How I Built My Business: ComTech

This post was copied from a website I used to maintain called How I Built My Business. It’s now here for posterity.

Business: ComTech
Years Active: 1974–2001 (continued selling AcME until 2010)
Location: Burley, Idaho
Business Builder: Richard Hardy

HIBMB: How did you get into computers back in the 1970s?

Richard: In 1972, I had graduated in Electronics Engineering Technology from BYU and was working at a nuclear laboratory in California when my dad died. I moved back to Oakley, Idaho to help my brother Randy with my dad’s farm. I really wasn’t interested in farming; I wanted to do something I knew how to do.

M.H. King Company (a five-and-dime store similar to a dollar store today) was about to get an IBM System/3 mainframe computer that would fill a typical bedroom-size room. I told them they needed a programmer. Their office manager had gone to a couple of classes to learn how to program and he knew they needed a programmer. He knew he couldn’t do it so he talked the boss into hiring me. It was a language I hadn’t heard of before.

Roper’s across the street already had a System/3 and they had a programmer there that wasn’t much good. I read the books and learned how to do the programming and started to do Kings’ programming on Ropers’ computer. Eventually, Roper’s fired their guy and had me do their work too. I was just working for the two of them. Once King’s got their own computer and built a new building, I worked in there doing their programming‚ inventory, payroll, everything‚ as well as programming for Roper’s.

I made an agreement to rent time on Kings’ computer and that’s when I started my business. That was in January of 1974. I had no investment at the start. The first thing I had to program under my own company was a general ledger and I didn’t know a debit from a credit. When I was dealing with the flu, I borrowed a textbook for about three days and learned accounting. With the help of one of my potential customers I wrote a general ledger package.

HIBMB: How did you acquire your first customer?

Richard: My first customer was J&J Office Supply. I just went down there and talked them into letting me do their accounts receivable. They had somebody already doing it so I could see what reports they were already printing out. They were aging report, summary reports, and statements. I duplicated it. At that time we were punching holes in 96 column IBM cards, printing their reports, and storing them on the hard drives. The hard drives were probably 14 or 15 inches in diameter and were removable cartridges. They held 2.5 megabytes each‚ lots of stuff! I actually stored the accounting of five or six stores on one 2.5 megabyte drive because we were much more efficient then. That’s what caused Y2K because we were storing dates as two-digit years to save space.

HIBMB: What language were you programming in?

Richard: I was programming in RPG II (Report Program Generator version 2). That was IBM’s answer to COBOL. Everyone else was using COBOL. RPG II was written by filling out forms‚ you had an input form, a calculation form, and an output form. Basically, it was built on the old concept of reading a card and printing a line. You got the input, you do something with it, and you got the output. RPG II then gave you ways of overriding the cycle and doing some fancy things.

HIBMB: What kind of printers were you printing on?

Richard: They were big, console-size chain printers. The chain had letters on it and hammers would hit the letters as the chain spun around really fast. The printers would use wide, fanfold, perforated paper with green and white bars.

HIBMB: What were the computers like?

Richard: The computer had the big CPU, the hard drives, four hoppers for cards, and the printer. For accounting for phone companies, for example, there was one stack of cards with customer names and addresses, one with balances forward and aging, and one with a card for every long-distance phone call. That’s why you had the multiple hoppers; you used a customer’s name and address card over and over and manually put in new cards as necessary. It punched out a whole new set of balances each month in preparation for the next month.

I ended up doing mostly accounts receivable for about 20 to 30 companies until I learned how to do general ledger, payroll, and accounts payable and I started doing those as well. That all happened in 1974. By 1975, Anderson Farms, which was a conglomerate of about 20 different farms, wanted me to do their stuff so they bought an IBM System/3 and I moved in with them. At that point, Anderson Farms was paying me $1,000/month to take care of any of their needs while I continued to grow my own business on their computer.

Anderson Farms started to fold, so in 1977 I bought the System/3 from them and moved into a building of my own. In 1980, the CPAs across the street and I went in on a System/34 and ran a twinax cable across the street. They would enter their own data and I would print all their tax returns and such at my place.

That was the first time I spent any of my own money because we split an $80,000 loan to purchase that computer. I had enough business to easily pay for it so there was really no risk at the time.

HIBMB: Did you hire anyone else?

Richard: I had hired a programmer named Ramon and he became very good at it. We started doing more work for telephone companies and ended up with a telephone package that we sold to several companies in Idaho, Utah, and Wyoming for about $25,000 each plus any programming we need to do for them.

HIBMB: How did you market your business?

Richard: It was word of mouth. We started with Project Mutual Telephone and then Albion Telephone Company. After that, others found out through word of mouth.

At that point, Ramon and I decided to incorporate mainly to save social security costs and such. The company was renamed from Computer Center to Computer Technology, Inc. and I made Ramon a partner. He bought half of my company.

It got to a point where Ramon was doing all the programming for the telephone companies. We needed an AS/400 for him to do his work and I never learned how to run it. By that time I had gotten into programming for personal computers because IBM came out with their PC. I took care of the personal computers and Ramon took care of the telephone companies. Those became our two major things and we just split anything else.

I also started building and selling computers. Somebody came up with a way to do the old RPG II programming on the personal computers whereas before I could only do it on the mainframe. I started writing software on the PC as if it were on a mainframe. We sold a lot of those computers. Clients would pay about $5,000 for just the computer and a green monitor. The computer was slow and had a 10 megabyte hard drive and the monitor. They could buy a dot matrix printer for $500. Then, they would buy the software from me.

After Clarion came out around 1990, I wrote AcME (Accounting Made Easy), an accounting software suite. One of the best business decisions I made was renting out AcME instead of selling it. It probably made a difference of $100,000-$200,000 over the life of the software. I rented it out for $8 per module per month. Most people would rent out three modules: general ledger, payroll, and accounts payable. There were three others but those were the main modules. That brought in up to $10,000 over three months from about 130 customers.

Clarion was a really nice, reliable language. My customers didn’t want to switch to QuickBooks when it came out because AcME didn’t ever do anything wrong once I got the original bugs out of it.

HIBMB: What happened with the AcME suite?

Richard: I started the AcME suite in 1990 and it maxed out around 2000 when I decided we would move to Utah. It then tapered down to 2010 when I officially discontinued it. At that point I couldn’t support it anymore and you had to have a parallel printer to really use it.

There was no investment in that either. The only investments were a little bit for our first computer and $40,000 for the second.

HIBMB: Can you tell use more about the computer side of the business?

Richard: When IBM came out with their PC in the early 80s it was hard to get them for resale. You had to qualify and have a ton of money. I made friends with a guy who worked for ComputerLand who was the major reseller of PCs at the time. I sold a few computers on behalf of ComputerLand. Corona then came out with a PC and several other companies started making IBM-compatible computers.

Computers were either IBM or Apple. Had Apple allowed others to use their operating system, we probably wouldn’t have anything other than Apple right now. They didn’t want to do that though so IBM bought Bill Gates’ DOS software and that’s how Microsoft came about.

Eventually I found a way to purchase computers to sell for myself. After that, I started building my own, buying my own cases, and using my own label.

At that point, Ramon and I had headed off on different paths. He needed some of the telephone capabilities that were available with Project Mutual in Rupert, a nearby town, that weren’t available where we were in Burley. We were practically running two different businesses at that point and it was enough to make us think it might be time to split up the company. He took the telephone part and moved to Rupert and I stayed and continued with AcME and selling computers.

Ramon is still doing the telephone stuff and is very successful. AcME was good for me and even after I later closed the company to move to Utah, people continued paying me for it.

HIBMB: What made you decide to close the company?

Richard: I hadn’t really thought about closing it but I had reason to close it because you couldn’t really make money selling computers anymore. When I started selling computers, I was selling them for $5,000 each. I was making $1,000 on one computer. By the time I quit, I was maybe making $100. A lot of them were sold to friends and relatives and you can’t charge them $50–60/hour to fix their computer. When you sell a new computer to someone and they think you’re going to move all their stuff over to the new one (some of which was pirated and they didn’t have the CDs), you’d spend hours and you’d still only end up making $100.

I had been making a lot of money programming but there wasn’t much demand anymore for individual programmers writing accounting software because cities, utilities, and large businesses were buying $100,000 packages and the little guys were buying QuickBooks.

When my kids started talking about us moving to Utah, we decided that would be the best time to do it. After I moved, I figured I might be able to do some computer support, but Novell had just laid off a bunch of people during the dot-com bust and there were all kinds of people like me running around looking for work.

HIBMB: What advice would you give to someone trying to start a computer business?

Richard: My suggestion is if you can do it without a lot of investment that is the way to go. Don’t try to dive into something without some level of certainty. I grew as the customers came along. I didn’t have any investment that required a certain number of customers. The customers grew me instead of me growing them.

I was fortunate because I was the first guy in there. Eventually I think there were about nine or ten mainframe computers in the area and I managed them all except one or two. The IBM salesman and I went together. He said, “I’m going to sell you this computer and this guy is going to program it for you.” This made it possible for him to sell computers and at the same time gave me customers.

Another good decision I made was having a man named Chris move into the same