As Jim Oricchio and his wife, Donna, strolled along the beaches of Maui in 1992, their minds drifted back to work. It seemed an unlikely topic to be pondering, as opposed to the beauty of The Valley Isle.
Only nine years earlier, the Oricchios started Coordinated Business Systems out of their garage, and worked with two partners to build a successful dealership in Minneapolis and Chicago. But the company had an offer on the table from IKON to sell both locations. The partners were selling. But Oricchio wasn’t sure he wanted to join IKON.
“I talked to John Hey, who was negotiating for them,” Oricchio recalls. “He told me that I needed to realize that if I sold, I no longer owned the business.”
There was one problem with that: Oricchio loved the business and didn’t want to give it up. He didn’t want to risk his employees getting downsized. A maverick at heart, he knew it wouldn’t be long before he, too, would be fired.
“It’s hard to sit around in meetings all day,” he added. “I would not have been happy.”
Coordinated Business Systems’ primary manufacturer, Mita (Kyocera), provided Oricchio a loan to buy out his partners, who went with IKON (and exited within a year). While Oricchio would freely admit he’s made his share of mistakes, the decision to stay independent definitely wasn’t one of them.
The company, based in Burnsville, Minnesota, with seven locations overall, has grown to eclipse the $20 million mark in annual revenues. Oricchio cherishes the relationship and the consideration provided by Kyocera (the loan was repaid in five years) and remains loyal to the OEM, with Sharp, Lexmark, HP and Epson filling in some product gaps.
In a year when traditional business has been hamstrung by COVID-19, Coordinated Business Systems has found added strength in growth avenues such as managed network services (MNS), telephony and, most recently, temperature-measuring devices. The loyalty he shows for Kyocera is extended to his base of 90 employees, none of whom were furloughed during the pandemic. It is further evidenced by the company garnering “Top Workplace” honors and the Torch Award for Ethics by the Better Business Bureau.
We had the opportunity to chat with Oricchio and his daughter, Marketing Director Kristie Oricchio-Kripotos, to learn more about the highs and the lows of business, the marketing and recruitment adjustments made in recent years, and how the ringing of the sales bell brings a smile to his face.
How was business in 2019 and 2020 during the months leading up to the pandemic? What were the keys that dictated your success?
Oricchio: While 2019 was a flat year for us, we had good momentum this year prior to March; we were projected to beat our forecast, but business started slowing down in March. Right now, we’re at 86% of our plan. MNS growth is over the top, as is telephony. Our hardware sales are OK, but where we’re behind is in our service calls, which are 66% of normal level. People are still not back to work, which means no copies are being made on MFPs and printers. We’re missing about 14% of that revenue. We have confidence we will make our budgeted plan, for a lot of reasons. The other products we’re selling are helping to make up the difference.
We are really a down-the-street company; we don’t chase down enterprise business that much. All the OEM directs have offices in the Twin Cities. We got one of the largest dealers in the country, Marco, located here, along with Loffler, another significant player. We’re really good at our down-the-street strategy. We do compete with the Marcos and Lofflers; they win some and we win some. Fortunately, the pricing doesn’t go in the tank very often.
What sets Coordinated Business Systems apart from the competition?
Oricchio: We do the right things for the right reasons. We are nimble and able to move quickly. We focus more on listening than we do presenting. It helps to be able to offer the right solution stack to our clients. But we don’t go in and dictate terms.
How has the company been able to weather the COVID-19 storm? Tell us about the experience of operating from your point of view.
Oricchio: We eliminated six positions at the onset, but we didn’t lay anybody off. I was nervous about the (layoff) decision, but decided against it for a lot of reasons. The primary one is we have great people working for us, and I don’t want to lose them. So far, we’re doing OK in spite of it. As our customers move, we move with them, which goes back to being nimble. We made a conscious decision to call all of our customers to see what they needed, and we’re still doing that today. It was amazing to hear how many customers said that we were the only vendor to call and offer ideas and assistance. Every day, my sales manager holds a group huddle with the sales staff over Teams, then has meetings with his managers every morning. We secured some pretty nice orders and landed new customers. It’s up to leadership to say OK, we’ve been dealt these cards, let’s plan in a way that can help us. We figured out how to be successful in this situation. We’re still maintaining about 14% new business. What helped us are the temperature-scanning systems and marketing cybersecurity through MNS.
Speaking of which, can you tell us about your process in selecting a source for the temperature-scanning systems, and how have they been received by clients?
Oricchio: It’s funny, because we turned down the opportunity to offer them twice, but we had enough customers coming to us with requests for them. We chose a really good product and it’s really gaining momentum. It was a bit of a challenge, because a lot of customers wanted them, but they had a hard time figuring out who within the company was going to pay for it—they had to figure out who was in charge of the buying decision. So far, it’s set a decent pace, and I think it will add between $500,000 and $750,000 in new business we otherwise wouldn’t have enjoyed. We picked a reliable supplier who we knew could source them. That was critical; a lot of suppliers were really backlogged. Dealers need to be cautious in selecting a vendor, because there are a lot of weak supply chains.
One area in which you’ve experienced substantial success is managed network services. How have you been able to scale this offering?
Oricchio: I jumped into MNS a long time ago and stumbled like crazy. Then CDA put together a meeting in Minneapolis where (Service Leadership CEO) Paul Dippell talked about MNS. Dippell discussed all the things that dealers do wrong when they get into this business, and I was the poster boy for those mistakes. We did everything wrong, and it was due to my lead and my stubbornness. At the end of the presentation, I said to my team, “I’m not as smart as I thought I was. We need help.” So we hooked up with Collabrance, and that put us on the right track and provided the right blueprint for being successful through their help and discipline. We’re doing well, it’s profitable and we have a good growth curve as a result. We’ve got a good team. We grew 45% in 2019, and we added two engineers this year. At the beginning, we needed to have level two/level three techs. That’s a challenge, especially in the Twin Cities market. It wasn’t long ago that Amazon hired 1,000 engineers out of the Minneapolis market. So the price of an engineer went through the roof.
Tell us about your refined approach to employee recruitment, using digital tools and HubSpot in an equation of the buyer’s journey.
Kripotos: We hired a full-time recruiter. We have different preset emails for different steps in the recruiting process. We also created case studies about various employees in our company. Candidates wanted to know if they could advance through our company and switch positions, so those case studies were good examples of employees who have done just that. We have a couple who have been with us since high school, people who went to college and came back, then worked their way through admin to marketing and telephony. One woman is now director of operations. It was important to us to get in touch with the younger generation on the digital side. We’ve had the program in place for about a year now, and it’s a good tool for candidates to see these different scenarios and case studies, to help in their decision-making process.
Is it difficult vying for employee candidates in the same market as Marco and Loffler?
Oricchio: Yes and no. We’re a different company than they are. I have a lot of respect for Marco and Loffler. But they’re corporate America and we’re not. We try to provide a family feeling when people walk in our building. We can pay closer attention to our new recruits; they’re not a number for us. We take our time selecting people because we want to make sure it’s a right fit for the right chair. We compete really well with them; very seldom do we lose a candidate to one of those competitors.
When inbound marketing became a challenge, Coordinated Business Systems opted to use a local agency. Can you provide insight into some of the changes and results?
Oricchio: We moved to a local agency because the national companies couldn’t get the look and feel of our company over the phone or video conference. The local company has a far better understanding of our culture.
Kripotos: We choose a local full-service agency. This was important to us because by leveraging several talents in one agency, we could communicate our message effectively across all mediums. We just shot a video for the temperature-measuring units and they had it edited and on social media in two days. By spending time in our office, the local agency really got to know our culture. The effort they made is evident in the blogs they’re writing. We’ve seen an increase in overall site traffic, new leads and resulting sales.
We were struggling for a year and a half and we were ready to throw in the towel, thinking maybe this wasn’t the right decision for us. But it’s coming along nicely. Last year, we did about $150,000 in sales from the leads, and this year we’re hoping to hit $250,000. We’ve had a lot of leads come in for the thermometers. We used to average maybe six or seven leads a month, and last month we had 20. Our website traffic increased 66% our first year using an inbound/HubSpot.
The company has been recognized by the Better Business Bureau with its Torch Award for Ethics, and is a repeat “Top Workplace” honoree. What are the foundations of your corporate culture?
Oricchio: I’m proud to say that we win awards because we do the right things, which speaks to the Ethics awards. We take care of our employees and treat them like family. We’re an honest company in the marketplace. We would rather lose a deal than do something that is unethical or lie to the customer. That’s our culture. We give our customers more than what they expect from us.
What was your dealership’s greatest accomplishment in 2019?
Oricchio: Our operations system was Lacrosse Next Gen, and we finally switched to e-automate. That was a very painful transition; the process took about seven months. Installing the new system, getting it operational and working right for us was critical. It took a lot of hard work and concentration. It made a big difference; it gave us a modern system with more access to information to help us manage our company. We use CEO Juice in that system, which we couldn’t do with Next Gen. It’s allowed us to manage our company quite well. In this business, you need good financial information in order to make decisions, and that’s what this system does for us.
Aside from COVID-19, what was the biggest challenge you faced in the past year?
Oricchio: Obviously, Minneapolis has made the news with the riots, and it’s tearing this city apart. We’re still dealing with it. In the areas where the riots have occurred, we’ve had quite a few customers impacted. We delivered four new copiers to one client, and two months later their facility was burned to the ground. That was our first major installation after COVID-19 hit, and it was done completely touch-free. The hardware was delivered to the sidewalk, disinfected, and then rolled into the building by the client. The installation and training were all done remotely, and the lease returns were dropped at the curb for us to pick up. It was a great story; sadly, one that did not end well.
Due to the unrest, we’re not allowing any employees to enter our office in downtown Minneapolis. There are places where we can’t deliver and our techs cannot access. People are still protesting and there are marches. It’s sad, because some of these businesses have been around for a long time, and they’ve been burned down–they’re gone. It’s tough for smaller businesses, because they’re not as insured as they should be, and they’re finding that out the hard way.
What are your goals for the next 12-18 months?
Oricchio: We’re not afraid to grow. We’re going to do it organically by increasing our business because we have a lot of room for it in our market. A second path is through acquisitions. We’re not going to do a deal just to put a star on our map. We’re looking at MNS and imaging dealers that will make us stronger in certain markets. But it’s got to be a right fit for us, a culture fit. We’re looking at MNS because we did a deal three years ago that really helped us get to where we are today. We have to be careful; as acquisitions grow, the prices on these dealers are going up and some are priced too high. But as the pandemic continues, these dealers will realize there’s not a lot of cash available to buy them. Either they’ll have to carry some of the paper themselves or lower the price. We’ll see.
Would you consider acquiring a dealer that has different offerings/vendors?
Oricchio: If it makes sense and it’s profitable. But would I take on a different vendor? Knowing the structure of this marketplace, not too many vendors are looking for other dealers to carry. They’re pretty satisfied with what they have right now. So the jury’s still out on that. For a company like Konica Minolta or Ricoh, the risk for them is that we’ll flip their base to our vendors. There’s a lot of unknowns out there right now. The big thing for an acquisition on the imaging side is the MIF population. There are enough Copystar dealers out there who could be a good target for us.
As the industry continues to contract and evolve, what will be the keys to success for the dealer community?
Oricchio: You’ve got to be flexible. For us, we’d rather disrupt our industry than be disrupted by it. You need to look for new opportunities that make sense. Recurring revenue is a very important factor. There are a lot of potential offerings out there, but you have to be careful with trendy offerings, because some of them don’t work. You’ve got to think outside the box.
What do you like most about your job?
Oricchio: Hearing the bell ring. In front of my office, we have a bell, and every time someone sells something, they ring the bell. Everyone in the office stops what they’re doing to applaud. That’s a win. What I really love about this industry is the chase. It’s competitive, it’s fun, and when you have a win, you feel good. But it’s a tough ballgame out there, so when you get a win, we all have to help celebrate that win. I have a lot of passion for this industry; it’s been good to me, my family and also my employees. We’ll get through this period.
Outside of work, what do you do for fun?
Oricchio: I don’t play golf, but I like to drive my cars fast. I like to scuba dive and travel, but obviously we’re not traveling right now. Scuba diving is a fantastic sport; I got five of my grandkids certified. It’s relaxing and enjoyable, and it’s also great when you can include your grandkids. We go to Maui every year and take the whole family.
