John Tamaro has every reason to worry. And yet, John Tamaro is excited. Because Tamaro's time and attendance dealership just recently completed two years of software development, the company's sales have been limited. And as a start-up, Scan Technology Intl. faces a lot of uncertainty - and no guarantee of profitability - over the next year or so. So, how can Tamaro be excited? He explains, "Many employees still punch time cards on manual cards on manual time clocks. Every company with a manual clock represents an (sales) opportunity."
The value of optimism - New business owners need a great deal of personal confidence, Tamaro says. "Upon starting Prosicom, I thought we could become profitable," he says. "But you have to know you'll make money. Sales generally don't come easily the first year. And it's tempting to want to give up. That's why businesses that fail generally do so in their first year."
According to most industry estimates, only 25%-30% of U.S. companies use PC-based or electronic time and attendance systems. Despite the number of companies still using manual clocks, Tamaro knows that because sales competition is fierce in this market, success will not come easily for Scan Technology.
Prior to founding Scan Technology, Tamaro operated an automatic identification and data collection (AIDC) dealership in Venezuela called Prosicom. Prosicom, which is now 25 years old, was in business for more than two years before it was able to break even. "The experience of growing a business from the ground up taught me a lot of valuable business lessons that I'll apply to Scan Technology," Tamaro says.
In the following pages, Tamaro, who still owns and operates Prosicom, discusses his plans to make Scan Technology (West Newfield, ME) profitable.
Do You Have The Right Business Outlook?
As a result of Prosicom's early struggles, Tamaro learned several important business lessons, including:
The value of persistence - According to Tamaro, persistence is another important quality for new business owners. "With Prosicom, a lot of prospects wanted us to quote them a price on a system," he says. "But they often wouldn't decide to buy for several months. A reseller's natural inclination is to focus on the prospects who are closest to buying. But you also have to keep following up with prospects who are a few months away."
The value of patience - Scan Technology developed its own time and attendance software, as opposed to reselling a package from a third party. According to Tamaro, VARs that develop software often release it prematurely. However, Tamaro field tested Scan Technology's software for over eight months before he felt comfortable taking it to market. "Because I tested it extensively, I wasn't as concerned about how it would perform. The extra testing outweighed the value of making sales a few months earlier. And because I didn't have to worry about bugs with the software, I could then focus all of my attention on sales."
VAR Action Points
Tamaro is using several approaches to carry Scan Technology through its initial struggles, including:
A heavy reliance on the Internet - One of Tamaro's primary objectives is limiting overhead. According to Tamaro, the Internet will play a key role in accomplishing that goal. For example, Tamaro will send customers updated versions of the software over the Internet. A costlier alternative is using an express carrier to ship software. "I'll be able to save hundreds of dollars by e-mailing software to customers," he says.
Scan Technology also has a Web site.
Software development - Tamaro had to hold off on making sales while the company's software was being developed. However, he says Scan Technology was still better off developing software on its own. "Occasionally, customers need new functionality from software," Tamaro explains. "But resellers can't change a third-party developer's software," Tamaro says. "Modifications are only made at the discretion of the developer. I didn't want our customers to be handcuffed that way."
In terms of customers, Tamaro says Scan Technology will target companies with 25-plus employees. He does not expect to target a specific vertical market, in that companies with at least 25 employees are spread across many markets.
Establish a dealer network - Scan Technology eventually plans to market its time and attendance software through a dealer network. Tamaro says marketing the software through dealers will help multiply Scan Technology's sales. "One dealer could sell to 50 end users," he says. "Dealers are usually interested in complementing the software they already resell."
Beating The Big Boys
As a start-up company, Tamaro knows Scan Technology will have to compete with established companies like Kronos, Konetix and Stromberg. And Tamaro knows that merely offering a lower price still may not be enough to win sales. "Some prospects don't feel comfortable buying from a newer company," he explains, "because they wonder whether a new company will be around in a year."
Scan Technology doesn't yet have the benefit of name recognition. However, Tamaro is encouraged by the fact that, as a time and attendance dealer, he will target human resource managers, who, he says, generally focus on system functionality. "Human resource managers want to make sure employee hours worked can be collected without complications," he says. "They will buy from newer dealers with competitive products."
Tamaro is taking a different approach than some of his more established competitors. Time and attendance software typically includes a payroll processing module, he says. Tamaro did not include payroll processing in his software. "Most end users already have some type of payroll processing system," Tamaro explains. "Why make them pay for something they probably don't need?"