Posted: July 01, 2011

Small biz: Action Computers borrows from used-car business model

Mike Taylor

Mark Hope was on the corporate fast track at 32, a vice president for an insurance firm back East pulling in six figures, when he quit to launch Action Computers in 1994.

"I hated my job," says Hope, 49, a graduate of Littleton High School who used to request a back seat on business flights so he could run an extension cord for his T-1000 Tandy computer to the outlet in the plane's restroom. "I thought, ‘I'm going to try to do my own thing. If I fail, I can put a suit back on and march in line with all the rest of the guys again.'"

Starting out of his house in Aurora, Hope quickly built a retail presence with stores in southeast Denver and Arvada. Action Computers is built on the promise of prompt service - one day from check-in to technician's bench is the goal - and the notion that while just about everybody needs a computer, not everybody wants to pay cutting-edge prices.

"We're really about providing that technology that's one or two steps back," says Hope, who earned an undergraduate degree in business administration from Western State. "We're the place where you go buy a used car that's two or three years old that's still really good, but it's not nearly as expensive as a new car."

Continuing the car-dealership analogy with regard to computer repair - a big part of Action's business - he adds, "And there's a full service department where you can get your oil changed."

Much of Action's inventory comes from companies that are going out of business or getting new computers. Hope says that while Action's sales volume has remained steady over the years, the average computer sale has dropped dramatically - from $700 to $800 five years ago to an average of $135 to $160 today.

"Right now I've got computers on the show floor that are selling for $45 apiece - with Windows installed," he says. "We have $400 and $700 computers available, but there's a lot of folks coming in and saying, ‘Look, we've got to save some money.'"

Not surprisingly, small businesses are among those looking to save: insurance companies, call centers, dentists, veterinarians. "It's crucial for them," Hope says. "Let's say they want nine or 10 computers. Well, nine or 10 computers and a server here is $2,300." Compared to? "Oh, four or five times that ... 10 grand, maybe. And when you're a small business trying to get things going, not only do you need to save that money but you need a helping hand to get all these computers and the server strung together."

Hope attributes Action's survival in a cut-throat industry to two qualities: Staying in touch with customers, and not carrying any debt. Business is highly seasonal, so Action's employee numbers fluctuate between 25 and 45.

Then there's Hope's hiring criteria: "Are you conscientious? Do you have a work ethic? We'll teach you everything you need to know about computers. Do you have it in you to really care about the customers, to take care of them? That's what we're interested in," Hope says.

"It's easy to run a big ad and get people in the store; it's very difficult to make sure day in and day out you do what the customer needs you to do," Hope says, sitting in his cramped office at the University Hills Action store with General Manager Daniel Kelley, 33, who started off as a technician 11 years ago.

"I'm the owner and you see where my office is," Hope says. "It's two steps from the show floor. My name is on the website. Any customer who wants to talk to me - my business cards are on the front counter. You don't get that at Best Buy."

And then there's the debt, or absence thereof. "We've never borrowed a dime from anybody," he says. "Ever. If we want a semi truck, we save up the money to buy a semi truck. If we want a warehouse, we save up the money to buy a warehouse.

"You have to be a chameleon to survive in this business," says Hope some 17 years after striking out on his own. "Many, many, many have failed."
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Mike Taylor is the managing editor of ColoradoBiz. He writes about small-business money issues and how startups are launched. Email him at mtaylor@cobizmag.com.

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