Wallowing in economic woes? Many of your competitors aren't
Talk about strange coincidences. On the day we were poring over data from hundreds of VARs who had answered a survey about their 2009 growth plans, a sizable solution provider left me a message saying he was closing his doors. Despite more than a dozen years serving up IT solutions in a solid niche, this VAR could no longer find a way to map out a profitable growth strategy. It was such a damn shame.
It is sad to see any VAR organization bite the dust because there really is so much opportunity for growth. Yes, I said "growth" despite everything you hear and read to the contrary. In fact, I am not the one using the G word, it is actually coming from you, our readers, who provided the details of growth strategies as part of a wide-ranging study on growth that will be published in our next issue.
By the time you read this, dozens of stories will have been written online analyzing the specific data points with color commentary from a litany of growth-oriented solution providers. VARs gave us this insight into growth long after the market meltdown and well into the throes of major job losses and a severely weakened economy. So when a large percentage of them say they expect very aggressive growth of 30 percent or more this year, it is a very relevant statistic.
Overall, we asked VARs to place themselves in one of five buckets. Were they the very aggressive type; aggressive, which means they expect to grow sales between 15 percent and 29 percent; were they focused on moderate growth of 1 percent to 14 percent; were they just keeping pace with the market; or were they not focused on growth at all. Yes, there were some -- about 12 percent -- who said they were not focused on growth, and in the past they along with those who were just keeping pace with the market were labeled as "lifestyle" VARs. But one could argue that those just trying to mirror the market today are growth-oriented if you consider the U.S. IT market will grow at its slowest rate in six years -- maybe squeaking out growth of 1.6 percent.
Next time you are sitting at one of our XChange events or another gathering of VARs, think about this: Nearly one-third of the room is filled with executives planning to grow their businesses in excess of 15 percent. You might think these guys and gals are crazy, but they are not. You might also think they are managing only small VAR organizations or consultancies, but they are not. Yes, there are many small VARs focused on growth, but there are many midsize and large IT shops with grand plans.
By the way, these businesses' No. 1 priority from a go-to-market perspective is to target new markets with their existing solutions or expertise; second is to focus on new customer segments. They may well accomplish that market penetration by expanding regionally or acquiring another solution provider. The economy is going to force a great deal of M&A activity this year while opening the door for new solution providers who want to get into the business.
As you can imagine, managing cash flow and the financial aspects of the business have taken on more important roles than ever for growth-oriented VARs. When we asked them to rank what is most critical, they said "finding new business." Note the word "finding" because these are not organizations waiting around for Microsoft or HP to send them sales leads. Growth-oriented VARs in a down economy go out and find new customers. Second, they keep up with changing technologies. With growth VARs, this doesn't mean perusing a vendor's latest offering -- it means they are in front of customers with Oracle's new $750 express database application before the local rep checks in to see if the marketing materials have arrived.
So consider this survey preview a warning. If you are wallowing in all the news about the economic downturn, many fellow VARs and rivals are using this as an opportunity to grow their business. What are your growth plans? Let me know at email@example.com.
Robert C. DeMarzo (firstname.lastname@example.org) is Senior Vice President/Editorial Director of Everything Channel.