Diversification helps business services firm grow

Published January 29, 2014 by Virginia Business

Keith Hungate likes to take a proactive approach to his business, which provides companies in Southwest Virginia, East Tennessee and Southern West Virginia with office equipment and information technology services.

“The goal is instead of [your computer] having a virus and it’s a crisis on you, we’re going to try to make sure that crisis doesn’t happen,” says Hungate, who began Marion-based Hungate Business Services Inc. in 1984.

In the past five years, the company has diversified, and its staff has doubled from 12 employees to 24. The company also moved into a larger, 19,000-square-foot building in the midst of the Great Recession.

Its ability to prevail during challenging times made Hungate Business Services one of 13 finalists at the 2013 Tayloe Murphy Resilience Awards. The awards, presented by University of Virginia’s Darden’s Institute for Business in Society, recognizes Virginia companies that have overcome adversity to grow and create jobs. Virginia Business is a sponsor of the program.

Hungate Business Services started out selling Xerox equipment through that company’s rural agent channel program.

In that program, Xerox enlisted local businesses to sell Xerox equipment, “and for that they provided some nice benefits — training, demo equipment, all of the complicated factors of a business we didn’t have to worry about, inventory or contracts,” Hungate says.

The downside of that business model, he says, was that his company had to rely exclusively on sales. As a result, the company decided to expand to IT services, because it often helped customers set up office equipment on a network. In 2010, Hungate Business Services acquired a small IT firm.

“We ramped up during the worst time, and a lot of that had to do with [the fact] we made a conscious effort to start building the IT business, and we needed people for that,” Hungate says.

Despite the recession, the company’s revenue has grown every year during the past seven years, Hungate says.

Hungate Business Services’ profitability was inconsistent from 2006 to 2012, partly because the company was investing for the future. Nonetheless, 2013 was shaping up to be the company’s best year yet, Hungate says. As of November, the revenue trend for the year was 25 percent higher than in 2012, and profits were on a path to exceed the company’s goals.

One of Hungate Business Services’ challenges is managing a multifaceted business that includes selling office equipment and providing IT services like off-site backup storage, spam filtering and network management.

“Our immediate goal is to develop our internal processes, have them predictable so they take care of themselves and raise the red flag when someone has dropped the ball,” Hungate says.