Kaboom! Featured

9:50am EDT July 22, 2002

CR Technology, like most companies, had a business plan.

It had been crafted by people with experience, and reviewed and approved by venture capitalists — you know, the guys in the dark suits who want to know how many times you brush your teeth each day before they’ll even think about opening their checkbooks. The i’s were dotted and the t’s were crossed and the plan was laid out in a boardroom, not on a cocktail napkin, but in the end, it didn’t matter.

The company started out roaring in 1983 with its optical inspection systems, landing customers such as Motorola, General Electric and Delco. Within three months the phones stopped ringing and sales dried up.

“We won a lot of initial business, but they were customers who were likely to not be repeat business,” says Richard Amtower, president and CEO of the company. The problem was the product was geared for a very specialized client who needed a lot of engineering resources to make it work.

CR sold the cameras, processors and computers, and left it up to the manufacturer to integrate the inspection device into its complex manufacturing processes. After the first few early adopters signed up, there weren’t a lot of other companies willing to invest so much of their own resources into a product, or they simply didn’t have the resources to even consider it.

“It wasn’t that hard to figure out the plan wasn’t working,” says Amtower. “The surprising thing is someone hadn’t picked up on it before. But it quickly became apparent it wasn’t going to work.

“Most of the market didn’t have the kind of engineering support needed to use our product. We were quickly running out of business. Most of the market wanted turnkey solutions.”

With the company running out of money, Amtower steered it toward the turnkey products the market was asking for. This took it out of survival mode, but created problems of its own. Every order was basically a custom one. They were labor intensive, had little chance for repeat business and had low margins.

CR Technology eventually sold the entire product line, using the money to finance a generalized visual inspection product, which is what it is successfully selling today.

“You didn’t have to be a rocket scientist to figure out something needed to change,” says Amtower. “In stark numbers, our plan called for $1 million or $2 million worth of business to be booked in the near term. Of that number, next to nothing came in.

“It was so clear and obvious that it was failing, but why hadn’t it been obvious before? I checked things out, talked to customers — everyone was pretty positive. That’s the deception. The early adopters are all enthusiasts, and that enthusiasm can carry over.

“We made up a number of plans. It seemed we were tearing up plans twice a year and writing new ones. This is becoming common for technology companies.”

Amtower offers the following advice:

  • Anticipate that your plan might fail, especially if you are a technology company. Don’t get carried away by the initial burst of sales. “It’s easy to overcommit on personnel and inventory that will leave you in a severe financial bind. The initial sales are seductive.”

  • Cash is king. If you fall into this situation, quickly take control. Look to your employees as key resources. If you have to downsize, the employees who are left are your key to survival. Make a commitment to them.

How to reach: CR Technology, www.crtechnology.com

Todd Shryock (tshryock@sbnnet.com) is SBN’s special reports editor.