To say the copier industry is competitive is like saying Steve Jobs had a knack for marketing. Couple that with customer demand for single source, integrated solutions and it makes perfect sense that copier dealers everywhere are diversifying revenue streams and driving profits by expanding their lineups to include business technology, software, water purification and other office essentials.
The world’s spoiled for choice these days. Everywhere, where there used to be one or at most a few options, there’s a half dozen, dozen, or more choices laid out like candy. Funding business equipment acquisitions is no different. Not that long ago, cash was the dominant means of acquiring equipment for many businesses, followed by loans and revolving credit.
The competitive environment for manufacturers, vendors and dealers is increasingly intense. As such, companies are seeing more and more pressure on pricing and risk. In every challenge, though, there is opportunity. Innovative thinkers are bringing new approaches to the market. Bundling services, technology and support with equipment sales – a “solutions” oriented approach – is key to selling more in this environment, but most aren’t realizing the impact a finance program can have on the success of those efforts.
Supporting new revenues requires more than the will to achieve more. It requires capital. Cash reserves are a precious commodity when starting or expanding new customer engagement because upfront expenses outpace how quickly you can collect on new revenues early in the relationship. One of these upfront expenses is often equipment.
Office technology transactions get you to your quarterly goals. But it’s relationships that make a business.
According to the Equipment Leasing and Finance Association, 70% of businesses leverage at least one form of financing to get the equipment they need to compete and win in the marketplace. Now consider this: according to this study, 94% of B2B buyers research business purchases online.
There is a software assistant in your phone that answers your questions. Websites seem to read your mind from the minute you land on them. Some cars parallel park for you – or even drive you around. This is the kind of thing that might come to mind when people think of technology innovation.
The commercial truck industry is requiring everyone to upgrade to more emissions-friendly engines. Many industries are upgrading equipment to include GPS asset-tracking technologies. IT equipment needs to be upgraded seemingly every hour and a half. Whether part of a regulatory move, a push for greater efficiency or the requirement to keep up with the competition, the word “upgrade” has a big impact on business owners’ lives. And a bigger impact on their cash position.
We’re coming off the some of the most aggressive years of digital transformation many of us have ever seen. Whether it was rapid pandemic adjustments, shifting enhanced privacy and security technologies, or riding the wave of automation as employers seek performance efficiency, 2020 and 2021 saw a large influx of capital spending in new technologies.
In a recent survey of 114 private equity firms with at least one office products company in the portfolio, 82% said that a differentiated business model was the key to management teams obtaining higher EBITDA multiples and business valuations.
“Cash flow is not just a thing. It’s the only thing.” – Principal of a $114 Million Office Products Dealer. Over time, you’ll hear finance companies speak ad nauseum of the importance of selling a payment for your equipment – even leading with one. And motives aside, businesses will generally buy more things if they have more cash to do it. Financing is critical to achieving success here. But what about YOUR cash flow? As a dealer principal, cash flows are the life blood of success just like it is for your customers. So, how does your finance offering impact YOUR cash flows?
Conserving cash is one of the most important aspects of running any business. Since cash is the most precious of all business resources, it only makes sense to manage it closely and commit it wisely. Even when a business has more than sufficient cash to cover working capital requirements, surplus cash is typically placed in reserve for critical and unexpected business emergencies. Cash not only provides the points for the scorecard of business, but it is the lifeblood of business as well.
