TAKING ON THE GIANTS.

DOCUSOURCE INC. COMPETES WITH THE LARGEST COPIER COMPANIES IN THE UNITED STATES, AND MANAGES TO KEEP ITS CLIENTS COMING BACK

XEROX Corp. may be the Goliath of the copy machine business, but Docusource Inc. has found that, with the right attitude and ammunition, you can take on the giants.

The Chatsworth company sells and leases what its executives see as the best office copiers on the market, backed up with a guarantee of fast, efficient service.

The seemingly simple formula has allowed the independent to grow revenue 700 percent in the last eight years. Today, Docusource has 1,500 machines in the field cranking out an estimated 30 million copies a month. The company's goal is to grow revenue from $21 million in 1999 to $100 million by 2007.

"It's a huge marketplace dominated by Xerox, but we find we can compete very effectively," said Lester Walker, chief executive and partner. "We're not necessarily a price leader, but we provide the best service."

With offices in Chatsworth, Irvine and Rancho Cucamonga, Docusource has positioned itself to go after the estimated $2-billion copy machine market in Southern California.

The company's commitment to service is illustrated by the fact that 30 of its 105 employees are roving service technicians who take care of 300 clients in L.A., Orange, Ventura, Santa Barbara, Riverside, San Bernardino and San Diego counties.

Docusource guarantees that its machines will be up and running 95 percent of the time and that its technicians will be on the job within four hours of a call.

"This is mission-critical equipment," said Walker. "Companies can't afford to have it down."

One of the keys to the company's success is its cost-per-copy plan, which accounts for more than 50 percent of sales, said Walker.

Instead of buying a machine, a company leases the equipment based on the number of copies it uses. That gives executives the flexibility to switch to larger or smaller machines depending on their copying needs.

"Executives like it because it frees them from being in the equipment business," said Walker.

Too much down time

Joe Serra, a buyer for Yamaha Motor Corp. USA, said poor service was his biggest frustration with Xerox and the reason his company switched to Docusource to take care of a large part of its copying needs.

"I was spending two hours a day of my own time trouble-shooting equipment, and that's not good," he said.

Docusource has made good on its promise of fast service and 95-percent uptime for its equipment, and through the cost-per-copy plan Docusource takes care of all the service and supplies, including paper and toner.

"It really cuts down on the paperwork. We ended up getting five machines, and we only have to cut one check a month," said Serra.

As an independent, Docusource isn't bound to any one manufacturer, so it sells what its executives believe are the best copiers in the business. Walker is quick to admit that Xerox, the company's biggest competitor, makes the best high-volume copier. So the company buys used Xerox machines and completely rebuilds them at the company's De Soto Avenue headquarters.

RICOH, on the other hand, was the first company to make a laser copier that ties directly to a company's computer network. Companies increasingly are switching to laser machines to avoid the extra steps of printing a document and having to walk it over to the copier.

Canyon can't be beat for color copying, says Walker, so the company offers those machines as well.

"This level of equipment allows us to play in a bigger environment," he said.

Docusource's target market is large corporate clients, such as CB Richard Ellis, Fox Television and Hilton Corp.

When a company wants to upgrade to newer or better machines, Docusource will offer to buy their old equipment. The company then fixes up the old machines and ships them off to brokers in the Middle East or Latin America.

The wholesale division accounts for 25 percent of sales.

Walker concedes that in a business dominated by Xerox it can be tough convincing executives from a large company to go with a relative unknown. "Nobody gets fired for buying from Xerox," he quipped.

But unlike other independents, Docusource has the sophistication in sales and marketing to go after the big-name clients and the service to keep them happy after the sale.

Taking on IBM 

Walker, who previously worked as a turnaround specialist for Deloitte & Touche, was a consultant to Docusource for four years before joining the company as CEO and a partner in January 1994.

"I realized this could be a $100-million business," he said of the opportunity.

The other owners, Dave Marder and Jon Rashap, brought sales and marketing savvy to the partnership; Walker brought his business expertise and banking contacts that he used for a needed infusion of cash.

In 1998, the company took on two additional partners, a couple of long-time independent dealers out of Orange County named Craig Wiegman and Jerry Ruppert.

The move gave Docusource a bigger foothold in the lucrative Orange County market and doubled the size of the company.

Tom Kardashian, a San Fernando Valley-based business executive, said he got to know Docusource through The Executive Committee, a group of CEOs that act as sounding boards for one another.

He attributes the company's success to the drive and focus of its partners.

Spotlight

Docusource Inc.

Core Business: Copy machine sales

Revenue in 1993: $3 million

Revenue in 1999: $21 million

Employees in 1993: 9

Employees in 2000: 105

Goal: To become the largest independent copy machine dealer in the U.S.

Driving Force: Demand for reliable, cost-effective copiers by corporate clients.