How do the biggest dealers think? Maybe not much differently than you. To find out, we asked some mega dealers what they did to grow their businesses—the steps they took and the strategies that worked. What’s interesting is that some things remain important today: Seeing the big picture of office technology dealers’ place in the larger print market, building a team, understanding how the market has changed, and importantly, how it may may change in the future. Moreover, mega dealers told us how dealers can succeed, emphasizing the importance of embracing emerging technologies, having a vision of where you want to go, and charting paths for getting there. There is no single route to success, but the paths the mega dealers chose share much in common and are ones you can emulate.
The biggest dealers got there through hard work, embracing change and new technologies, taking risks, understanding what their market needed, and believing that office technology could go beyond copying, scanning, printing, and faxing. All had a vision of being more than they were. While they acquired other shops, much of their growth has been organic—expanding existing capabilities based on employees’ skills. Sometimes this meant taking better advantage of the talent at hand. Other times it involved acquiring shops in an appealing market or companies with employees whose skills could make a success of new opportunities.
In both cases, growth came from leveraging the talents of employees. Patrick Flesch, president of Gordon Flesch in Madison, Wisconsin, noted how this can play out in an interesting way: “Our most impactful growth has occurred through acquisition, but the most profitable growth has been organic. We focus on growing our customer base organically so achieving success in that area is very rewarding.” It’s also key advice for dealers seeking to grow.
“We always talk about the three ways to grow,” said James Loffler, CEO of Loffler Companies, based in St. Louis Park, Minnesota. “Organic cross selling to current customers, organic growth through new sales under our brand and those of our partners [OEMs], and acquisition of the right kind of companies that meet our cultural requirements.”
Culture can be crucial. A company can have a top-down or bottom-up culture, a participative one, or anywhere in between. But how this plays out with the business being acquired can make the integration straightforward or a persistent challenge. It’s important to learn about any differences before the ink for the sales agreement leaves the pen. They usually aren’t deal breakers, but talk with owners, managers, and other employees to avoid being blindsided after the sale is finalized.
Skills and culture are two things to think about. Markets are another. As Mike Lepper, CEO at Impact Networking, in Lake Forest, Illinois, noted, “Acquisitions allowed us to gain needed skills that let us address a particular market.” He cited a firm that was small but had some excellent talent among its staff. This proved especially important as Impact acquired the dealer and went on to buy IT companies. The acquired expertise also gave Impact access to new markets while expanding services for existing customers. In this way, organic growth can be enabled (or enhanced) by acquisition.
This means it’s important to look at markets in two ways. One is the geographic market, such as new ZIP Codes or another state. Second is new areas of expertise that may let you connect with types of businesses you may not be familiar with. Both are vital to growth and can be winning reasons for expanding your business.
Then there’s using both together. Rob Stevenson, vice president of marketing at Flex Technology Group in Mesa, Arizona, said the combination organic growth and acquisition can be a winning strategy. “We have added many significant companies to the FlexTG brand,” noted Stevenson. “Having them under our brand enabled us to expand our organic growth.”
The Essential Ingredient
Copying, scanning, faxing, and printing have become business as usual, almost to the point of being taken for granted. Yet there is no one-and-done answer. What dealers find is that managed IT is increasingly important and often tied to managed print, possessing an infinite range of variables that some dealers term managed services. “Our managed services business is over 10% of our top line revenue, and we have plans of doubling that in five years,” said Flesch.
Think about this share of revenue and speed of expansion. Dealers’ challenge is that managed IT can vary extensively from one customer to another. No one has the ideal answer, leaving it up to dealers to find the best solution for each customer. Such complication presents opportunity. As Flex Technology Group’s Stevenson noted, “Managed IT offers a growth opportunity we continue to explore.” For dealers this means focusing on customer needs and staying disciplined with your offerings. “The growth can be very profitable and fits into the monthly recurring revenue model that works on the print side,” added Flesch.
Elephant in the Room
AI gets a lot of press and is already having an impact, yet it’s not always clear what it may mean for dealers. This doesn’t mean dealers can adopt a wait-and-see approach. Dealers of all sizes are trying to learn as much as possible and determine how AI can help their companies and their customers become more efficient. This is why it’s so important—even if you don’t have a specific plan for AI—to learn and understand how your customers plan (or hope) to use it and what your dealership can and cannot do.
While what you may offer with respect to AI will vary by customer, there will likely be similarities that can be used across customers. Flesch described his company’s approach: “We are trying to learn as much as possible and determine how AI tools can be used to help us become more efficient internally.” The other side of this can relate to your Managed IT business. There may be places in which you can monetize your burgeoning expertise via AI consultative services based on using it within office technology. Meanwhile, don’t be surprised to learn a customer knows more than you. Learning to use the power of AI can be a very dynamic experience!
Stevenson from Flex Technology Group makes an important point: “AI will not replace your team—but it will replace the waiting.” His company already uses AI to enable predictive maintenance based on usage and condition of the equipment, offering real-time security signals for unusual print behavior and access. “The real savings come from time—less waiting, less rework, more uptime. That’s the future of AI in office technology,” he said.
Loffler envisions having internal AI teams that may vary by customer, with more complete and more timely information. This approach could let them focus on supporting specific customer needs. Importantly, said Loffler, “We don’t plan putting AI between the company and our customers, but to put it alongside our standard support options to help make our teams more efficient and provide customers with a better experience.”
But Wait, There’s More
There was more input than can easily be summarized from our interviews with four mega dealers. Here are some other questions and their brief input:
Are mega dealers more likely to acquire more dealers, sell their operations, or find other ways of consolidating?
- All three, along with combinations that may not be readily apparent. While the mega dealers will grow, so can mid-size and small dealers.
- Private equity is continuing to show interest in our industry which could continue driving sales of dealers.
Some mid-size dealers may become mega dealers. Other than financing and marketing, what separates those that grow from those that do not?
- Having a growth mindset. Providing better value and support to clients can help businesses grow.
- A dealer’s appetite for acquisition and/or diversification. Making the leap from mid- to mega dealer requires leaning into both.
What are the most efficient ways of hiring and retention?
- Beyond competitive wages and comprehensive benefits, it goes a long way to treat people with respect and appreciation.
- Your brand can help attract the type of talent you want. Great people attract great people. We’re looking for people who are innovative and are going bring new ideas to the table.
How should smaller dealers respond to today’s market?
- Picking a niche and owning it. For example, deciding you want to get good at cybersecurity or IT or AI and working toward that goal. Have a growth mindset while providing consistent value and support to clients.
- Invest in your sales team and focus on customers who value partnership. Don’t waste time on low-margin deals that don’t align with your strengths.
- Invest in the business to provide an enhanced customer experience while upholding commitments to customers.
- Don’t to do something if you’re not committed. It’s important to invest enough money and be willing to wait for results.
Back in the day when this industry was all about faxing, copiers, printing, and scanners it was sometimes described as a lifestyle business. No longer. The rise of technology has made office equipment and systems far more demanding and requires constantly expanding areas of expertise. It’s not for anyone looking for an easy lifestyle. The opportunities for individuals and companies are broad and deep. As Loffler pointed out, “Every mega-dealer started as a small dealer. With the right strategy and team, it’s possible to grow and thrive.”
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