel: an experienced PP sales leader, a PP business an- you just as they would a managed print services (MPS) or alyst and a dedicated PP service tech. One major mistake is managed network services (MNS) partner to handle their to promote someone with no PP selling experience to launch business-critical, document-centered workflows. Producthe program. Doing so drastically reduces the chance of suc- tion print is the perfect complementary product line to MPS cess. Recruit a proven PP leader and expect to pay him well and MNS. All three gain access to net profit, embed your — $70,000 with the opportunity to equal that in commissions. services and equipment at the heart of your customer’s critiThe PP leader should have great time management skills and cal business functions, and make it very difficult for a combe able to rally and train your account managers on how to petitor to displace you as a trusted partner. n Greg Buschman, PhDc and managing partner at Strategic uncover opportunities. The candidate also needs to be rightAccount Marketing LLC, assists office technology dealerships left brained, meaning he has great people skills, but is also with launching or revitalizing production print sales intelligent. PP sales leaders must be able to demonstrate the divisions. He has held national and regional leadership hardware, understand workflow software and be good closers. roles in production print and professional The PP business analyst is equally important. During my services for more than 20 years. Buschman doctoral studies, I had an opportunity to study tier-one comcurrently sits on the global Print Properties panies like IBM, which sells into complex business environand Colorimetric Council, helping to create ments. These companies will tell you it is the business analeading practices for the production print lyst who truly sells the deal. A PP business analyst is not an industry. He can be reached at greg@samllc.us application specialist. Do not promote or hire an application or (727) 742-5045. Visit www.samllc.us. specialist. The person you are looking for is a continuous18 | ­w w w. o f f ic et ec hno lo g y m a g.c om | S e p t e m b e r 2 0 1 8

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A Team Approach The key to a successful business sale by: Jim Kahrs, Prosperity Plus

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s a dealership owner, the sale of your business will be the biggest and, likely, the most important transaction of your life. As a business owner, you have spent your life learning and honing your craft. Most dealership owners consider themselves strong salespeople and negotiators. Surely you are capable of handling the sale of your business on your own. How complicated can it be? Having been involved in more than 200 business sales, purchases and valuations, I can tell you that going it alone will cost you tens, if not hundreds of thousands of dollars, and could cost you the chance of even getting a deal done. It is more complicated than most think until they have been through the process. The most successful business sales have been handled with a team approach. In this article, I will outline the people who should comprise your team to ensure the best possible outcome. The team starts with your staff. It is vital for you to understand how important discretion is with your own staff. When you begin to look at selling your business, you need to keep the situation from the majority of your staff. It can be detrimental to you as a seller, to the buyer and to the staff members themselves. When people learn that the business may be for sale, they get nervous. Nervous people do irrational things. A business sale handled with the right approach will benefit most, if not all, employees. The employees who need to be involved will depend on your knowledge and involvement with different aspects of the business. Many dealership owners involve their controllers/CFOs in the process, as prospective buyers will want detailed financial information and will have detailed questions. If you are not fully up to speed in this area, you will need help. It may also be necessary to involve your sales or service managers. Fortunately, you do not need to decide up front. You can bring in different players from your team as needed. All employees brought into the process should sign nondisclosure agreements. They need to understand and respect the importance of maintaining full confidentiality.

As you might expect, the sale of a business is a significant tax event. Because of this, it is important to have your accountant/CPA involved in the process. We recommend bringing the accountant in immediately before signing a letter of intent. This gives you an opportunity to edit the offer to accommodate specific tax strategies. Everyone has a different tax situation, so having an accountant who is familiar with your business and personal financial and overall tax situation is critical. Along with your accountant, it may be necessary to bring a tax accountant or tax attorney in. Depending on the type of deal and its complexity, you will need specific tax advice. As most people know, the tax code is complicated. Your general CPA is often not qualified to advise you at the level necessary. We recently did a deal where the tax attorney suggested a reverse triangular merger — the formation of a new company that occurs when an acquiring company creates a subsidiary, the subsidiary purchases the target company and the subsidiary is then absorbed by the target company. I would be willing to bet most business accountants would not be familiar with this option. By utilizing this strategy, we were able to avoid a huge tax bill. Depending on your corporate entity, the tax implications in a sale can be tremendous. A C corporation that is sold in an asset sale is subject to double taxation. If you do not know the ways around this, you can leave a great deal of money on the table. As with tax planning, financial planning is another major component within the process. Most dealership owners who are considering a sale are doing so to fund their retirements. I have had many conversations with potential sellers about their futures and what will be needed to support their preferred lifestyles. Unfortunately, many of them do not really know how to plan this out and determine what will be required after the sale. This is where a financial planner or wealth manager comes in. These folks are experts in planning for the future and mapping out what you will need to live the life you want and have the money you want left for

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your heirs. They can help with income with legal fees, accounting fees, investment planning, expense projections, estate commissions and broker commissions, Those who choose to go planning, investments and a host of some have opted to go it alone and “save it alone do not realize other critical items that will have a drathe money.” This is shortsighted. Money inwhat that costs them matic impact on your future. vested in having the right team will pay for until it is too late. An attorney is the next key resource itself many times over. Those who choose Unfortunately, there required in these transactions, however, to go it alone do not realize what that costs it cannot be just any attorney. Experience them until it is too late. Unfortunately, is no rewind button with business sales is a prerequisite here there is no rewind button for a business for a business sale. and I would say that knowledge of the ofsale. My advice from participating in more fice technology industry is an absolute than 200 transactions is simple: Retain the must to ensure success. right advisors and you will definitely come out ahead. n I participated in a transaction a few years ago where the Jim Kahrs is founder and president of Prosperity Plus, which has buyer I was representing wanted to use his attorney. He provided business consulting, marketing programs, and merger bragged to me that his attorney was one of the best in the enand acquisition assistance to office technology tire state. This attorney, however, was not skilled in business companies since 2001 and has represented sales and had no background in office technology. When all buyers and sellers ranging from $1 million in was said and done, the attorney missed a major point in annual revenues to those with revenues in the agreement that allowed the seller to prebill a bunch of excess of $50 million. Kahrs can be reached at service contracts (outside the normal course of business) (631) 382-7762 or jkahrs@prosperityplus.com. that cost the buyer $60,000. The “best attorney in the state” Visit www.prosperityplus.com. missed something he never should have missed. The bottom line is, not all legal work is alike. Be sure your attorney has experience and a successful track record in mergers and acquisitions or you could be the one losing $60,000. Finally, you need a broker/investment banker with experience in the industry. It is easy for you, as a seller, to be outmatched by a sophisticated buyer. Many buyers out there have done many acquisitions. They have expertise and use it to their benefit. There is no replacement for expertise. Handling a sale on your own is like sending a brand-new sales rep out to close a $100,000 deal with one of your best customers. No dealership owner I know would send a rookie out alone to close a big deal, yet some do this when facing the biggest transaction of their lives. You deserve to have expertise on your side of the transaction to balance the scales. Having a broker will also allow for an arm’s-length transaction. Like it or not, selling your business is an emotional roller coaster. You need someone who can remain unemotional when dealing with buyers. A broker can also act as the lightning rod for any animosity that comes up in the negotiation process. As the seller, you need to maintain a strong relationship with the buyer. Any hard feelings about the negotiations should be aimed at the broker. A broker will also help the transaction progress at a fast pace. Data gathering, due diligence and legal-document negotiation can take a lot of time. Many dealership owners are so busy running their day-to-day operations that they have little time to run the business sale process like they should. In my experience, the biggest objection to getting the help required for a business sale has been the expense. When faced www.offi cetechnol ogymag.com | Se p te mb e r 2018 | 23

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Q&A: Konica Minolta Errigo comments on MWA acquisition & the industry by: Brent Hoskins, Office Technology Magazine

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n July 2, Konica Minolta Business Solutions U.S.A. Inc. (Konica Minolta) announced the acquisition of MWA Intelligence Inc. (MWA), a provider in the enterprise resource planning (ERP) space. MWA is now a part of All Covered, Konica Minolta’s IT services division. The MWA FORZA ERP solution, built on SAP Business One (SAP B1), Sam Errigo is a single integrated system that provides control over critical business operations encompassing accounting and finance; sales and customer management; inventory and distribution; purchasing and operations; service and mobility; and reporting and administration. MWA, an accredited SAP Business One Gold Partner, reseller and development organization, is a past recipient of the SAP Innovation Partner of the Year Award. With the acquisition of MWA, Konica Minolta expanded its partnership with SAP to become a SAP Business One original equipment manufacturer (OEM) and master valueadded reseller. SAP Business One has more than 60,000 customers using its SAP B1 platform. Recently, BTA had the opportunity to visit with Sam Errigo, executive vice president of sales and business development for Konica Minolta, about the acquisition, the industry and Konica Minolta. Following are Office Technology’s questions and his responses. OT: Why did Konica Minolta acquire MWA? Errigo: There are three reasons. The first one is the enablement of the dealer community to conduct business in the future. We firmly believe that customers will soon acquire technology-related products in a different manner — the consumption-based model, which is already here. We’re seeing it in our daily lives; consider how people consume things like movies using Netflix or music using Spotify. We believe that, over time, customers will acquire technology in the same manner. In order to do that, you need an ERP.

The second reason is to execute the workplace of the future. If we believe that customers will want to acquire products that are more integrated into their businesses — and couple those with other integrated services — then an ERP like FORZA has to exist. The third reason, selfishly, is the market opportunity. We can foresee a surge of activity; our desire is to be thought of as the premier provider in the marketplace, not only for multifunction products, but for all office technology. It made perfect sense to acquire MWA and differentiate Konica Minolta in the marketplace, not only in the eyes of customers, but in the eyes of dealers. We are the right partner to help dealers make this transition [to a consumption-based model], so the acquisition made perfect sense and aligned with our long-term services strategy. Why now? We’ve had the opportunity to work with [MWA President and CEO] Mike Stramaglio and MWA over the last three years, primarily as a consultant and providing some level of support for dealers, whether it was implementation or data conversion. We are familiar with the platform and it has definitely matured. We believe that the opportunity was right based on the market potential and swell of activity that we are seeing in the marketplace. Our plan is to accelerate implementations of FORZA at a much faster pace through investments of human capital and technology resources. OT: Why was MWA made a part of All Covered? Errigo: MWA is under the All Covered umbrella for a few reasons. First, over time, we will transition product support, whether it’s on premise or it’s hosted, through All Covered. All Covered is best suited to manage support technology platforms such as FORZA. The second reason is Konica Minolta dealers are already using All Covered to execute their go-to-market IT strategies. All Covered has intimate customer knowledge and we are providing reports to dealers about what we do every day for their IT customers. We built a solid comfort level with dealers on how we conduct business in the IT space. We have terms and conditions that we have put in place to help minimize any trepidation a dealer may have about doing business

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and sharing data. That was already built within the All Covered agreement, so it made perfect sense to manage this under All Covered, hopefully giving dealers a much better comfort level. Honestly, wherever the data resides, we would be absolutely foolish to do anything with a dealer’s data. We are just not going to do that. That is not the company we are.

or just partner with us. If you don’t have the financial ability to go out and build a Dealerships that are still data center, 24-hour help-desk support, a innovating and investing VoIP offering or hire a highly skilled techto diversify their products, nologist, we are the right partner. service offerings and We also see dealerships diversifying human capital are into content management. That is another big growth area. Others have expanded achieving growth and into areas like security service — physical gaining market share. security. That has been a really good busi OT: Why is it important to have ness and is synergistic with the existing an open platform ERP? services provided by dealers. Those would be the big areas. Errigo: The open platform allows you, as a dealer, to run The last one is production print, and gaining more share your business the way you want; which means you may want of wallet in existing accounts. If a dealership has all of the to integrate different partners or take advantage of new tech- office equipment, but not the production equipment, this nology opportunities. An open platform allows you to diver- is a missed opportunity. You are right there. Why wouldn’t sify in the manner that best suits your business. A closed you go after that? You are selling higher-value and less complatform says: “You have to work within the constraints of moditized devices, providing service, increasing your click our platform.” You have to conduct business a certain way volume and getting more share of wallet. I would encourage and, with anything outside of that, the word “customization” dealers to consider production print; it is still a growth area comes into play. Customization is directly correlated with with great aftermarket opportunity. higher expense and support because it is out of the norm. OT: Consolidation among dealerships is cur OT: Are there any other general thoughts you rently moving at a rapid pace. What do you bewant to address related to the MWA acquisition? lieve will be the lasting effect of all of this conErrigo: My advice to dealers is that they need to be look- solidation on the BTA Channel overall? ing at their back-end infrastructures. To enable new types of Errigo: Here’s how I would answer that right now, knowproducts and services, the right back-end system is a neces- ing what I know. There is going to be more consolidation in sity, or you will never be able to deliver a consumption-based the market. We are watching the surge of activity and this is model. Your ability to deliver on the promise of the workplace directly related to the following. I believe that dealers with of the future will never be realized for customers. My message more mature businesses have a choice to make. Do I invest is simply to do something. The “I’ll-wait-and-see” attitude is a more into the business? For instance, do I go out and buy a big mistake. Dealers should be actively looking for and inves- managed IT company? Do I invest in my back-end architectigating new ERP solutions to prepare for the future. ture so I can facilitate the workplace of the future? Do I go out and hire more technologists who can help lead business OT: You have the opportunity to see many transformation within the sales organization? These are big dealerships. What are the most successful Konica investments for even a mid-sized business. The dealer who Minolta dealerships doing to expand and grow sells his or her business is saying: “I choose to sell because I their businesses? choose not to invest.” I think that is big. Errigo: Dealerships that are still innovating and investWhat is the lasting effect? The quality of the BTA Channel ing to diversify their products, service offerings and human will increase because those who choose to stay in the business capital are achieving growth and gaining market share. will invest in the business in order to compete. In the end, we They are thinking long term. They are thinking more stra- will end up with stronger, more technology-versed businesses tegically and they are investing back into their businesses. that will be open to different avenues of investment in order In which areas are we seeing investment? Definitely, man- to grow. That diversification is going to be really important. aged IT services. When we started touting managed IT services after we acquired All Covered, I think the industry thought OT: Do you see a time when Konica Minolta’s we were way off-base and that the strategy was questionable. branches will be de-emphasized in favor of the We look pretty smart right about now. We have encouraged BTA Channel? dealers to do one of two things — invest in an IT acquisition Errigo: At this point, that would be a “no,” and here’s the and augment services with Konica Minolta and All Covered, reason: We’ve done a really good job balancing our dealer 26 | ­w w w. o f f ic et ec hno lo g y m a g.c om | S e p t e m b e r 2 0 1 8

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actively pursue customer locations where and direct operations. We have managed our dealers are placing Konica Minolta distribution between both channels and Business transformation products, plain and simple. We do what balanced market coverage to deliver a is comprised of a series we say and our dealer channel has trust profitable business model for both chanof ... strategies that are in Konica Minolta. This is one of the prinels. I will put our dealer organization put in place and, mary reasons that Konica Minolta has up against any other dealer organization over time, a new and grown over the past 10-plus years. in the channel and say we have the best dealers. They have grown with us. Over better-positioned OT: What else do you see as the the last 10 years, we have strengthened organization emerges. primary reasons for Konica Miour relationships and we have effecnolta’s strides in recent years? tively managed distribution. So, for us, it Errigo: My first thought is to say: “We have a great culture, wouldn’t make sense to sell any part of our direct operation. We want both channels to grow in parallel. We’ll continue which we do, and we have great alignment within our dealer and direct organizations. We have motivated direct and dealer down that path for the foreseeable future. sales organizations that are winning — and winning is conta OT: Konica Minolta has publicly stated that it gious.” That’s my initial reaction, but there’s more to the story. You have to go back 10 years ago when we started on this has zero tolerance for any direct employee deliberately undermining the dealer channel. Has the journey, stating we were going to transform our business and prepare for the future. company, in fact, adhered to that commitment? Business transformation is comprised of a series of decisions Errigo: The message is loud and clear within the direct organization. We do have a zero-tolerance model. We do not and strategies that are put in place and, over time, a new and better-positioned organization emerges. The transformation impacts all aspects of the business, such as investment strategies, organizational structures, talent recruitment, risk and back-end support infrastructures. We made some really strategic bets such as managed IT (MIT) services and enterprise content management that aligned with our core business. We moved quickly and were less concerned about perfection when acquiring and more concerned about the culture of the acquisition. We were all in on the MIT services strategy and acquired 25-plus companies to support our dealer and direct channels. The impact of delaying or moving slowly into new markets is the missed opportunity for growth and learning about what customers really need long term. When you are in reaction mode, you are pressed to make decisions that may be less than advantageous in the long term. Market makers lead the way and continue to innovate and deliver incremental customer value that fosters long-term profit. As they invest and diversify, a separation will occur and a greater delineation between providers will happen over time. This separation is attributed to the cause and effect of decisions made years ahead of market changes. Our culture is one of speed to market and making big, bold moves that will change the landscape of the industry. We have proven that our leadership teams understand the market and the dealer channel. The acquisition of MWA is just another example of a big move and understanding where the market is going. n Brent Hoskins, executive director of the Business Technology Association, is editor of Office Technology magazine. He can be reached at brent@bta.org or (816) 303-4040. 28 | ­w w w. o f f ic et ec hno lo g y m a g.c om | S e p t e m b e r 2 0 1 8

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COURTS & CAPITOLS

The Impact of Tariffs Use your terms & conditions to offset price increases by: Robert C. Goldberg, general counsel for the Business Technology Association

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very day you read or hear about tariffs being imposed by the United States on goods imported from Europe and Asia. The amount of the tariffs is expressed in billions of dollars. The tariffs are presented as a response to unfair trade practices by the country where they are being imposed. Although farmers were hurt significantly by tariffs on soybeans, the government turned around and authorized subsidies for the farmers who were impacted. So, how are tariffs affecting the office technology industry? China is the source of both equipment and supplies for copier/MFPs and printers. After all, Lexmark was purchased by a Chinese company. Tariffs that increase the cost of equipment can be passed on to end users. In addition, many industry suppliers have shifted production from China as the Chinese cost of labor has increased. The real problem is the cost of supplies. Several suppliers have announced price increases for supplies due to the added cost of importing them. An increase in supplies costs can be very detrimental to independent dealers who have cost-per-copy or bundled contracts at a fixed amount. Over the years, click charges have decreased dramatically, becoming a competitive factor. Dramatic increases in supply costs can make a break-even click charge unprofitable and the result may last for years. There are two approaches to this issue for your consideration. In previous years, we have seen significant increases in the cost of gasoline. To address this issue, many businesses added a “fuel surcharge” to their invoices. A vast majority of the recipients recognized the issue and paid the added amount. Some of these relationships were pursuant to contracts while others were not. A uniform increase on supplies could be announced and added to your invoices as a “tariff surcharge.” It is anticipated that most end users will accept the amount without objection. Those who insist on contractual terms can be accommodated or you can negotiate with them. The best alternative is to review your terms and conditions to establish if you have the contractual right to raise prices during the term of the agreement. The BTA Managed Print Services Agreement (which you can find on the BTA website under Benefits/Legal Services/Sample Legal Agreements & Contracts) provides in part, “During the term of this Agreement, the charges may be increased to reflect increases in the cost of fuel, supplies, parts or labor.” Each of these items is beyond a dealer’s control and, thus, the agreement allows the cost increases to be passed on to

the end user. The need to constantly review and update your transactional documents cannot be emphasized enough. Here, a simple sentence can save you from unmanageable supplies cost increases. BTA is also taking a stand against tariffs that increase the costs of the goods and supplies its members provide. It is important that our elected officials know the impact tariffs are having on the office technology industry. The economic impact will be felt locally in the form of decreased revenues, layoffs and lower tax revenues. If you have an opportunity to speak to or reach out to your congresspeople, let them know the impact tariffs are having on your business and their constituents. BTA is reaching out to Congress and the White House with our position as well. One voice may not make a difference, but a chorus will. BTA will keep you advised. n Robert C. Goldberg is general counsel for the Business Technology Association. He can be reached at robert.goldberg@sfnr.com.

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AIMED VIEWPOINT

Dealership Profile: Lineage Company focuses on adjacencies; company culture by: Elizabeth Marvel, Office Technology Magazine

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ith a long history in the mailing business, AIMED and BTA member Lineage has experienced tremendous growth over the years. Lineage President Richard Williams attributes the business’s success to continuously expanding the company’s offerings. Williams’ parents, David and Anna, bought the company’s first offices in Buffalo and Rochester, New York, in 1984. It was a Friden (now Neopost) dealership Richard Williams and, at the time, had five employees, 500 customers and was losing money. Under David’s management, Lineage went through several acquisitions, purchasing companies in Little Rock, Arkansas, Lenexa, Kansas [a suburb of Kansas City, Missouri], Charlotte, North Carolina, and North Carolina’s Triad region. Today, the company, which is the largest Neopost dealership in the United States, has grown to $18 million in annual revenue with about 105 full- and part-time employees, and more than 10,000 customers. Some of its largest accounts include PepsiCo Inc., R.J. Reynolds, UMB Bank and Dillard’s Inc. Williams grew up in the business, starting as a janitor in Lineage’s Buffalo office in 1984. He worked part time in the admin, service and sales departments while in school, and joined the business full time in 1991. Williams worked as a sales manager and then as general manager in the Buffalo office while his father expanded the business. He then served as vice president of sales and marketing and, in 2009, became the company’s president. In January 2016, Williams purchased Lineage from his parents. Lineage was solely in the mailing industry until 2012, when it purchased a Konica Minolta dealership to sell MFPs. It then expanded into outsourcing (printing and mailing pieces for customers) and disaster recovery. This was the beginning of the company’s movement into adjacent markets. “Our mission statement is: Transforming business-critical communications from creation to distribution,” Williams says. “We do that through software, hardware and outsourcing. We’re really able to meld together a perfect solution for a client.” To create these perfect solutions for clients, Lineage offers copier/MFPs and printers; mailing systems; addressing systems; inserters; paper cutters; folders; letter openers; and, most recently, parcel lockers. The company also sells software and solutions, offering outbound shipping (ProShip) and inbound

receiving (WTS) software, document management software and managed print services. Lineage also does mail presorting and outsourcing at its Lenexa location, creating and mailing 200,000 to 300,000 pieces of mail per day. Williams has plans to incorporate IT services and other adjacencies as well. “That’s [IT services] really the next area where I’d like to go,” he says. “I’ll more than likely acquire because that’s not my expertise ... But he or she who controls the IT [in a company] controls the equipment. Why wouldn’t I want to control that space? If you get into the IT side with security and that sort of thing, it’s a market that is showing phenomenal growth. “We’ll continue to be a business-to-business company, focusing on sales and service, but ... we’ll leverage the business-to-business relationship,” he continues. “That’s the thing you have to think about: ‘How do I leverage the relationships that I have with my current customers and with the next adjacent space I could move into to continue to grow my business?’ When I say ‘adjacent,’ I mean something that touches the document. I don’t care what form the document takes, whether it is paper or digital.” The diversity of the company’s products and services is not the only thing that sets Lineage apart; its company culture is also unique. “Our purpose statement is to honor God by serving, supporting and caring with excellence,” Williams says. “But I tell my employees, ‘You don’t have to believe in God to work here. The only thing I ask is that you serve, support and care with excellence. If you can do that, you can work here forever.’” Williams also set up caring teams — mini boards of directors made up of representatives from each part of the business — in each office. “If an employee runs into a tough spot, financially or otherwise, he or she can go to the caring team members and they will listen to what the employee has to say,” he says. “The caring team, which has a budget, will make a decision on how it is going to help the employee. It could be a gift of money, a loan or a combination of the two. It could be counseling. But the point of the caring team is to care for our employees financially, spiritually and emotionally. Our employees knew that we cared about them, but they didn’t know there was a way that we could care for them ... So it’s a caring culture that we’ve brought into our company.” n Elizabeth Marvel is associate editor of Office Technology magazine. She can be reached at elizabeth@bta.org or (816) 303-4060.

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DEALERSHIP SPOTLIGHT

Quality DOS Dealership owners share ‘new-building’ experience by: Brent Hoskins, Office Technology Magazine

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hey met in 1989 when Joe McMonagle was serving as a district manager for Monroe Systems for Business, the company he had worked for since 1970. Gordon Stapleton was later hired by the company and went to work for McMonagle. That was the start of a 29-year friendship that later solidified the convergence of their career paths. In 1992, McMonagle left Monroe when he was hired by a dealership to develop and manage its Lancaster, Pennsylvania, location — Quality Copy Products of Lancaster — with the agreement that after five years he would have the option to acquire the location. Not long after his arrival at Quality, McMonagle asked Stapleton to come work for him. Stapleton says he replied: “‘Well, I don’t want to come work for you, but I will come to work with you. Let’s buy this company.’” McMonagle looks back with fondness to the beginning of their partnership, which led to their acquisition in 1998 of what is today Quality Digital Office Solutions (Quality DOS). “Gordon and I have the same mindset of ‘the customer comes first,’” he says. “We grew the company one customer at a time, making sure each was happy. We still have some of the same customers from 1992.” While the dealership’s first location was leased, in 2007, McMonagle and Stapleton purchased a building that became the second home for their dealership until 2015, when they were met with an unexpected, but welcome, opportunity. They shared their building with a tenant that was interested in occupying the entire building. “I said, ‘We need a 10-year lease and that is non-negotiable’; the tenant didn’t bat an eye,” Stapleton says. “Long story short, we moved our operations to a separate facility that we leased and immediately started looking for a building to renovate, or land on which to build.” Building a new home for the dealership emerged as the option of choice. Stapleton had toured the newly constructed building of fellow dealer Ray Derstine, president of Altek Business Systems in Telford, Pennsylvania. “I realized very quickly how important the layout and presentation of a building could be for the future,” he says. “That drove my decision to push Joe. I said, ‘Let’s build a new building; maybe not as big as Ray’s, but very similar, because I think that would help us in the future to expand our business and attract new talent.’” Soon after, they purchased land in nearby Mount Joy, Pennsylvania, and the process was underway. In June of this year, Quality moved into its newly constructed home. “Ours is almost an exact duplicate of Ray’s building, only smaller,”

Above: Though finishing touches were still incomplete at the time, such as landscaping and the installation of outdoor signage displaying the company name, the 20 employees of Quality Digital Office Solutions moved into the new building, located in Mount Joy, Pennsylvania, in June of this year. Right: Vice President and CFO Gordon Stapleton (left) and President Joe McMonagle during the groundbreaking in September 2017. Stapleton says. “A couple of changes were made here and there, but we matched the overall look of the building and, for example, Ray’s idea of having the control room [where, at Quality, screens display the locations of all service technicians and the monitoring of devices via KYOCERA Fleet Services] visible from the demo room. We even used the same builder.” Looking back at the process, Stapleton shares details of the experience that may be insightful to others considering the construction of a new building. For example, he says, expect that the permit approval process will likely be costly and take longer than the construction itself. “We broke ground at the end of September and moved in the beginning of June; the construction didn’t take long,” Stapleton says. “It’s the other stuff you have to go through that, for us, was ridiculous. We ended up spending months and close to a six-figure number just getting approvals before we ever put a shovel in the ground. We were surprised by the multiple approvals necessary from our township, borough and county, each charging us various fees.”

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that wall over there.’ That kind of feedback Stapleton cites another aspect of the excan save you the expense of having to redo perience in the form of a recommendation “There is an entire work later in the process.” to others. “We had a general contractor, but change of culture Despite the inherent challenges assobecause we gave in to the desire to include and talk track to our ciated with any construction project, Staone of Quality’s customers — a company current and prospective pleton says he and McMonagle are pleased that does excavation work — we ended up customers because with the positive impact the construction with two separate organizations working of the new building is having on Qualitogether,” he says. “One piece of solid adof what we are able ty, given the features of their new home. vice for those who may be looking at this to do here.” “There is an entire change of culture and down the road: Don’t do it that way. Hire a talk track to our current and prospective single general contractor that is responsible for everything and then ‘ride herd’ on that company; let the customers because of what we are able to do here,” he says. “With our new demo room, for example, we can now better general contractor pick all of the subcontractors.” Finally, looking back, Stapleton shares another lesson show customers how technology can improve business prolearned that other dealers going through the building process cesses and take them to the next level. Plus, our employees should consider. “I would recommend that you interview the are excited about having new workspaces in a new building; installers, because they do this all the time,” he says. “If we I believe they are as happy as ever in their roles at Quality.” n Brent Hoskins, executive director of the had reached out to those guys before they started their work, Business Technology Association, I would have said to them, ‘You look over plans all the time; is editor of Office Technology magazine. do you see things that we missed?’ They may have said someHe can be reached at brent@bta.org or (816) 303-4040. thing like, ‘Well, it’s odd that you don’t have light switches on

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SERVICE CONNECTIONS

Service Success Differences in service & sales management training by: Ken Edmonds, Service Management Coach

Editor’s Note: Ken Edmonds serves as the instructor for the new online BTA Service Success Training program, which begins Oct. 1. For more information, visit www.bta.org/SST. n the office technology industry, there are two management roles vital to the success of the dealership: service manager and sales manager. These two positions are responsible for the majority of profit that comes into the dealership and they are the roles that most affect the long-term viability of the company.

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Their Relative Importance In the financial model used in our industry, service and supplies generate 50 percent of the revenue coming into a dealership. The sales department generates 48 percent of the revenue. When we look at profit, the picture becomes drastically different. The service department operates at 52 percent profit margin while the sales department operates at a net loss. Since the service department is where the money is, you would reasonably expect there to be a significant amount of training available for a service manager to help optimize his (or her) department’s operations and profitability. Unfortunately, that is not the case. What is Available for Sales When you look at the BTA website, you will find there are training classes for sales professionals and sales management. These courses are available both as classroom training and online distance learning. Online distance learning programs have the advantage of allowing a sales professional to continue handling his daily duties while acquiring the knowledge he needs. Classroom training programs offer the inherent benefit of interaction with other attendees and the resulting dynamics for learning, but there are, of course, the associated travel costs. If you search online for “sales management training” in general, there is a wide variety of programs available. While many are not focused on this industry specifically, they provide

helpful training that will make better sales managers who are equipped to motivate and train their sales teams. One factor that makes both of these types of programs beneficial is that they go beyond the metrics of what good looks like, and include information on what is necessary to motivate and train attendees’ teams to be successful. What is Available for Service When you look for service management training, historically, there has only been one workshop on the BTA website, FIX: Cost Management for Service 2.0. This is an excellent workshop and has had many attendees through the years; I am pleased to say that I am among them. The focus of this training is on understanding the costs associated with service and the workshop consists of about eight hours of instruction. If you look for other providers, there is currently at least one other choice in the industry for service managers. It, too, is a very good training program. It focuses on the metrics of the service department and the benchmarks that the department needs to achieve to meet the profit targets. The Importance of Training I worked with a dealer who promoted a technician into the role of branch service manager and failed to provide any education on how to be a manager. This individual struggled

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For nearly 16 years, Edmonds served at Sharp Electronics Corp. and then at Konica Beyond training that is Minolta Business Solutions as a problem focused on metrics and solver for both technical and service profitability models, look management issues. In early 2018, he retired for a program that from Konica Minolta as a district service develops an insight into manager. Before that, Edmonds had an extensive background in the imaging what motivates people, business, having owned a successful what tools they have ... dealership and serving as a service manager for multiple dealerships. In total, What to Consider he has more than 40 years of experience in the technical and When you look for training for a new supervisor or manager, what should you consider? Beyond training that is focused computer fields. Edmonds is currently consulting with dealers on strategies to improve on metrics and profitability models, look for a program that profitability. He also writes for ENX Magazine, develops an insight into what motivates people, what tools Office Technology magazine and blogs for they have to work with the team and how to become a true leader. The program also needs to provide the service manager The Imaging Channel. In addition, he publishes a blog for his own website, www.kedmonds.biz. an understanding of the customer and how the decisions he Edmonds can be reached at ken@kedmonds.biz. makes can affect customer satisfaction and retention. n with his team and did not have the skills and/or education to be effective in his role. Similarly, in another situation, a dealer promoted his best technician to a supervisor position, but he was never trained and wound up leaving the company. Sadly, this is typical when someone is put into a position where he lacks the knowledge and skills to succeed.

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