For any office equipment dealer looking to widen its product and service portfolio, there are ample options to pursue that require varying degrees of investment, from minimal (temperature-scanning devices) to considerable (managed IT)—with plenty of options in-between.
And while this publication laid out multiple options as part of the March State of the Industry report, there are ample reasons to avoid certain options that perhaps aren’t a strong fit for you and your customer base, perhaps due to geographical considerations, market saturation, a long path to profitability, sourcing issues, a learning curve and other caveats. The truth is, what works for one dealer may not be feasible for another.
We turned to our dealer panel to assess their views on what potential product additions should be approached with an abundance of skepticism and caution.
One of the most oft-cited ventures is managed IT services, which can be a high-risk, high-reward proposition. And by “risk,” it is the level of financial investment in resources to execute a home-spun competency that raises red flags. Even the most accomplished of managed IT providers wipe their brows at the thought of how long it took to navigate its offering into profitable waters.
Included in that group is Denver-based All Copy Products. Its Verticomm managed IT services division required substantial investments over a number of years to get to the point where it became a money maker.
“We’ve made lots of mistakes, especially with offering different cloud solutions,” said Brad Knepper, company president. “I wouldn’t discourage companies from entering managed IT, but be cautious before making significant investments until you’ve tested the waters a bit with a third-party source. We’ve lost millions in getting to where we have a pretty sizeable IT company now. We lost millions getting there, but we’ve gotten that back and more. For a smaller dealer, that would be pretty challenging out of the gates to make those investments.”
Due Diligence
John Lowery, president of Applied Imaging in Grand Rapids, Michigan, believes as long as an offering fits within the demographics of the businesses a dealer serves, that should protect the dealer from unforeseen landmines. Proper due diligence can help stave off unpleasant surprises.
“We have been very fortunate to choose wisely based on our own research of the markets we are in,” he said. “We would avoid any products where we can’t add value, and all serves should have some form of recurring revenue.”
While many dealers pivoted to offer solutions that spoke to pandemic needs, Brian Gertler—senior vice president of LDI Color ToolBox in Jericho, New York—advocates taking a longer view with new products and services. “The only landmine is stocking devices that might have a very short shelf life,” he said. “Our future is uncertain, and large capital investments in pandemic remedies and ‘safe place’ solutions should be a short-term strategy.”
Mark DeNicola, CFO/CSO of Centriworks in Knoxville, Tennessee, believes that are still opportunities in equipment sales and print volumes, as evidenced by the dealer’s five-year business plan. Still, Centriworks continues to add services and diversify in a manner consistent with its plan.
“Diversification just for the sake of diversification is a mistake,” he cautioned. “It needs to be intentional and fit your business goals/objectives.”
