Above: Kevin McCarthy
We have known Kevin McCarthy, president of Modern Office Methods (MOM) in Cincinnati, Ohio for years. He has always been willing to discuss issues and concerns that his dealership has with vendors in general.
The timing of my visit was October 2023, and I held off finishing this piece because we explored some sensitive areas and I wanted to move further away from an event that we discussed during our meeting. We also did not want McCarthy or his executive team’s comments to be conceived as negative or derogatory.
Above: Ken Staubitz
In addition to McCarthy, I met with Ken Staubitz, senior vice president & COO, Mike Tutko, executive vice president of sales, and Karen Morgan, director of marketing. I let them know that the information we discussed was valuable for Modern Office Methods’ manufacturers to hear. None was what we would call bad. These were just observations and opinions.
Opportunity Knocks for Modern Office Methods
Modern Office Methods is a Canon and Ricoh dealer in no special order. McCarthy has done a remarkable job in seizing the opportunity that was presented to him when Xerox (Global Imaging Systems) announced they had acquired a competitor, MT Business in Mansfield, Ohio on May 15, 2017.
MT Business was Ricoh’s leading dealer for several years. It took pride in being #1 and were not averse to making a big buy at the end of the year to secure continued market leadership. We estimate the dealership’s annual revenue was in the $50 million range. Its territory encompassed Ohio and southeastern Michigan.
It was extremely easy to discern that there were large metropolitan areas such as Cleveland and Columbus that were now open to dealers who carried Ricoh. There was a huge MIF available, and McCarthy recognized that this was an opportunity to significantly expand his dealership.
Xerox viewed this as a huge win because it gave them the channel reach in the $20 billion multi-brand reseller space. There were many other successful dealers who looked upon this as an opportunity, including Gordon Flesch Company, Applied Innovation, Blue Technologies, and Perry ProTech as well as Graphic Enterprises in Canton, Ohio who had been acquired by Visual Edge.
McCarthy asked Ricoh for help. What was done, I cannot say but can comfortably observe that Modern Office Methods was in a growth mode shortly after MT was acquired by Xerox. We estimate its 2023 revenue to be $60 million. This dealership grew during the pandemic. The fact MOM does very well in production print is no insignificant factor particularly with two extraordinarily strong lines such as Canon and Ricoh.
How Do Modern Office Methods’ Business Prospects Look for 2024?
“While I believe the economy has softened, I also believe the current administration will do everything in its power to ramp up the economy between now and the November 2024 elections,” observed McCarthy. “Our company is moving forward with our expansion plans and will continue to drive growth in both revenue and profit, as we believe the opportunity to take clients from competitors who are not providing outstanding value to their clients is huge.”
E-Commerce and Modern Office Methods
“We are currently looking to enhance our e-commerce program, but do not believe it will be a giant part of our focus in 2024,” explained McCarthy. “We do believe there is an opportunity to use e-commerce with specific clients, and for specific products that are easy to distribute and install.”
IT Services vs. Production Print
“I would advise dealers to participate in production print long before jumping into IT services,” observed McCarthy. “Production print, while challenging, is like our core imaging business and there is a lot of opportunity to take production print business from organizations whose service has dropped off significantly over the last several years. At the same time, IT services are a great business and the monthly recurring revenue per client is significantly larger than the average imaging client’s aftermarket revenue. You had better know what you are getting into and be ready to invest heavily in this new venture.”
Thoughts on Last Fall’s Ricoh Dealer Meeting
We addressed the recent Ricoh dealer meeting, and we will briefly hit on what the Modern Office Methods team thought the best value of being there was. The breakout schedule was significant and covered many key areas of the business. McCarthy and his executive team singled out a presentation on financing as well as the e-commerce session as worthwhile. It was pointed out during our conversation that e-commerce means different things for different people.
The MOM executive team also found value in the discussion of AI and how to leverage it. They also commented that there seems to be a very subtle partnership between Ricoh and HP. As a dealership heavily engaged in production print, MOM’s executive team believed the sessions covering that area were particularly good. There was a discussion about company culture and the comment was, “I think we have a good culture, but it could always be better.” In general, the MOM team came away with quite a bit of information.
What’s Next for Modern Office Methods?
We talked about where the dealership is going. It is staffing up, hiring industry veterans which means that they are looking for SMEs (Subject Matter Experts) for the different areas of the business.
In 2024, Modern Office Methods will focus on diversification, managed services, and MPS. The dealership is growing in all these areas and the result is expected to be a dealership with the best-in-class service organization.
We also had a serious discussion about what the dealership would like to hear from its manufacturers. The response was more consistent messaging. Do not emphasize one aspect of the business for a brief period and then turn around and say forget that. Dealers look for certainty from their manufacturing partners and the message must be delivered with a great deal of certainty.
Frank’s Take
This is a group of executives who have a keen understanding of what they need to do for today and tomorrow as well. Modern Office Methods has addressed diversification which is leading to satisfactory results. When we sit back and prepare for our Fridays with Frank tapings, the vast majority of what we discuss comes from dealers such as Modern Office Methods.
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