When analyzing the scope and availability of potential acquisitions at his disposal, Rick Bastinelli—the president of Centric Business Systems of Owings Mills, Maryland—likes to keep an open-but-analytical mind.
After all, there’s ample reason for Bastinelli to target the Mid-Atlantic market, as Philadelphia, Baltimore, Washington, D.C. and northern Virginia offer a wealth of possibilities. Bastinelli has fished in these waters twice in little more than a year, adding Webster Integrated Technologies and Carefree Office Technology, Virginia-based firms that have deepened and expanded Centric’s geographic footprint.
The Mid-Atlantic region has been kind to Centric, providing a growth trajectory that lifted Centric from a $1 million performer, when Bastinelli acquired then-Copy World of Baltimore in 1991, to more than $60 million in revenue by the time the final receipts are tallied for 2019. Bastinelli changed the name in 2006 to reflect the dealer’s aim to provide products and services that are a central communication point within the office environment. Centric now employs more than 260 people through eight locations, supporting more than 37,000 devices throughout the marketplace.
Centric has used its status as a full-line Sharp dealer at the onset as a growth vehicle, and Bastinelli also brought in Ricoh, HP and Kyocera. The dealer offers a broad array of products and solutions, including MFPs, wide-format devices, production print, managed print and IT, document management, business consulting and facilities management.
We sat down with Bastinelli to learn more about how the acquisitions are fueling Centric’s growth, the dealer’s Centric Connect IT support function and the value of hosting themed events that provide education in a relaxing and fun manner—all of which casts the dealer as a thought leader and a companion in their clients’ quest for growth as well.
How is business so far in 2019?
Bastinelli: Overall, very strong. It started out slow due to a strong finish in 2018. However, our core business is very solid and we’re on course to hit our annual plan. July was one of our biggest months ever. Our vertical market focus has produced excellent results with consistent growth in both production and health care. It seems the larger you grow, the more challenging it is to achieve double-digit growth, especially with price erosion. But we’ve always had a strong emphasis towards new, organic growth, and we complement that with strategic and synergistic acquisitions that keep us moving forward at an aggressive pace. We purchased two companies in the last 12 months and continue to look at other opportunities. In 2019, we also created a bid desk that is ensuring we’re handling bids properly, which is helping us win larger contracts. We expect it to be a very successful year.
What does Centric Business Systems pride itself on?
Bastinelli: Like most dealerships, Centric has always focused on providing outstanding customer service and offering a strong value proposition. We consistently survey our customers to ensure we are achieving a high level of customer satisfaction. We’re always looking for ways to improve the customer experience. Our biggest source of pride is the team we have assembled and the culture attributes that it demonstrates when executing their job responsibilities. A few years ago, a team of Centric employees, without any leadership participation, documented the attributes that made up our culture and labeled it the Centric Way. They were successful in identifying and documenting the essence of our culture, and that document now serves as a new-hire orientation tool. It’s the foundation of our recognition programs and a guiding plan for all of our employees.
We’re also proud that we have achieved our growth, expansion and acquisition as an independent company controlling its own destiny. The growth has created opportunities for our employees, which in turn creates long-term tenure and enhances the employee experience. Lastly, our success has served as an opportunity for us to contribute to the communities we serve. Last year, over 5% of our profits were donated to nonprofits or other community organizations. It is important to be a good corporate citizen.
In a little more than a year, Centric has acquired Carefree Office Technology and Webster Integrated Technologies, expanding your Virginia presence. Can you talk about the strategy behind these moves, and what does each dealer bring to the table?
Bastinelli: The acquisition activity remains strong, and the climate creates terrific growth opportunities for companies like Centric that have the size and the scale to buy them, and more importantly, the expertise to integrate them into their culture. We’ve always enjoyed solid market share in Washington, D.C., and northern Virginia. The Webster Integrated Technologies acquisition was quite synergistic because they sold a compatible product line in Ricoh, and their geography bordered the southern part of our existing footprint. It was a natural evolution for us to expand in a territory that was contiguous to our current footprint.
Adding Carefree Office Technology, located in northern Virginia, provided us more density in our existing marketplace. Both companies shared a customer-service philosophy like Centric’s, with solid service departments, tenured technicians and dedicated customers. For us, adding experienced employees and net-new customers, while growing our MIF and revenues, are drivers toward seeking acquisitions.
What will you be looking to accomplish in future deals? What are the geographic and product/service needs you will be looking to address?
Bastinelli: We are open to considering other marketplaces that will provide us an additional product line. In the future, our acquisitions will target companies with a good culture, solid operations, accurate billing, clean financials and fair pricing. The quality of the opportunity would determine our future direction. We would look carefully at an opportunity outside of the Mid-Atlantic region. However, when you combine Philadelphia, Wilmington, Baltimore, Washington and northern Virginia, and all of the secondary cities within that region, it is a strong and vibrant marketplace. We could certainly achieve our long-term goals within this region of the country.
We consistently survey our customers to ensure we are achieving a high level of customer satisfaction. We’re always looking for ways to improve the customer experience.
Rick Bastinelli
You have a wide breadth of offerings, from managed print and IT to business consulting, facilities management and production printing. In a business that seeks out the next big thing, how do you vet new offerings?
Bastinelli: Dealers with solid resources who have built a strong B2B service operation have a full range of options. Vetting new offerings can be challenging, so we take several steps to determine our direction. First of all, we rely on our manufacturer partners to share their vision of the future and their product roadmap, so we understand their direction. Next, we carefully study the events of the industry. I’ve always said we might not be the most-creative dealer or the first to jump, but when we copy something, we fully commit and do it well. We’re constantly looking at what’s happening with our peers throughout the industry. When we are considering a new offering, we build a realistic business plan. We carefully analyze the new revenue opportunity, the investment costs, and the sales and service structure required to sell, service and support the offering. What is our break-even point? Most importantly, how many units or sales are required for us to have an acceptable ROI? We feel that a solid business plan will guide us in making the right decisions.
Centric hosts themed events that provide learning opportunities for clients in areas such as document management and workflow solutions. Talk a little about the value this brings to your client relationships.
Bastinelli: We find that customers are eager to learn. Knowledge gives them the power and enables them to help their organization achieve its goals. We conduct 12-15 events per year designed as educational forums to keep our customers and prospects informed on the latest technological developments. We find these events to be extremely beneficial. It requires our staff to keep abreast of all the technological developments and understand them well enough to give presentations. This helps establish us as a knowledgeable industry leader, which gives our customers confidence in knowing that they’re partnered with the right company. We serve the role of instructor, helping our customers understand industry trends, new solutions and current offerings. They’re all designed to be educational and fun. One of our most-recent themed events was Casino Event, and all our participants had a lot of fun gambling before and after the sessions. They’ve proven to be quite successful.
Your dealership launched Centric Connect, which helps resolve post-installation issues with copiers and provides value for clients who may lack IT support. How has it been received by customers?
Bastinelli: It’s been beneficial to both our customers and our company. Prior to launching Centric Connect, our help-desk technicians were spending more time solving customers’ network and software issues than they were solving device issues. We were handling calls for printing issues that had nothing to do with our device. With competitive pressures on cost per page, it was impossible for us to build that service into our cost-per-copy pricing. In addition, we recognized that customers really had a need for this type of service. Many clients had offsite IT support that wasn’t immediately available, or their onsite staff was busy with other projects. Offering that service for a low monthly cost per device, per month, provided the peace of mind that regardless of the issue, Centric is a full-service solution provider to handle their needs. The initial launch was slow to gain momentum; our sales staff was reluctant to discuss the additional costs. However, as customers called with issues and we had the opportunity to explain the program benefits, we have had several adaptors and it has become very successful. Many of those adaptors include members of our sales staff.
Talk about the role that organic growth has played in Centric’s success story. What are some of your strengths in this regard?
Bastinelli: Although we’ve made six acquisitions over the past few years, it’s our organic growth that drives us as a company. Close to 50 percent of our hardware placements are net-new installations. We achieve those results through our unique sales structure, our sales process, extensive training and our expansion into new geographic territories. I believe that generating organic growth is an area we execute well, and it’s been significant because it contributes to double-digit aftermarket growth.
What was your dealership’s biggest win last year?
Bastinelli: It came from our health-care vertical-market team. We added a health system with 11 hospitals as a new Centric customer. The engagement was a managed print/copy/services agreement for over 5,000 devices that included some production machines.
What was your biggest challenge in the past year?
Bastinelli: We are enjoying a strong economy with under 4% unemployment in our region. That’s great for business; however, it creates a challenging environment to hire the talent required to fill open positions in a growing company. The time and effort required to fill a position is longer and more expensive than it was previously. We’ve done some unique things to deal with this challenge. We’ve developed in-house recruiting, people working directly for us as full-time recruiters to fill positions within the organization. This investment has really paid off. These recruiters know our culture, have a much-better understanding of the roles and responsibilities of the positions, and we are more effective at recruiting and retaining employees when our own recruiters are bringing them into the organization. We’ve also provided incentive programs for our existing employees—they’re eligible for a bonus for helping us to land a new hire. Your employees are a terrific resource, because they understand what it takes to be successful in this company and industry.
There’s another challenge we see in major markets, where office employees are looking for opportunities that allow them to work remotely from home, either a few days per week or full time. We feel the nature of our business makes it difficult to allow certain employees to operate as untethered workers. Collaboration is important to us, and our ability to provide great customer service is difficult to accomplish when employees are working remotely. I think the untethered worker is a phenomenon that preceded the millennials, and certainly spans the full gamut of the workforce.
What are your goals for the next 12-18 months?
Bastinelli: Growth is critical to the financial success of any company. We are focused on achieving double-digit growth, and we believe that size and scale are necessary to effectively compete with the mega dealers and the manufacturer branches. Both of them have a strong presence in our markets. Growth also provides the resources required to expand and invest in products and services. At Centric, we call it the cycle of sustainability. Successful companies generate profit, they reinvest the profits in the company for growth, and that growth ensures continued profitability. This year, we expect to exceed $60 million in revenue, and we’re just focused on combining our organic growth strategy with strategic acquisition in order to keep our growth pace at a very aggressive rate.
How do you view the industry changing in the future and what are you doing to adapt?
Bastinelli: The M&A activity in the industry is changing the landscape. Specifically, Staples acquisition of DEX Imaging can have major implications. Time will show the real impact to the independent dealers. Apart from M&A activity, our view of the core business is growth will be a critical component to survival in the future. As technology becomes more sophisticated, it will become difficult for smaller dealers to compete without a lot of resources. Also, we expect inkjet technology to play a larger role in office output devices, especially in production print. We continue to expand our production team and also support staff to help them on both the presale analysis and the post-sales training. Smart office, or the office of the future, will be an additional workplace that will leverage traditional devices, like MFPs and white boards, with artificial intelligence to reinvent the office landscape for meetings and methods of communication. I think we’ll see more dealers embracing the IT business, providing managed network services. Customers in the future will be looking for a service provider to manage their network, computers, devices and security, as well as prints. I think we’ll see a much-greater acceptance for storing information in the cloud.
At Centric, we have built a NOC staffed with certified help-desk technicians. We plan to expand our offerings into MNS. Our focus on vertical markets will enable us to better understand specific industry requirements, including the complexities of regulations that matter most to customers. It’s very large in health care. We are expanding our solutions team, preparing and adapting to help streamline the sales process, understanding customers’ unique workflow requirements and preparing for subscription-type solutions in the future. A primary focus is to build our staff with technology-savvy employees who are capable of selling and supporting future technology.
What do you like the most about your job?
Bastinelli: My favorite part is building both personal and business relationships with customers, employees and vendors. I believe relationships are the foundation of building a great company and culture. Centric has an amazing team of employees who are dedicated to our mission, and I enjoy working with them every day, watching them perform, and mentoring to help them grow and reach their potential.
Outside of work, what do you do for fun?
Bastinelli: The job requires a pretty strong time commitment, so when I’m not working, loved ones become a priority. My priorities have always been family, work and golf. And I realized a long time ago that you can only be good at two out of the three. I enjoy playing golf, but it certainly takes a back seat. Spending time with loved ones in our homes in Stone Harbor, New Jersey or Naples, and traveling occupy any free time away from work.
