Lori Schlotter, CEO of Colorado CustomWare in Fort Collins, turned the company around after it lost a major contract in 2003. Colorado CustomWare’s sales are expected to double this year.

Schlotter overcomes crisis to win software contracts 2005 Bravo! Entrepreneur — Fort Collins

FORT COLLINS – In 2003 Lori Schlotter encountered a crisis.

At that time Schlotter’s company, Colorado CustomWare Inc. of Fort Collins, was a subcontractor on a major technology integration project for a government client.

But the contractor on the project suddenly dropped Colorado CustomWare. Schlotter had to write off $600,000 in anticipated sales.

Schlotter pulled together her managers and staff and came up with a survival plan. Management took a 50 percent cut in pay. Four workers were laid off from the 20-person staff and hours for remaining employees were cut back by 25 percent.

Still, Schlotter wasn’t just thinking about making payroll for the next month.

Schlotter was so confident in her company’s potential, she was also thinking about the next year.

“While scaling back, I knew we had to prepare the company for growth,” she said. “I knew we had the best product on the market.”

Schlotter’s flagship product is a software tool for government assessor offices. The product, RealWare, utilizes geographic information systems technology and allows assessors to conduct mass property appraisals to determine tax valuations.

Schlotter’s instincts about growth proved to be right.

Colorado CustomWare was able to maintain its existing clients, and slowly started racking up new sales. By the summer of 2004, the company had landed a two-year contract to serve all 23 counties in Wyoming. The Wyoming deal allowed Schlotter to raise all employees back to full-time and bring back some former employees.

New contracts followed in Alexandria, Va.; Pulaski County, Ark., and Rutherford County, Tenn. By the end of 2004, Colorado CustomWare had lined up new multi-year contracts worth $6 million in future revenue.

Back from the brink

This year, with the addition of new contract with the city of Philadelphia, Colorado CustomWare’s expects to record $5.2 million on the company books, more than doubling 2004 totals.

The company now counts 44 different clients in 11 states. At 30 employees, Colorado CustomWare is actively searching for five more employees, and Schlotter is close to launching two more software products, theoretically tripling the company’s revenue potential.

The new products include a collection system for county treasurers, and a system for county clerks to feed property deeds into the county’s assessment system.

“We’re looking for potential partners,” Schlotter said, referring to a county or counties that would help to complete development of the product and be the first customer – a role that Larimer County played with the launch of RealWare.

Before Schlotter founded Colorado CustomWare in 1989, she was an employee of the state of Colorado who traveled around the state to train county clerk and recorder employees on new software.

During that period, Schlotter observed a need to help counties make the transition from mainframe computer systems to PCs.

Her first product was designed to assist clerk and recorder offices in recording deeds. However, she was soon forced to pull the plug when the state announced it was about to offer a similar system for free.

“So, I was going to be selling against free,” Schlotter said.

Instead, she turned her attention to the assessment market and came up with RealWare.

RealWare real hit

The product has become a hit for assessors because of its flexibility in assessing property values.

“We’re able to fine-tune it to economic neighborhoods,´ said Gil Reyes, assessor for Adams County, which has been a customer since 1996. “We can change the parameters. We can add factors, and take factors out.”

With more rigid assessment programs, an assessor may have to value an enclosed porch with a space heater the same as a newly constructed addition of the same size. Unless the assessor remembered to make the modification by hand, it caused a flaw in valuations. The RealWare program, which can be utilized in the field with computer tablets, allows an assessor to make that adjustment upon visual inspection.

“It makes my life easier,” Reyes said. “It cuts down on protests, and cuts down on consumer agitation.”

Colorado CustomWare grew gradually through the 1990s, but hit its stride in 2001 when it grew from 11 employees to 18 and moved into a new office building in the Oakridge Business Park.

Then came the gut blow in 2003.

While Schlotter heaps praise on her management team and employees, she deserves credit for “facing the brutal truth,´ said Gerard Nalezny, who was Colorado CustomWare’s banker at the time. “She did not hide from the stark realities of her situation.

“That’s tough. You start a business and you have it initially flourish. Then you run into a serious roadblock. Facing the reality of that is like finding out your kids aren’t smart. It’s emotional. She had the guts to face the hard issues straight on.”