RJ Young CEO AJ Baggott provided The Cannata Report with a mid-year company update during CJ Cannata’s recent visit to Nashville. Baggott also revealed the segments of the business performing well and the dealership’s strategy for running a thriving managed IT business. Look for part two of our interview with AJ next week.
How is 2023 doing for RJ Young so far?
Baggott: We had a record-breaking year last year, and we have broken every record so far this year that we had started setting last year. We made $50 million in our first quarter. That’s the first time we’ve done $50 million in a quarter. We’re on a $200 million run rate, so that was a pleasant surprise.
Why is RJ Young doing so well?
Baggott: We’re seeing all of our diversified offerings [monitors, displays, security cameras] outside of traditional print become profitable contributors to the business. Not just single-digit contributors, but high double-digit contributors.
We are selling a lot of these diversified products and that scale has created additional profitability. They are no longer some auxiliary thing we do but are a true component of the business to the tune of 20% which is coming from outside of traditional print at this point.
What’s RJ Young doing right to make that happen with these products outside of traditional print?
Baggott: We run it completely separately from our copier business in terms of the operational side. Many dealers are still trying to pigeonhole it into the copier model, which doesn’t work. The piece that works is having talented sales teams that find opportunities for all of it. We hired subject matter experts from outside the industry that are AV specialists. If our sales team finds a qualified lead, they’ll bring in a solutions architect that has an AV background.
In the IT space, we hired people who have never worked in the imaging channel, but they’ve been highly successful with other MSPs in that space. We’ve found the expertise to build and continue to develop those and then empower those folks to tell us where we’re missing the boat versus trying to build a model and then pump money into it.
The talent that we’ve brought in has been remarkable, so much so that we can’t keep enough of it. We’ve bought MSPs just for the engineering talent, and we’re working on opening our MSP headquarters in Huntsville, Alabama. We’re growing that so rapidly that we’ve got to have additional infrastructure for it.
Was RJ Young smart enough to bring in these experts before you launched this segment of the business, or did you learn from your mistakes?
Baggott: This predated my tenure with RJ Young. They bought what they thought was an MSP, which was really a break-fix IT company and tried to turn it into a managed IT company. That didn’t work. When I came in, we were losing money in it like most dealers that I talk to, so I started doing a lot of research outside of the industry. We’ve learned from some of our mistakes there and didn’t repeat those when we diversified.
When we started doing more of the audiovisual products, we already had subject matter experts ready to help us roll that out. Those guys are super talented. They can walk into a space and ask the customer what they’re trying to accomplish, and they can just in their head build a solution that solves a customer’s problems when they didn’t even necessarily know what they were asking for.
We’re building customized solutions to solve customer problems. That’s why we treat the operational and administrative side of those things so differently.
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