Brothers turn father’s ailing firm into Sh58 million copier businessMonday June 29 2015
Tawfiq Magan knows first-hand what it is like to be thrown in the deep end.
When his father asked him to take over Total Office Solutions in 2005, he felt like he was being asked to save the Titanic. The company was quite literally sinking under the weight of mismanagement by its former managing director.
His father, a lawyer by profession, had invested in the company in 2003 and stayed as a silent partner.
By the time he discovered the extent of the problem, the company was on its death bed. He had by then sunk in much of his own money, making him the majority shareholder with a stake of about 65 per cent. He sacked the managing director and put his son in the hot seat.
Mr Magan had no experience running a company and was, understandably, terrified.
“My initial plan was to sell off the assets and pay off as much as we could of what we owed the banks and then look for something else to do,” he told Enterprise.
After three months, he realised the firm had potential and decided to give it another three months.
He must have done something right because 10 years later the company is still around, having made Sh58 million in revenues last year as well as being listed among the Top 100 companies list last year.
Total Office Solutions pioneered the concept of refurbished photocopiers. The company imports used copiers, strips them apart, replaces all the parts that are not working properly, puts the copiers back together and sells them as practically new.
Their customers are mostly corporates and small businesses that cannot afford brand new copiers. They source the copiers from Europe – Sweden, Netherlands, Germany, Spain and France.
“Europe is competitive in terms of quality and shipping compared to the United States,” he said.
The concept proved so successful that the company now has more than 20 competitors. While he invites competition, he says some of his rivals simply import and sell used copiers without refurbishing them.
“They are able to undercut us on price because they don’t work on the copiers at all like we do,” Mr Magan pointed out.
To differentiate its products, the company sought ISO certification in 2012. Adding that to being a member of the exclusive Top 100 Club is another big boost in terms of customer trust.
Other than refurbished copiers which bring in 60 per cent of its revenue, the company also sells compatible toners which have become popular in the market because they retail for a fraction of the cost of a new toner cartridge.
They source the compatible toners from China which has a huge industry, paying special attention to select the right factory to avoid buying cheap quality products.
Mr Magan says the company is constantly playing catch up to global manufacturers of printers who come up with ingenious ways of forcing consumers to only use their products.
“One top manufacturer introduces brand new printers into the market every six months and every time the toner is shaped differently forcing consumers to buy that specific toner for that specific printer,” he said.
Mr Magan explained that manufactures do this to stay one step ahead of rivals who make compatible toners so that they have a monopoly on toners for about six months as we develop a compatible toner for the new model.
Total Office Solutions has 50 staff and two retail outlets in the central business district.
They sell their products outside Nairobi using dealers in Mombasa, Kisumu, Nakuru, Meru, Eldoret and a few smaller towns.
The introduction of value added tax (VAT) on photocopiers one-and-half years ago intensified what was already vicious competition in the industry.
“That was a huge knock to us. Many of our competitors sell without VAT by mostly selling on cash basis without receipts. We can’t do that. Before VAT was introduced we were on a level playing field.
“As soon as it was introduced, we were automatically 16 per cent higher than our competition. We lowered our prices and made less margins in order to compete,” he said.
The senior Magan is still a silent partner but Tawfiq is helped in the management by his two brothers – Zahid Magan who runs the copier division and Faheem Magan, in charge of the company’s stock.
Other than finance and purchasing, Mr Magan also does all the design work for the company.
He has a background in design having worked as a web designer in the UK where he also studied and obtained a degree in business information technology from Kingston University.
He was born in Mombasa and raised in Kenya until he was 13-years-old when he left for the UK.
“Kenya has a very challenging business environment compared to England where there is law and order and police are your friends,” Mr Magan said.
“Here you are scared when you see a policeman or city council officer entering your office because you know they are not operating on a professional level, more of self-interest.”