As the managed print services market continues to expand, traditional copier and printer businesses are expanding into each other’s specialties. The downturn in the economy continues to push dealers into new areas of sales and service. Here are a few items to consider before committing to offering a new product or service.

Magazine ads, business shows, word of mouth and the Internet are all great places to start looking for manufacturers that are actively seeking established businesses to become authorized resellers of their products. You can look for products that can complement the products you currently sell. You may take on a competitor’s product or step out of your comfort level and stretch the boundaries of the products you sell.

Searching the telephone Yellow Pages and Internet is still a quick and easy way to see if certain products are already offered in your area by multiple vendors. Do not duplicate a product or skill that is already oversaturated in your area.

Establish a company policy to have your entire staff keep track of any products or services that are requested by (potential) customers who randomly call in or ask a sales or service rep. Depending on the size of your current customer base and extent of advertising, you may be surprised at the number of requests your staff turns away on a regular basis. As you review these unfulfilled requests, calculate the profit margin that is possible when selling these items.

There may be sound business reasons why a specific product is not easily acquired by a consumer. The sought after item may be obsolete or have very little profit potential for the seller. Hopefully, you may find a trend of a profitable product that is lacking easy access in your community. Look closely at the supply and demand in your area. Survey other businesses in your area.

Items as diverse as shredders and software are easy to become authorized to sell. It is necessary to find a niche that meets your company’s interests and the consumer’s need.
If you are currently an authorized dealer of another product, investigate the repercussions that may take place when your manufacturer discovers you have taken on a new authorization. In most cases, there will be no problems. But if there is an exclusivity clause or a problem that has the potential of dividing your loyalty to your current vendor, you may be in for some problems.

Once you have figured out a potential product (line) to consider, calculate the real cost in dollars, labor and overhead it will cost your company to expand your product offering. Items to consider:

1. Actual labor cost of employees while they learn about the new product. Loss of revenue from selling your current products as your employees focus on the new products. Your customers will also be burdened with new sales calls as your staff introduces the new products to your current client base.

2. Consider the real dollar cost of advertising, training, parts, supplies, warehousing space, showroom space, Webpage additions, brochures, signage and business card changes to include the new product.

3. I have yet to mention the actual cost of paying for the new product. Hopefully, you can negotiate a deep discount on your first order or be able to defer payment on the initial order for 90 to 120 days. The better your company’s credit history and bank account balance, the better chance of negotiating a cost saving deal. You have more leverage before you consummate the deal. Maximize this pre-signing time to optimize your buying power.

4. Some vendors do not require any long-term commitment or specific quotas, but you usually will not receive as deep a discount without one. You may also have to pay for service and sales training. This training can cost thousands of dollars plus the cost of travel and lodging.

5. Calculate the reasonable profit margin in selling the new product line. How long will it take to recoup your initial investment? Is there an expectation of reasonable profit in an acceptable time period?

In your initial discussions with a manufacturer, be very specific when discussing quotas, rebates, discounts, required start-up inventory (product, supplies, parts), training, sales and service support.

Request a complete copy of all contracts that you will be required to sign. Read every sentence. If there is something you do not clearly understand, seek help from an attorney that specializes in contract law. BTA members may contact Bob Goldberg, BTA’s General Counsel at 312.648.2300 for a no charge telephone consultation and contract review. In most cases, it is a prudent business decision to have a knowledgeable lawyer review any contract before you sign. Some manufacturers allow extensive revisions to their standard contract; others have a take it or leave it policy when dealing with master dealer contract changes.

If all of this seems a little more than you are willing to undertake, there are alternatives.

You can also buy products from a manufacturer’s designated distributors. You can legally buy products and become authorized through the local distributor on certain products within a manufacturer’s product line. This gives you the best of both worlds— official authorization without any long-term contractual commitment. Many distributors offer access to the OEM’s rebates, sales contests and other quota-based incentives.

With the help of the distributors, (many interviewed as part of ENX’s Business Profiles and Company on the Move) you can earn manufacturer’s authorization with many product lines. Necessary training can be achieved through Internet training and testing. Full-color authorized certifications can be printed off the Internet after achieving online training.

When dealing with a distributor or the actual manufacturer, you can pre-test the manufacturer’s hotline and response of the local sales office. Call the hotline. See how long you are on hold. What is the general demeanor of the reps? Call the local manufacturers’ regional office. Leave a message for the local sales rep. How quickly do they response to a voicemail message that you leave? If the OEM’s or distributors have a local office, visit their showroom and warehouse facility in person. Call out of the area dealers and ask for their candid opinion on the pros and cons of taking on a new product.

Be aware of how you will be able to acquire parts, supplies and technical help if you are no longer actively selling the product. An ounce of prevention can eliminate ten tons of problems in later years. Now may be the perfect time to explore the possibilities of expanding the products and services that your company is representing. Bigger may be better. Realistically review the risk versus reward that taking on a new product line will create.

The most effective way to cope with change is to help create it.

Ronelle Ingram, author of Service With A Smile, also teaches service seminars. She can be reached at ronellei@msn.com or visit her website www.ronelleingram.com