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Small Business of the Year runner-up
Impact Financial Systems Inc.
President: Tim Parsons
Projected 2013 revenue: $4.5 million
Business: Software development and delivery
Tim Parsons and Jeff Deming had just finished playing tennis at River Run Country Club in Davidson when they started talking business. Their sons were high-school buddies, and while the men had spent time together, they usually chatted about family or other domestic topics. “We were probably having a beer on the veranda when I asked Tim what he did,” says Deming, who in 2007 was senior vice president of product development for an office supply and technology business. It turned out both were in the same industry: business-software development. “Tim told me about the company, and I thought, ‘That sounds interesting.’”
Six years later, they sit in a conference room at the Davidson headquarters of Impact Financial Systems Inc., which provides automation software for financial institutions. They moved into the 3,500-square-foot office the previous day, and it’s just an elevator ride from the 2,000-square-foot space the company outgrew. But the upgrade is significant. With annual revenue growth averaging 43% since 2009, IFS has invested in more senior- and entry-level talent. It’s paying off. Last year, IFS landed its first large enterprise client — information-technology speak for providing an application used companywide rather than departmentally. (IFS can’t release who it is.) Based on that success, it’s targeting other large brokerages.
“We don’t have a lot of machines other than PCs,” Deming says. “We don’t have big shipping costs, because the cost of shipping — I mean, it’s just digital. What we do have and what we must have are great minds, and that begins with Tim. For him to have taken himself out of the market back in 2002, his biggest investment was to not be working somewhere else, because he could command a large salary.” Born and raised in Southern California, Parsons graduated from Bucknell University in Pennsylvania with a computer-science degree in 1986. He developed software for Lehman Brothers before moving to Charlotte in 1992 to run technology for Interstate/Johnson Lane Inc., which was acquired by Wachovia Corp. in 1999. He became chief information officer of Winston-Salem-based Wachovia Securities Inc., where experience with inefficient automation systems got him thinking about creating a better one.
When Wachovia merged with Charlotte-based First Union Corp. in 2001, Parsons lost his job and sank $15,000 of his severance into pursuing his idea. “I said, ‘I’m going to give myself six months, and if I can make it work, good. If I can’t, I’ll go out and find another job before I have to worry about feeding the family.’” He used his contacts at brokerages to set up tours, pitching the idea of automating their systems. The problem: He didn’t have anything tangible to sell. But Wachovia reached out after he returned home, asking him to handle some departmental projects, automating simple processes such as ordering checks.
IFS focuses on brokerages because of Parsons’ experience in that field. “In the brokerage world, customers are always saying, ‘I want to open a new account,’ or ‘I want to transfer funds from my account to my wife’s account.’” That entails shuffling paperwork between departments. IFS’ platform automates transactions such as opening an account by walking users through a series of prompts. By the end of its first year, revenue was $800,000, generated from projects at Wachovia and a division of a large insurance company, which IFS won’t name. Based on the results, most of the brokerages Parsons had visited signed on as clients. “We went back and sold them the very same program we’d told them about.” Between 2003 and 2008, revenue fluctuated between about $300,000 and $1.2 million. “You’d have some big years — you’d sell a bunch of stuff and deliver it — and then you’d have lean years,” Deming says.
Deming began advising Parsons in 2007. He helped him sustain the self-funded business model Parsons had created and forge a growth strategy. He came on full time in 2010 and is now vice president and chief operating officer. In addition to hiring and keeping top-notch staff and independent contractors, another focus is stabilizing revenue by moving toward term licenses rather than perpetual ones that companies pay a lot of money for up front. “You think at first that if you create great software, people are going to be beating your door down wanting to buy it,” Parsons says. “But that’s not how it works. It takes a lot of effort to sell it. I’m glad I didn’t end up having to go get another job, but it was getting close. My wife was losing her patience with me.”
— Mark Kemp