The Amherst Technologies Bankruptcy Provides A Lesson For Us All

Solution providers tend not to watch too closely what other partners are up to unless they are direct competitors. But the expected Chapter 7 liquidation filing of Amherst Technologies with a bidding war breaking out over its assets, as reported by crn.com, bears some reflection.

Amherst was not a Johnny-come-lately and that—coupled with success in selling products with little value-added services—may be what caused its problems. Its longevity also speaks to the scary reality that all businesses, including yours, are living organisms that can get sick and die if the business model isn’t right.

ROBERT FALETRA Can be reached at (781) 839-1202 or via e-mail at rfaletra@cmp.com.

The Merrimack, N.H., company is, in fact, 22 years old with sales north of $200 million.

So what is the problem? I certainly don’t know all the details, but having written more than one story on the company in my reporting days, I do know this: Amherst had some unbelievably great years, but it was largely focused on product sales back in the heyday of products leading the sale. Amherst was never able to flip the business model to one in which its services and consulting business led the sale and dragged the products behind it. So it got caught on the lowest-price product sale treadmill.

While that’s my opinion and may be an oversimplification of what happened, my point here is that as business leaders we all need to constantly evaluate our business model, understand what the customer and the market will pay a reasonable price for, and then have the courage to make the necessary moves to provide that service. This, of course, isn’t as easy as it sounds, and too many of us allow ourselves to get caught up in the routine of everyday activities to realize there needs to be a constant adjustment.

‘As business leaders we need to constantly evaluate our business model, understand what the customer and the market will pay a reasonable price for, and then have the courage to make the necessary moves to provide that service.’

The CMP Channel Group and CRN do an enormous amount of research surrounding solution provider business models and what is and isn’t working. You should tap into that research often. We are also increasing our education services for solution providers though the Channel Group’s education and market intelligence division, the Institute for Partner Education & Development. The Channel Group’s XChange conferences, too, are a source of not only education, but an opportunity to network with other solution providers and discuss what is working for them that you may be able to adopt.

We have a lot of other resources that I don’t have the space to get into completely, but you have to make time to draw on these and other knowledge bases. It’s understandable why this doesn’t happen often enough, given that time spent on education or analyzing data about business models or even talking to other solution providers is time not spent with customers.

Customers definitely come first, and time spent with them is never a waste. But your company, like your body, is a living, breathing organism. It needs checkups. It needs to exercise new muscles. It may need to slow down on an overindulgence in one market before it is too late and push into other directions to continue to grow and not be vulnerable to a decline in one area.

This isn’t news to a lot of you, but we all need to realize that every company hits bumps in the road and the good ones deal with them and motor through. The really good ones, however, look ahead before they get to any potholes, and maneuver around them.

Amherst did that for a lot of years. But despite its success for two decades, it never realized the market was changing and that lowest-price product sales wouldn’t deliver a profitable margin. It never jumped to the service/product model. What I really hope is that all of us take this as a lesson learned.

Make something happen. I can be reached at (781) 839-1202 or via e-mail at rfaletra@cmp.com.