A Plan That Pointed to Success : Retail: Larry Imperiale, 1986 winner of SDSU’s business plan competition, saw a niche among the point-of-sale giants and filled it.
Not all winners of the annual San Diego State University business plan competition go on to start a business, much less become successful.
But Larry Imperiale did and is.
His company, SalePoint, has become a leading producer of point-of-sale systems used by specialty retailers to track sales and inventory and to improve store operations. SalePoint expects to do more than $4 million in sales in 1990, only its third full year in business. SalePoint systems, which basically are cash registers linked to personal computers, consist of SalePoint-designed software and International Business Machines hardware.
Imperiale’s company has thrived despite heavy competition from corporate giants such as NCR, Fujitsu and IBM. Among SalePoint’s successes are agreements to supply systems to retailers such as Williams-Sonoma, The Nature Company, Egghead Software and Universal Studios in California and Florida.
Imperiale, 32, attributes his success in large part to the annual SDSU business plan competition, which he won in 1986 shortly before receiving his masters in business administration degree. The young entrepreneur said the competition forced him to focus and concentrate his ideas in coming up with what became the blueprint for starting SalePoint in 1987.
Business plans are documents that entrepreneurs use to lay the groundwork for a new enterprise. The documents, which contain an array of market, technical and financial information, also serve as marketing tools used to attract capital from investors or lenders.
Each year, SDSU sponsors a competition to encourage business students to come to grips with the hard realities of starting up a new business and to foster the entrepreneurial spirit. The competition is held every December and is judged by an outside panel, including San Diego business executives, bankers, venture capitalists and journalists.
For Imperiale, a Redwood City native who attended SDSU’s graduate business school while holding down a full-time job at Triad Systems, his contest entry became “the vehicle for taking my idea and putting brackets around it.”
“The plan was a way of saying, here’s how to go about doing it, forcing me to write it down, plan it out and anticipate all the obstacles I’d run into,” Imperiale said. “Academically, (the contest) let me tie in everything I learned through my business school program through one exercise. That’s what’s lacking in most business schools. There is so much theoretical stuff that you lose touch with the pragmatic.”
The thesis of Imperiale’s plan was that there was an opportunity in the retail point-of-sale market to develop a system suited to specialty retail stores. Imperiale knew what he was talking about: he was working in point-of-sale products for Triad Systems.
At the time he wrote his plan, most of the advanced point-of-sale systems offered by IBM, NCR and others were targeting very large operations such as department stores that were likely to have 100 or more cash registers per location.
Smaller stores and chains were being neglected, Imperiale said, because it was easier for the manufacturers to sell and service the larger accounts. And not many small businesses could afford the cost of the IBM and NCR systems, which made economic sense only if the cost could be spread out among dozens of “points of sale,” or cash registers.
After Triad declined to take up his idea, Imperiale resigned and started out on his own. He soon took on as his partner Alan Grant, a retired San Jose venture capitalist living in Coronado and a former national director of the American Electronics Assn. Grant helped Imperiale navigate the rough financial waters that all start-up companies encounter.
Imperiale’s company set out to develop a product geared to retailers with less than 10 cash registers per store, and costing half what IBM was charging per register. SalePoint’s system would also use operating software that permitted store managers to use the computers for a variety of purposes. A drawback of IBM’s proprietary software used in its large-store systems was that it was good only for the point-of-sale system, Imperiale said.
The product SalePoint introduced in 1988 was good enough that IBM accepted the company as an “industry remarketer” of its products, a tacit admission that SalePoint could serve a computer market that Big Blue couldn’t, IBM’s Beverly de Luise said Monday.
“IBM depends on its industry remarketers to help us get into niches that IBM does not have solutions for,” said De Luise, a Raleigh, N.C.-based marketing representative who has responsibility for store systems products. “Theme parks are a good example. SalePoint has sold IBM hardware into Universal Studios. We use them as marketing arms and legs for us.”
Despite contractual terms that prohibit SalePoint from selling its software with other brands of point-of-sale hardware, Imperiale said his relationship with IBM has worked well. The main advantage has been the sales leads that it receives from IBM salespeople, who receive the same commissions from a SalePoint deal that they would from selling the systems themselves.
The industry term industry remarketer has come to replace value-added reseller , or VAR, as a description for a company that buys computer hardware, then adds its own software, hardware or technical expertise before reselling the package to the end user, Imperiale said. There are an estimated 8,000 such companies in the country, according to International Data Corp., a market research firm based in Framingham, Mass.
SalePoint’s five-year, $5-million deal signed last June to supply point-of-sale systems to Williams-Sonoma, a San Francisco-based retailer of specialty cookware items, was “a real feather in their cap,” said Thomas H. Friedman, publisher of Retail Systems Alert, a Newton, Mass.-based industry newsletter that reports on retail automation trends.
“There are companies that are bigger than SalePoint, wealthier than SalePoint, with more technical resources than SalePoint, but there are few companies with the tenacity of SalePoint,” Friedman said.