In struggling economy, Wangard sees computer business grow significantly
The slow economy may have dragged some businesses down. But an economic see-saw effect has given a boost to other companies that are poised to capitalize on the opportunities.
Steven Wangard of Vanguard Computers is attempting to do exactly that — and judging from sales figures — he is succeeding. The Wauwatosa-based reseller of computer hardware and software products and related services ranks in the top 150 Hewlett-Packard dealers nationwide, and is in the top 1% of Hispanic-owned businesses.
“In the last year, I’d say we’ve done a good 15% to 20% or more over the previous year — if not more than that,” Wangard said.
That’s not to say Wangard has not noticed an economic downturn.
“I think that we did notice a downturn and more competition in 2000,” Wangard said. “It slowed down — I’d say in August of last year. It’s a herd mentality. Consumers have not been buying as much as they usually would. Where I am seeing a slowdown is in the behavior of business people who are being overcautious. They started holding off on purchases. But they can only hold off so long before staff starts screaming bloody murder.”
In response to the economic times, Wangard said his firm has gone back to its core competencies.
“Our growth is in the same area it has always been,” Wangard said. “But we have gone back to our core essentials of dealing with clients — not to cost-cutting. In hard times, you go back to your basics. In other industries, there has been a strong degradation of proper support to clients — things like general courtesy. What is happening is that people who have that mindset and think things come easily to them will no longer be successful in business. It’s as simple as returning a person’s phone call.”
Service essential
Wangard feels that in down times, some firms will actually cut back on crucial customer care — leaving themselves vulnerable. He bases that theory not only on experiences in his own industry, but on his experiences shopping for an automobile.
“I’ve been looking for this car for three months,” Wangard said. “I have seen salespeople — and even managers at car dealerships — who don’t return phone calls. Friday night, I was at a restaurant in Delafield. I saw the car I wanted with dealer plates — and I called that dealer. Still, they did not bother to get my name and number. I went into the dealership, and the person who was there did not want to negotiate, and did not want to work with me on the car they had there on the floor because it was not exactly what I wanted.”
Wangard said he had worked in the auto industry 20 years ago — when it cost $50 to get a single interested body in the door.
“You’ve lost $50 if they walk out — and then you lose the potential profits on the sale,” Wangard said. “Now it costs more like $100 to get a person in the door. It costs big money to make these mistakes.”
Wangard said that is the type of mistake his competitors are making, adding that he normally competes with locally-owned firms, such as Paragon Development Systems and AE Solutions. But in some cases he bumps heads with manufacturers such as IBM Corporation, Dell and Gateway.
“I have two competitors on my Hewlett-Packard business — but they don’t even cause a blip on my charts,” Wangard said.
Even major manufacturers — and stalwart local firms — can fall down in basic areas like professional presentation, according to Wangard.
“Recently, I was working on a project for UW-Stout,” Wangard said. “I found out later that only two people put in professional bids — us and IBM. Everyone else’s wasn’t even worth looking at, according to the reviewers.”
Wangard feels that many companies and their sales forces are still fat and corn-fed from the booming economy — and are not in any condition to chase after their own supper.
“When the economy was good, the economy bred people who are good as order takers,” Wangard said. “In a down market, there are still people buying, but these people are demanding better service.”
Even more service
Apart from basic customer care and courtesy, Wangard said Vanguard is having success with adding even more customer service to its mix.
“Some level of service just makes your life easier.” Wangard said.
According to Wangard, 60% of Vanguard’s clients are governmental entities, and one of the firm’s primary goals is to expand its reach into the corporate and private sectors. Service may be the way to do that.
“It’s tough,” Wangard said. “Our whole company is geared for and has infrastructure to handle government projects — from financing to logistical services. It would be hard for our competitors to come in there and be profitable. When things were lush, the competition stayed away from government — but now we see them coming back.”
Wangard’s reaction to the threat is swift and decisive.
“We are hiring salespeople dedicated toward corporate sales,” Wangard said. “We are heavily promoting that area and putting resources in that area — more advertising and more dedicated people.”
In fits and starts, the strategy seems to be working.
“We had Johnson Wax walk in the door and start talking to us,” Wangard said. “We wound up making two custom-configured machines. They are unique — something they could not even get from a manufacturer — costing $8,000 apiece. We have had a lot of $2,000 to $3,000 purchases. We have high-end people negotiating $2.5 million purchases.”
Assistance from Vanguard divisions that provide value-added services is allowing Vanguard to de-commoditize itself, Wangard said.
“Companies are outsourcing things they can’t do in-house,” Wangard said. “We’ll get entities that will buy equipment and warehouse it. But some of the time, we receive a product for a client, stage it, and deliver it. Without our help, a lot of that stuff gets screwed up on an ongoing basis, particularly if things are tight and the staff is overloaded. Sometimes it just doesn’t make sense. One entity wanted to purchase 450 machines — and we got the contract not because of price, but because our level of service made sense for them. A company might need a large number of machines deployed on a timely basis, but they don’t have the staff to handle it. Why would they hire staff for the deployment and then six to nine months down the road you are firing them?”
Powering through a slowdown
Taking advantage of your competitors’ cutbacks in service is one way to grow during a slow period, according to Wangard. Eating the roadkill left over once you have run them into the pavement is another.
“There is a trend torward consolidation — elimination of smaller suppliers due to transactional costs,” Wangard said. “We have been fortunate that businesses have been consolidating in our direction. Clients have decided who can give the best value.”
Wangard stressed that it is important to keep on hiring during a slowdown — and what better place to look for talent than in the wreckage of your failing competitor? And the detritus of corporate war can be raided for more than people.
“Some people may not be competing with us, but simply have a similar business,” Wangard said. “But we absorb them. Convergent Technologies — they just filed for Chapter 11. So we took over their office space and all their furniture.”
Convergent Technologies was a high-level provider of technical computer and networking on-site services serving the northwest suburbs of Chicago.
“They were selling hardware and networking services — and they lost their focus,” Wangard said.
July 20, 2001 Small Business Times, Milwaukee
