Optitech - Points on Entrepreneurship - Article Example

• As was in the case of the athletics competition that Jim Harris took part in, where he won from the guys who should’ve beaten him easily
• After his graduation, Jim Harris moved to San Diego with his girlfriend, but soon after moving, he ran out of money and came back to his hometown, Denver.
• After coming back to Denver, he worked with a supplier of remanufactured laserjet toner cartridges for 3 months till it closed down

• When the company closed down, he asked his parents for money, which amounted to $8500, and started selling the cartridges in his car
• As Harris decided of opening Optitech, a proper way of refurbishing the laser jet toner cartridges had come, which enhanced the performance of the cartridges
• To start with, he started targeting businesses that had large print volumes like hospitals, legal, and accounting firms

• To grow, and build a recurring base of revenue for his company, Jim Harris knew that he could not only rely on the small businesses and would have to get some big accounts, and by Summer, he was generating a revenue of $12000 monthly
• Soon after, he got a large order from a hospital of $118,000, which helped him in collecting a large working capital and got him an entry into the healthcare industry
• As time passed, Jim Harris set up his plant of remanufacturing operations using empty cartridges in 1995 and acquired quite a few end-users, including sole proprietors and large firms and by the late 1990s, the monthly sale of Optitech had gone up to $800,000 monthly

• In 2004, Jim Harris learned that a national-level office supply store, AOS, was accepting bids from toner remanufacturers, so he applied too
• Optitech was the smallest company in the running, with annual sales of $15 million, but secured a 5-year deal after a continuous effort of more than a year.
• To start with the AOS account, Optitech invested about $2.5 million in the inventory, which was a huge amount for Optitech
• The number of credit days that AOS was getting from Optitech in the earlier stages of the deal was 140 days, because of which the receivable amount that Optitech had to collect from AOS went up to $12 million by early 2006, however, AOS brought the credit days down to 70 days

• By mid-2006, Optitech was earning good profits, and their annual sale to AOS went up to $30 million annually
• As the industry started getting matured, the original manufacturers started thinking of ways how to interrupt the business of remanufacturers of toner cartridges
• Jim Harris found this to be a major threat for Optitech and said that they might have to work hard to get ahead of this situation

• Jim Harris was ready to face this battle and for that, he contacted ‘Shield and Company, an investment bank, to give him an overview of how the business is going to perform in the future, what challenges would it be facing, what decisions it should take in the future, etc

• Based on the trends of the industry, ‘Shield and Company forecasted future cash flows for Optitech for the year 2007, which showed a sale of $50,000,000 annually, with a profit of $12,500,000 Read More