Craig Knouf
A little over two years ago, Craig Knouf, a document imaging industry veteran, decided to roll the dice and get back into the document imaging business in a mature Portland, OR market, a market with some formidable big name competition. Was that a smart move, a smooth move, or temporary insanity?
Actually, it’s turned out to be a brilliant move. But before we get into the specifics of that move, let’s trace the long, circuitous path Knouf took to get to where he is today.
Knouf started in the office technology business in the early 1980’s selling IBM Selectrics. From there he went to a small independent dealer where he sold Canon fax machines in 1985. The next year he started selling copiers. By 1987 the dealership he was working for was acquired by Alco Standard. As that organization grew to become a $100 million Alco company, Knouf moved up the ranks from sales rep, to sales manager, to branch manager, to regional sales manager, to vice president of sales.
By 1996 around the time Alco started talking about changing its name to IKON and altering its business model, Knouf realized he had acquired the skills to run his own dealership and the time had come for him to go off on his own. He cashed in his stocks and bonds, went to the bank with a business plan, got an SBA loan and opened Associated Business Systems in June ’97 with 10 other people he had talked into leaving various companies.
Of course everyone he knew told him he was crazy for starting a dealership with no base. “You’ll never make it,” he was told.
Wrong.
That first year Associated Business Systems did $3.8 million and within 10 years it was a $44 million dealership, and one of the largest Ricoh dealerships in the country, with 200 employees. That was also the time Knouf began thinking about selling the company. When Ricoh heard he was talking to Global they came in and made him an offer he couldn’t refuse.
Ricoh liked his style, and who wouldn’t considering his track record along with his entrepreneurial way of doing business. He was told to keep running the business the way he was running it and that the plan was to fold the 11 RBS locations in the Northwest under the Associated Business Systems umbrella, creating a $75-$80 million entity that Knouf could run as he saw fit and grow accordingly.
How perfect was that?
It was a marriage made in heaven or so it seemed. But like most marriages originally made in heaven, it didn’t last. The deal closed in April 2008 and by September Ricoh had announced they were buying IKON, which changed everything. He was asked to wrap into the national Ricoh/IKON program, and while he’d still be running the company there were certain aspects of his new situation and who he’d be reporting to that didn’t sit well with him.
He fought those changes like the fighter he is, but he soon found himself on the ropes and decided to take the severance check, a five-year non-compete, and retire.
That was fine, he was ready to retire at 52 anyway, figuring he’d spend time at his second home in Palm Springs, play a lot of golf, and just enjoy life.
But Knouf miscalculated. Most of his friends were still around the same age, still working, and didn’t have the financial resources to travel and do all the things he was able to do.
Within nine months he was looking for something to do.
Inspiration came when he read a magazine article about the coming boom for the ‘better burger,’ a higher end burger than you’d find at one of the fast food chains.
“I love burgers and saw the promise,” he recalls.
He looked into franchise opportunities around the ‘better burger’ concept, then realized why do a franchise when he could do it himself? Putting his business acumen and love of burgers to work he opened the original Wow Burger in 2011, a restaurant where one could get a burger made from all natural beef, and where customers could customize their burger with an eclectic selection of free toppings, buns, and homemade sauces. It took off like a Titan rocket. A second restaurant opened the next year.
All along Knouf continued making investments, including buying and fixing up classic cars, and was perfectly content being the Wow Burger king. But everything changed when a former partner from Associated Business Systems came knocking. He shared with Knouf a letter Ricoh had sent to its HP supplies business customers, basically saying they were getting out of the HP business and would no longer service and supply HP products or any other competing model and recommended that they now call CDW for service and supplies.
“I looked at this letter and said, ‘They’re firing the customer,’” says Knouf.
Doing the math he figured that when he was with Associated about $8 million of its $44 million came from printers, printer supplies, and printer service.
“Here’s an $8 million business they’re going to fire,” states Knouf. “If they don’t want it, I’ll take it. It’s profitable, a good business, makes perfect sense, and you don’t need a lot of overhead to run it.”
He turned Wow Burger over to his son and shifted his attention to getting back into the document imaging business. He brought on his friend who had been working for Ricoh, hired two technicians and one of his old bookkeepers from ABS and opened for business the next month as a printer service company that sold printers and printer supplies, and provided MPS.
Once again everybody told Knouf he was nuts for getting back in the document imaging industry game and working 70-hour work weeks since he no longer had anything to prove.
“I didn’t think so at all,” maintains Knouf. “I looked at it and saw an opportunity.”
Not long after opening the doors Knouf decided it would be nice to have an additional product line and reached out to Samsung who had just entered the business and became a Samsung dealer, and then became authorized to service Brother and HP and sell the supplies for all those lines.
Knouf’s good fortune continued when four months later, the son of a former competitor approached him about buying the Toshiba dealership that ABS had attempted to acquire years before. Imagine Solutions ended up buying the company, hiring all the employees, including the owner’s son, and merging the assets.
“We weren’t planning on becoming a copier dealer, but they had good customers, good employees, and all of a sudden I was back in the copier business,” acknowledges Knouf.
Getting a new business off the ground is not without its challenges, but the biggest challenge for Knouf is the same thing it’s always been, finding good people. Although this time around it was little more complicated.
“When you’re a big dealer like we were at Associated, you talk to every single person, service, admin, and sales because you’re always recruiting,” he explains. “They all knew me, but this time it was, ‘How long is he going to do it again before he sells it?’ I had a lot of fear to overcome from people who were afraid I was going to build it up and sell it again. That’s the biggest challenge and will continue to be the biggest challenge.”
Business is going well and as of June 2015, Imagine is well beyond its plan. The segments of the business doing best include MPS, Supply Inventory Management, and Toshiba’s color MFPs.
Of course there’s always room for improvement and one segment of the business Knouf would like to see do better are the higher volume, centralized machines. A big reason for the slow start in this segment is because he hasn’t been able to find the right people who know the product and can focus on it.
“That’s one area we see as an opportunity in 2016,” observes Knouf.
Another acquisition that’s made a big difference is now Imagine’s NOVO Expert Solutions division.
“There was a company in town with good engineers that specialized in SharePoint and RightFax and could write programs like nobody’s business,” says Knouf.
He had originally tried to acquire the company, which was one of the biggest RightFax resellers in the country in his ABS days, because he saw that having solutions and professional services was the way to grow and become a stronger company. But they couldn’t reach an agreement. Then last year the owner decided he wanted to step away from the business and he approached Knouf and told him he wanted to make sure if he sold that his employees and company would be taken care of.
“That’s what we did—we brought those folks over to work with us and changed the name to NOVO which stands for ‘New Beginnings’ as a division of Imagine Solutions,” says Knouf. “Their big thing is content management.”
Imagine’s customers are a little different depending on the product or service. For printer fleet management and supply inventory management it’s virtually everybody. The MFP business is the same customer Knouf used to have at Associated—small to medium size businesses. Imagine also has a few large accounts. The NOVO Expert Solutions business is mostly medium to large customers, including healthcare systems and one of the largest hospitals in the western United States.
“We’re all over the board,” notes Knouf. “If we do a good job of moving from platform to platform, we should be able to move our multifunction customer into those larger customers that are doing professional services with us and vice versa. We’ve done well in moving our supply inventory management people into becoming copier customers and vice versa.”
Asked what he does for fun when he’s not working, Knouf replies, “Work, isn’t that fun? It is for me.”
Something he’s discovered about himself since being back in the business is that he doesn’t think he’ll ever retire.
“That was the goal everyone wanted when I was growing up—making enough money not to worry about things and travel,” says Knouf. “I love what I do; I can’t wait to get to the office, many nights I’m here until eight o’clock.”
When he’s not working, Knouf still finds time to play golf and travel.
He says the best thing about doing what he does is watching his people grow in the industry and within the organization. Knouf also takes great pleasure in seeing his employees buy their first house, have their first child, or watch them walk their daughter down the aisle at their wedding.
As a successful entrepreneur a few times over he must have some advice for someone considering doing what he did, i.e., crazily starting a business in a mature market.
“Jump high and jump back in,” he says. “I don’t think there’s ever been a better time. When I originally did this in ’97, IKON was messing up with their customers and their employees were unhappy and it was a huge opportunity not because there was growth in the copier business, but because there’s possible growth in the industry from within for another player if you will. Nothing has changed, we’re in a mature market and here it goes again. Although the copier business and printer business aren’t growing, the shift of which company [a customer] goes to makes it a great time to be in the industry.”
