It occurred to Tim Renegar that his company, Kelly Office Solutions, was on the brink of its 75th anniversary. The Winston-Salem, North Carolina-based firm had done the 70th anniversary celebration in style, and now the president will have to figure out what he can do for an encore.
As challenges go, it’s a nice one to have these days. Considering that the business rode the coattails of the typewriter age all the way through to the computer revolution, a 75-year run is fairly impressive. Prior to Renegar buying into the firm in 2010, the company was topping out around $4.7 million. It survived the typewriter market vanishing—though some folks actually still wander in looking to service their Smith Coronas—and also withstood the Great Recession, when it lost its largest client (a local hospital) which represented a very large share of the pie.
But when owner Peter Kelly welcomed in Renegar, his longtime competitor, the firm enjoyed significant growth in the next 10 years. Kelly Office Solutions had 16 employees and $3 million in revenues in 2010; there are now 71 team members and sales in the $17.5 to $18 million range, a figure that stood at $19 million pre-COVID. In addition to the Winston-Salem headquarters, there are facilities in Greensboro and Charlotte.
“We’ve been able to grow pretty dramatically,” Renegar noted. “We were a little over $19 million pre-pandemic, but we took a pretty significant hit from our service side after things shut down. Our hardware is starting to climb back up, but clicks are down, and obviously we’re not getting any overages. We were recently authorized to sell in the Hickory area and go a little further west. That’s our goal, to increase in the central and western/southwestern part of North Carolina. Now is the perfect time to make acquisitions, and we’re ready to get back up on that horse.”
A longtime Ricoh/Savin dealer from its earliest days of the post-typewriter era, Kelly Office Solutions also counts Konica Minolta, Brother and Epson among its core hardware providers. Brother is helping the dealer satisfy the growing A4 needs of clients, and Epson is enabling Kelly to ride the inkjet revolution and answer the total cost of ownership siren song that’s become popular throughout the industry.
Family Affair
Kelly approaches the market using a three-pronged attack. The first is print/copy, which includes production and wide-format devices, managed print and the beginnings of a label strategy. The second is managed IT, a relative newcomer to the portfolio over the past six years, led by Renegar’s son, Blake. Kelly relied on Collabrance for the technology stack, but is slowly developing much of the competencies in-house. A third space—coffee, pure water, ice and purified air—falls under the guidance of son Brice Renegar.
Kelly does a significant amount of business in the legal, health care, manufacturing, nonprofit/faith-based and architectural spaces, along with a small cadre of hospitality and transportation firms. Legal firms in Kelly’s markets actually performed better than their metropolitan counterparts that suffered when the courts closed up shop. Health care clicks took a big hit, but with patient services still an area of need, Kelly was able to step in and help. Document management enabled Kelly to gain inroads, particularly with the legal sector. Those same clients have also been keen on maintaining adequate security measures in the face of ransomware threats, and Kelly capitalized on the opportunity to provide peace of mind there as well.
What enabled the dealer to resume its course of 12-15% annual revenue growth—a staple throughout Renegar’s 35 years in the dealer game, including stints with Triad Business Systems, Charlotte Copy Data and IKON Office Solutions—is not so much what he did during the pandemic as what he didn’t do, which was push the panic button and implement layoffs. Even when revenues collapsed 45% in March 2020—clearly an unsustainable model—Renegar knew it would take the work of all 71 team members to weather the storm and enable Kelly to make the eventual course correction.
“As the leader of an organization, you have to ask yourself how we get through this with the least amount of disruption to our people, because nothing’s permanent,” he said. “If you drop a bunch of people, you’re going to have a hard time getting them back. That’s what happened with the restaurant/hospitality space; people lost their jobs and figured out another path in life. Those businesses are struggling to find employees. I didn’t want that to happen here.”
For starters, Renegar didn’t close the offices. Everyone chipped in to help where needed, which meant picking up a broom or running a vacuum to handle the janitorial services that were once outsourced (“We did a lot of the things we’d been outsourcing,” he noted). Extra cubicles were added to allow employees to bring in their children, thus providing them with space to do remote learning. And Renegar was quick to pounce on the available Paycheck Protection Program funds, which was critical in enabling the dealer to remain fully staffed. In all, only two employees left Kelly, and those were people who retired as planned.
Roller Coaster Ride
A strong April was sandwiched by dismal results in March and May, but June rebounded nicely and set the tone for a solid 2021. Service revenue is still down by about 15% from pre-pandemic, but 20% above 2020. Renegar notes the company will need to expand its base of machines in field to reach 2019 service levels, but in May of this year, nearly half of its placements were net-new. That means more MIF with existing clients and squirreling away business from the competition.
Suffice to say, the rebound wouldn’t have been possible without Renegar maintaining his staffing levels. “I didn’t cut anybody’s pay, and we were able to come through it with a stronger balance sheet than we’ve ever had,” he said. “That tells you how, when you have the right people in place, they make things happen and you can survive just about anything. We kept our people and kept our enthusiasm, and I think we’re going to come out of this far stronger.
“I’ve heard stories about dealers laying people off, getting the PPP money and bringing them back, because they had to, then they would lay them off again. What does that do to your employees? They don’t know what to think or who to trust, and they wonder what their future is going to be. We couldn’t do that to them. We stayed steady, kept a cool head and made it through.”
It is those qualified, competent and happy employees who Renegar believes helps to set the dealer apart from its competitors and sets the tone for Kelly’s corporate culture. Having them in lock step with the dealership’s goals and initiatives creates a team that’s eager to explore and take on new projects, as opposed to dreading them. They’ve also been critical when branching out into unchartered waters with managed IT and coffee/ice/water/air products. That has also played well with clients.
“Customers want you to handle the works,” he remarked. “The ancillary revenue stream from pure water, pure air, pure ice and coffee are nontraditional offerings for the average office BTA channel partner. It’s not a typical office offering, but it’s typical that every office needs it. That makes perfect sense to me, and I have the infrastructure to carry it.”
Renegar’s background is a diverse one. In addition to the aforementioned dealers, he spent three years with Sharp as president of Sharp North Carolina after it acquired Charlotte Copy Data. A veteran of numerous boards and dealer councils, he was able to complete a couple deals in the Charlotte market, including obtaining some MIF from Ricoh. He’s eyeing acquisitions of companies in the $1.5 to $3.5 million range, primarily prospects in the Carolinas and Tennessee, or perhaps Virginia.
“There are a lot of dealers who don’t want to sell to the bigger companies because they’re afraid they won’t take care of their customers,” he said.
“They’d prefer to fit in with the culture and be a part of the company. There are opportunities out there that will bring additional clicks and revenue.”
Aggressive Growth
With the new fiscal year starting last month, Renegar is looking to take great strides in resuming that 12-15% growth pattern. He doesn’t count acquisition growth as part of that figure and anticipates the two deals he has in the pipeline could bring an additional 10% boost. Investments in key personnel, which includes a new vice president of sales for the copy and print division and a branch sales manager, will make all the difference as Kelly seeks to exit the pandemic in a solid position.
represent the present and future
leadership of Kelly Office Solutions
Blake and Brice are poised to be the next generation of leadership at Kelly Office Solutions. They were exposed to the business at an early age, spending summer breaks from college working in the warehouse and driving trucks. While both have a firm grounding in all aspects of the business, Renegar wanted to give them the opportunity to flourish in different aspects of the operation. The move quickly paid dividends.
Blake spent a year working on the process to bring managed IT to Kelly and decide on the right strategic path—build, buy or partner. With the help of Collabrance, the managed IT division has grown from zero to 10% of the company’s overall revenues.
“Blake has done a tremendous job,” Renegar noted. “When you tell a client you want to manage their network, they ask for references. When you say ‘us,’ that’s a tough sale. But we now have about 35 clients on board.”
Brice initially was less than enthusiastic about taking the reins of the water division, as it lacked the cachet of the print/copier world. But as he dug deeper, he found it to be more technical in nature, and from a health standpoint, the offerings make a difference in people’s lives. During 2020, its revenues were up 175% over the previous year. The pure air component—and its ability to kill 99.7% of surface germs via ionized product—was popular during the height of the pandemic.
“Brice has really blossomed with it; he’s turned it into a really nice operation with a staff, whereas it was just him and the installer when he started,” Renegar added. “It’s a neat ancillary, and it’s opened a lot of doors for us.
“Both of the boys have gained a lot of respect because they started in their own divisions and have proven that they can do it. They just went out and sold, and our employees realize that they’ve really made a big difference.”
Renegar a Staunch Advocate of the Power and Value of BTA
Tim Renegar has been with dealers both large and small, and he’s seen the industry from the OEM vantage point. But regardless of the hat he’s worn, one constant has remained: Renegar’s love and respect for the Business Technology Association (BTA).
Due to the pandemic, Renegar agreed to serve a second term as president of the BTA. But he’s been involved with the organization his entire career and believes that membership for an independent dealer is an absolute must.
“BTA is the single best value and resource for an independent dealer, regardless of size, as long as you use and understand it,” he said. “It offers unbelievable knowledge from a lot of experienced people. You can bring just about any situation to BTA, talk to (general counsel) Bob Goldberg or any of the leadership there, and they can point you in the right direction.”
The legal counsel in itself is a tremendous value proposition, according to Renegar. He feels access to documents and the ins and outs of contract negotiations makes it even more compelling, as does the opportunity to network with fellow dealers. Being able to pick up the phone and get the answers to any question makes BTA an indispensable tool.
“The BTA has given to me way more than I’ll ever give back,” Renegar noted. “I can’t say enough good things about BTA.”
