Everything Old is New Again Kent Berkbuegler and Eduard Bursak saw the economic downturn coming before a lot of others did. As owners of Axis Telesolutions, Inc., they supply telecommunications equipment, often to companies that are expanding by adding employees or departments. They definitely saw a trend as those opportunities began to diminish. Luckily, their business also fit right in with another trend in today’s business world – that of reusing and recycling. The equipment they provide is primarily refurbished equipment, rather than new, which can mean considerable savings for a customer. In addition, they maintain a repair facility, where they do component level repair on phones and hardware associated with virtually any phone system that someone may have in their office. “People are holding on to their existing equipment,” says Kent “but they may not want to pay for a manufacturer’s maintenance agreement.” In today’s society, where electronic equipment is often viewed as somewhat disposable, Axis Telesolutions takes a different approach. Throwing something away when it breaks and buying new was not what Kent learned growing up in rural Missouri. “The way I was raised, if it’s broken, you fix it.” The initiative to make something out of nothing and to use old parts to fix things is a philosophy shared by Eduard who emigrated with his family from Belarus in the former Soviet Union in 1992. Because of these values being instilled in them, “it makes perfect sense for the two of us to be in this industry” says Kent. “We buy equipment that is out of service, or that has been used by someone who is upgrading or going out of business. We recondition it and turn it into resalable equipment.” The concept isn’t new, but in regards to telecommunication equipment, it was unheard of about 25 years ago. At that time, AT&T dominated the market, controlling all telephone equipment and charging very high prices to end-users. Upon the break-up of “Ma Bell” in 1984, equipment could be purchased from sources other than straight from the manufacturer. This allowed the formation of an entire industry and companies such as Axis Telesolutions. Finding the Right Components Kent and Ed met while they were both working for another company. Kent was working on a bachelor’s degree at ITT Technical Institute when he was hired. The company was selling telecommunications equipment and it made sense for them to expand into repairing equipment as well. Kent had a hand in establishing and managing a repair facility for them before later moving into the sales department. Ed had graduated as an Electrical and Telecommunications Engineer from Belorussian Railroad University before coming to the U.S., but was doing numerous odd jobs until a friend introduced him to the company’s owner. With his background, it was a natural fit and he was at last able to use his education and experience. He took over managing the repairs department after Kent. The two moved on to other jobs but kept in touch. They started talking about starting a business. As Kent explains, “my father owned a farm supply business, and I always felt that I’d own a business myself someday too.” What he didn’t anticipate, though, was having a partner. While it is extremely difficult to find the right person, he admits that if you can do so, business ownership can be a lot less stressful since you are able to share the burden with someone. Since Kent and Ed’s fundamental goals and values are the same, they’ve been able to make it work for the last 12 years. “A good business partner” states Kent “allows you to step away a bit and trust that your partner will do a great job.” The company had humble beginnings, starting out in Ed’s basement in 1998. After only about a year, the partners purchased their first building. Over the years they added to their staff, growing out of their space and settling in their current location in 2003, where they employ 15 people. Adding Another Line In 2005, Aaphix Communications, LLC was created as an off-shoot of Axis Telesolutions, Inc. While customers look to Axis to provide add-on equipment or repair their existing systems, Aaphix focuses on providing complete systems and doing maintenance on them. Aaphix is owned equally by Kent, Ed, and Dmitry Lebedev, another immigrant from Russia. Dmitry and a technician handle projects from start to finish. They design, engineer and install new systems, then provide ongoing maintenance to their customers. “Axis doesn’t require as much technical proficiency as Aaphix” explains Kent “but the product knowledge needs to be greater.” Since they are dealing with hardware for existing systems that are being used by their customers, the technicians need to be able to service an extremely wide variety of products and brands. On the other hand, Aaphix’s role is engineering and designing new systems. Kent praises Dmitry’s knowledge of the “network side of things.” “We’re very lucky to have an expert in the field who is also our business partner.” Right now, Aaphix Communications operates only in the St. Louis area, but the partners would like to expand throughout the Midwest, and possibly further, in the future. Unlike Axis, who can ship their refurbished products anywhere in the United States, Aaphix needs to have technicians on-site for system installations. Whether through adding more technicians or subcontracting the work, growth appears to be in the cards. Customer Service Answers the Call Over the years, Axis has faced an increasingly competitive market. Most notably, the internet has changed the way everyone does business. “It creates a more educated consumer, at least from a shopping and price comparison standpoint.” believes Kent. A customer can go online and probably find any piece of equipment they need. What sets Axis apart from online sources and the smaller “one-man” operations is in their level of customer support and product knowledge. “When you buy online” says Kent, you need to decide if you want to risk buying from someone you don’t know. You may save a little money, but is it worth it?” At Axis, if someone is looking for something that is not easy to find, they can let a sales rep do the leg-work to find the right product. “Purchasing departments in large companies may not know anything but a part number given to them by their IT department” explains Kent. “The purchasing department is happy to have a reliable vendor that they can call.” In addition, Kent points out that an online buyer may be missing important information, such as when an item might need a power supply to go with it. So while Axis is continuing to increase its online presence, Kent asserts that customer service is still their dominant feature. “If you call with a problem, you’re going to talk to the same person every single time. If you send something in for repair, someone will follow that return through from start to finish.” In addition to traditional customer service for purchases and repairs, Axis Telesolutions has the ability to take on projects that may seem out of the ordinary. For example, companies that have many different locations can send their phones to Axis where they will be repaired, then inventoried and housed in one location, until the company needs them again. Playing this Asset Management role is advantageous to both Axis and the customer. By trusting Axis with this task, they eliminate the need to have their own shipping, receiving and warehouse facilities. Extending their Reach Keeping up with new technology is another area in which Axis maintains its competitive edge. While Kent describes them as aggressive in taking on new systems, they are also cautious in deciding where to spend their time and money. When faced with learning to repair and service new products, they need to be sure that the demand for that knowledge will be there in the future. By being attentive to trends and aware of the cost/benefit ratio of training technicians in various technologies, they’ve been able to create some important niches. As an example, Axis is one of the few companies that does component repair for video conferencing. There are companies who rely heavily on this very expensive technology, and after investing so much in a system, they will obviously need to have it repaired if something goes wrong. “When you have a $30,000 system, you can’t just throw it away; especially when we may be able to repair it for a reasonable price” states Kent. In addition to video conferencing, the company’s latest frontier is the wireless world. In addition to repairing handsets for wireless phone systems, they are starting to broker high-speed connectivity. “If we engineer a system for someone, we can tell them what they need and they can make the call to a local data services provider themselves. But there’s no need for them to worry about it; we can take care of it for them” explains Kent. As Kent asserts, it all boils down to having the right people on staff to support the services they are selling. “That’s where many companies fall flat. They offer services that they can’t deliver because they don’t have the right skills or knowledge.” Knowing When to Disconnect The ability to recognize their weaknesses as well as their strengths has served Kent and Ed well over the years. Kent recommends that all business owners should learn to delegate tasks as soon as they have the opportunity to do so. “There is probably nothing that you could put in front of me, or Ed, that we couldn’t figure out how to do, but that’s the problem; you can’t do everything, so you need to apply your skills in the proper area.” As he explains, “I don’t need to know the ins and outs of things like the accounting software.” He adds that he doubts there are many companies that grow and prosper when the owner has his hands in everything. “It can be difficult to do, but you need to step away from those things as soon as possible. You need to hire quality people that you can rely on, and then give up control of those tasks and trust that they will do the job.” Making the Right Connections This attitude has proven effective for Axis Telesolutions in choosing the companies that they rely on for their services as well. In 2006, the partners felt it was time to review the accounting services they were receiving. They were using a “one-man” firm, and sometimes ran into delays or reliability issues. More importantly, however, was that they felt that most accountants, including the one they were using, simply processed numbers. “Ed and I like to be creative” says Kent. “We believe that there are ways to save tax dollars appropriately and legally, but we weren’t getting that kind of advice.” They were introduced to Diel & Forguson, LLC and found the tax advice they were looking for. The firm prepares the tax returns for Axis Telesolutions, Aaphix Communications, and various associated partnerships that handle their properties, but also provides annual tax planning. “Since we do have multiple companies, we wanted them all under one umbrella,” says Kent, “and we expect our accountant to be able to look at the big picture. We need them to say ‘you should be doing this’ or ‘here are the tax implications of doing that.’” One of Diel & Forguson’s first suggestions was for Axis to make an election to be taxed as an S Corporation rather than a C Corporation. This election requires a Business Valuation, which is another service that Diel & Forguson was able to provide. The change has resulted in considerable tax savings for the company. Kent describes Axis Telesolutions, Inc. as “just a small company that tries to do what’s best for our customers. We look at their situation and offer solutions that best suit them financially and technology-wise.” Likewise, they have found in Diel & Forguson an accounting firm that does the same for them. u Click here for photos. Axis Telesolutions, Inc. 2110 S. Vandeventer St. Louis, Missouri 314-333-4250 866-867-2947 www.axistelesolutions.com Aaphix Communications, LLC 314-880-4600 877-880-4604