Slumpbuster: Used IT equipment for cheap

This Minnesota firm is cashing in on hot demand for inexpensive, secondhand IT equipment.

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Jennifer Larson has stacked used servers up to the rafters.
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(Fortune Small Business) -- Move faster and take more risks. Those are lessons that Vibrant Technologies CEO Jennifer Larson learned during the dotcom bust. So when she saw the beginnings of an economic slowdown last year, Larson was ready to pounce by acquiring new inventory for her company, which sells used IT equipment.

The Minnetonka, Minn., firm earmarked $1 million for a buying spree, scooping up used routers and servers on the cheap as companies began downsizing and selling off unneeded equipment. Increasing her stockpile of goods from $3.5 million to $4.5 million leaves Larson prepared for the crush of IT brokers and other firms looking for refurbished units to outfit their offices at a discount. She is also bolstering staff to 50 from 40 to handle the rising volume of orders and boosting the marketing budget 25%, to $500,000.

As a result, Larson anticipates 2008 revenue of $52 million, up from $45 million last year, and expects sales to explode 40% in 2009.

"I believe our strategy is going to work because I know what our clients are looking for this time," says Larson, 36.

Larson knows that her situation is unique because demand for her products spikes during downturns. But she also knows that just like other small-business owners, if she doesn't innovate and implement smart growth strategies, the slumping economy could crush her. In 2001, Vibrant was inundated with customers but struggled to manage its growth, and the company failed to gain as much as it should have in sales and profit margins.

"I don't want that to happen again, where I feel we are scrambling to help people and working 80 hours a week," Larson says. "I'm too old for that now."  To top of page

Have you cut costs by buying secondhand equipment? Join the discussion.

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