The word flat generally isn’t in Mark Miller’s vocabulary. But it was an appropriate description for the financial performance of Eakes Office Solutions in 2021. The Grand Island, Nebraska-based dealer certainly gets a mulligan due to the pandemic, as do all dealers. And frankly, the flat growth was an outlier, as evidenced by the 8% growth Eakes realized in 2020 and projected 12% growth for 2022 once all the receipts have been tallied.
Miller, the company president for the past 20-plus years and a 30-year veteran of the firm, has good reason to be confident in Eakes’ durability. Steady growth has been a trademark of the firm since its 1945 inception, backed by 285 employees and 14 locations across the Cornhusker State. A Sharp, Ricoh and HP dealer that has blended organic and acquisitional growth to reach the $70 million plateau, the firm’s true resilience lies in a catalog that’s among the most diverse in the entire office technology universe. The reason is simple: Eakes maintains a presence in other business galaxies.
Along with copiers, MFPs, and production and wide-format devices, Eakes provides end-users with office supplies, janitorial supplies, office furniture and technology solution services. Furniture, office supplies and copiers/service each account for about 30% of the overall pie, meaning the dealer isn’t top-heavy or overly reliant on any one category. In a rural state dominated by agriculture, the ability to be all things to all customers is everything.
“For Eakes, local really means local—we’re where our customers live,” Miller said of the firm’s 14 locations. “No other dealers can say that. Plus, with five distinct and separate product categories, we can offer a greater array of products than anyone else. When you combine that super-laser local focus with the offerings, that can really set us apart.”
That diversity prevented Eakes from entering red ink in the ledger during the pandemic. The company has endured the same supply chain issues across its lines (including a foam shortage that hampered the furniture space) and struggled to meet prior year service and supply agreement revenues. However, most of its clients remained in business, with the exception of large firms in cities such as Omaha, where employees were sent home. Being able to serve the needs of such a wide array of customers meant the dealer didn’t fall victim to certain business verticals that were highly impacted. And while Eakes counts many agriculture-based clients among its book of business, the occasional transportation disruption served as a minor speed bump for the farming community.
Leadership Dynamic
Eakes’ corporate dynamic is an interesting one in that Miller represents just the third generation of company leadership and the first outside the family. Howard Eakes was busy repairing typewriters from his kitchen table in the period just after World War II and was succeeded by his sons, Dan and Ron, in the 1980s. The formulated succession plan has proven to be instrumental in the success of the business, according to Miller.
Eakes is also an employee-owned company, although not an ESOP. Dan and Ron were majority owners when Miller came on board, but since unveiling a financial succession plan in 2015, the ownership group has swelled to include 35 employees (himself among them) as the brothers sold their stock to team members.
“Our people take pride in being owners; they’re invested in the company, and they really take that to heart,” Miller noted. “Every year, as stock becomes available, we look to get more employees into the group.”
Jason Tomjack, corporate marketing manager for Eakes and an owner himself, believes the increase in stakeholders has had a salutary impact on morale. “You can see that sense of ownership isn’t just physical, but emotional, in how you come to work every day,” he said. “That changes company culture too, when you expand that ownership group out to others.”
With the possible exception of the janitorial business, which stood at less than $1 million at its launch eight years ago and is now a thriving $10 million operation, there were no turning points that catapulted Eakes to its current scale. “Intentional growth has been one that allows us to utilize our shared services model really well,” Miller said. “And whether it’s marketing, accounting, purchasing or whichever, we share every service we can among our locations. That, above anything else, allows us to scale quickly. We don’t buy 10 companies a year. We’ve bought 12 companies in the last 10 years because our mantra is slow and steady growth.”
M&A Strategy
A trio of deals in the past couple years underscores Eakes’ commitment to fortifying its five business segments. At the start of this year, the dealer acquired a kindred spirit in OfficeNet, a multipurpose dealer with locations in Fremont, Columbus and Grand Island that offers office products, copiers, furniture and cleaning supplies. A year earlier, Eakes obtained Schwarz Paper of Lincoln, which provides office, locker and janitorial supplies needs. A third deal for a dedicated supplies company, Moneywise, provided a presence in Scottsbluff and opened the door for Eakes to offer its full catalog to that dealer’s client base.
Miller and company CFO/COO Paul McKinney orchestrated the deals with the vagaries of market conditions in mind, hoping to offset slowdowns in certain product categories. “We’ve spent a fair amount of time on strategy,” Miller said. “We have a great resolve to keep the business growing. Our strategy is built to offset economic slowdowns in our various divisions through organic growth and acquisition.
“Schwarz Paper served not only our Lincoln market, but the entire state. It was the perfect target for us as we grew our janitorial business. OfficeNet has long been a strategic target as an office supply and Savin copier dealer in three of our biggest markets. And because Moneywise only sold office supplies, we were able to bring in our copier, janitorial and furniture reps and roll up the rest of our product categories into that market.”
Miller feels he has a rather robust pipeline of prospects that are being evaluated, with the $1 million to $4 million range being the sweet spot. Given that transactions can be taxing on a company’s support staff, Eakes is strategic on the product categories and markets under consideration. Timing also plays a role and it is “dictated by what we can handle,” he said. While he didn’t give specifics, Miller noted there are candidates under consideration.
Buying competitors during the pandemic period is a challenge unto itself, as the trailing three years’ financials have to be vetted to ensure the downturn isn’t masking underlying, long-term issues. “We spend a lot of time dissecting 2019, 2020 and 2021 financials to make sure we can see what we need to see in terms of real business they were able to generate through the pandemic period,” he added.
One of the strongest growth areas for Eakes over the past year was technology solutions services, which saw a 54% increase in business. Over the years, Miller’s leadership team has discussed the merits of digital solutions and concluded it was difficult to form their own solutions company when it would knock heads against competitors with 20-plus years of experience. Initially, they felt it more prudent to partner with companies that provide MSP services but weren’t active in the copier realm.
“We would just hang our copiers and printers on the networks those folks managed, and that worked fine,” Miller said. “But we also began to focus on solutions products we could sell really well, such as PaperCut document management software and faxing solutions—just a few specific categories where we excelled. We decided to create our technological solutions division specifically to take advantage of the fact that we had become pretty good with these products. So we separated that division, identified leadership, gave the reps some incentives and goals, and they’ve hit those goals. It’s been a good business for us the past three years.
Corporate Culture
Like many dealers, Eakes has found sustaining its culture to be a task. The pandemic and the Great Resignation have caused millions of Americans to reevaluate their personal careers, needs and goals. Miller sees culture as a moving target with the needs of employees constantly changing. Much emphasis has been placed on employees’ well-being, and the key is delivering the message that a culture-minded business values its people. Still, some of the time-tested values remain intact.
“Howard Eakes’ success was based on hard work, customer care and great people,” he noted. “While we’ve added a few more core values, those original three are the basis of our values today. Our people know it, we talk about it and hire for it—it’s part of our DNA. That said, you’ve also got to move with the times to make sure everything else is good with our people.”
Unpacking the industry’s main focal points—supply chain, remote work (not an issue in Nebraska), chip shortages, rising interest rates, inflation—the one area of most concern in Miller’s mind as the pandemic continues to fade is attracting and maintaining high-value employees. Nebraska is currently tied with Utah for having the nation’s lowest unemployment rate at 1.9%. Thus, for Eakes, while culture helps keep employees in their current seats, wooing new prospects from the shallowest of talent pools will certainly task the marketing and human resources departments.
“We’re really focused on retention and attraction; it’s our No. 1 line item in our strategic plan,” Miller said. “We’ve worked hard to create better pipelines of people to recruit. We recently updated our full benefits offering and our flexible work policy in terms of scheduling and work location, providing more options than we have in the past. Keeping and attracting great people will be critical to our success.”
OEM Relationships
On the MFP side of the business, Eakes continues to solidify its relationship with Sharp, having won its 16th Hyakuman Kai Award (crystal eagles, which Miller refers to as the “birds”) in the last 17 years. Miller appreciates that Sharp provides dealer care from the highest level of the organization, and he’s served as the chairman of the Sharp Dealer Advisory Council for the past few years. The byproduct is what Miller calls a two-way street of interaction.
“I get insight into the vision of Sharp’s leadership, and our relationship has really solidified,” he said. “At the same time, Sharp leadership gets a view into our dealership to help them determine what manufacturers can do to help dealers like us excel. We’ve also had a beneficial relationship with Ricoh; we brought them on a few years ago and they have been great to work with. The addition of Ricoh hasn’t taken away from our Sharp volume, but rather supplemented it.
“I think Sharp has managed the pandemic nicely, as well as any company in the industry, and it’s paid off. It’s not just having product, but good product. Sharp has been a game changer for us.”
Moving Forward
Miller’s strategic plan contains no less than 30 current initiatives, all working toward the same end: slow and steady growth. While he won’t rule out a larger deal, most acquisition opportunities remain in the $1 million to $4 million range to supplement organic expansion. But don’t expect any sudden growth spurts.
“I’m the kind of person who sets a lot of little goals in order to achieve the big one,” he said. “If we maintain our focus on executing those smaller goals, we will achieve the very growth we desire.”
