Raising the bar Featured

8:00pm EDT April 25, 2007
The first year Scott Doores’ software company won a prestigious service award, he said he didn’t really know what the award was for, but he was happy someone was paying attention to him and AudioTel Corp.

The second year, he wanted to win again, just to prove that the first year wasn’t a fluke. But after he won for the third straight year, he decided he and his 75 employees were going to have to bust their butts to keep their streak going. “You get that third award, you’re driven,” the president and CEO says. “There’s no way you want to lower your bar. You want to maintain that recognition that we’re the best out there.”

Doores continues to push his people to be the best, which helped his company grow its revenue to about $14 million in 2006, up about 40 percent over 2005.

Smart Business spoke with Doores about how he creates reoccurring revenue to keep the company growing.

Q: How do you grow a company?

The company always lives within its means, and its means are defined as what our reoccurring revenue stream is. We wanted to make sure that we created a reoccurring income so we don’t have to wake up every day and kill something to eat.

Now, we never grow this company past what our reoccurring revenue stream can pay for. Then, we grow the company from the profits on our sales, and what we share amongst our owners is out of the sales.

Now our reoccurring revenue stream is probably two-thirds of our annual income. If we do $15 million, almost $10 million of that is reoccurring. Even when we have a bad month, that cash flow is always there, and you can weather those kinds of storms.

Q: How did you create a reoccurring revenue stream?

We made it a major focus in our pricing and approach to our market. We’ve lowered our upfront prices and sometimes make the sale quicker, but at the same time creating a reoccurring revenue stream, where that person continues to pay us for support and upgrades and enhancement.

Q: How can other people create a reoccurring revenue stream?

Wake up every day saying, ‘What can I do to increase my monthly income?’ Not, ‘What can I go sell today so I can make payroll?’ You don’t ever want to be in that predicament, and fortunately, we’ve never been in that situation.

Everybody, since they started to get into business, knows that cash flow is king. It’s critical. Create a reoccurring revenue stream that you can count on month in and month out, and do your accounting.

Most companies don’t want to do their accounting because they don’t want to know the truth. Do it effectively and efficiently because the government is the worst person to borrow money from.

Q: How do you adapt to growth?

As you grow, you have to work hard at internal controls. Everyone says, ‘You’re going through growth pains — it always happens when you grow.’

You can’t just accept those comments as OK. Constantly work on improving your policies and procedures. You don’t want to restrict people, but you want to keep everybody on the same page, and you want to keep them on the pavement.

Every once in awhile when they start going down the dirt road, you have to get them back up on the pavement. I say, ‘I know it may seem shorter and easier to get there that way, but in the long run, we’re all better if we’re keeping on the same page and we keep headed in the same direction.’

Have a little bit of vision, but at the same time have some discipline to make sure your policies and procedures keep up with your growth. Otherwise that leads to frustration and people getting upset with each other, and that becomes counterproductive.

Q: How do you stay on top of internal controls?

You do that by keeping your mind open and looking for solutions all the time — thinking outside the box and looking for silly ideas and looking for technology. When we have a problem, the first thing we look for is a procedure to solve the problem.

The second thing we look for is technology to solve the problem. The last resort is to hire somebody to solve the problems. Sometimes you just ignore the problem and see if it goes away on its own, as silly as that sounds.

Manage a company by trying to resolve problems and issues. You can’t always have a strategic plan that always works. You have to be willing to change, make some compromises and try to work through certain things.

HOW TO REACH: AudioTel Corp., (972) 239-4486 or www.audiotel.com