Help Wanted...Fast!

After the Internet bubble burst a few years ago, many solution providers were just trying to survive. The idea of growing one's business by adding product lines, customers or new staff was forced to take a backseat to cutting expenses, consolidating resources and hanging onto the precious clients already in the fold.

In 2004, the economy showed sporadic signs of recovery, as customers were once again spending money on necessary technologies, such as security solutions and network upgrades, sometimes even splurging a bit on innovations like wireless technologies if they thought it would help their businesses run better. That was all good news to solution providers.

While soft spots exist, the economy is generally stronger across the board. For solution providers, customers' willingness to open up their wallets means they can expand their own operations--adding new programs and technologies. Of course, that also means adding new staff to tackle the new opportunities.

The 2006 VARBusiness State of the Market survey is the clearest evidence of this renewed optimism (see "Sales And Services Increase," page 58). Just less than 60 percent of the survey respondents plan to increase sales and/or services staff in the coming year; roughly two-thirds of midsize and large solution providers plan to do the same.

Even more telling: Only 3 percent of respondents plan to cut sales or services staff, perhaps the surest sign that VARs are feeling as stable as they have in recent years. But many solution providers are finding that growing their businesses and taking advantage of new opportunities means expanding their horizons into new product lines and services, sometimes even changing their entire business models.

Cameron Spitzer is the sole proprietor of Truffula Networks, a onetime networking hardware VAR in San Jose, Calif., that was forced to make a change. "When all the hardware I sold started running through Japan, I had to find another way to make money," Spitzer says.

Spitzer now offers consulting services that focus on various aspects of network security, including combating spam. The surging security wave is presenting Spitzer with a welcomed problem. "I'm not going to be able to keep up with the demand," he says. "I'll have to start either turning away customers or hiring people."

Think Before You Act

The effect of each new hire at a small company is amplified because the size of the company usually dictates that everyone fill multiple roles; the task for Spitzer and other solution providers like him is to figure out which type of employees to bring in first.

"I don't want to be an entrepreneur; I want to be an engineer," Spitzer says. "I have a lawyer and an accountant who are discussing how my business can get bigger than a sole proprietorship, and whether I can continue to be an engineer will probably hinge upon whether they can take over the entrepreneur part from me."

Other small solution providers may find that they're able to grow their businesses without adding a lot of people to the full-time payroll. Raymond V. Hall runs his eponymous training and services consultancy in Chicago, providing services for technologies ranging from VoIP to Windows Small Business Server for government and private-sector clients. Until now, Hall has been able to use consultants on a project-by-project basis, but his business is taking off enough that he's beginning to make more long-term plans.

"I'm anticipating more than double the revenue [in 2006] than I've had the past two years, and the way things are going, I'm almost forced to hire new staff," Hall says, adding that he'll probably look first to add people who can help train customers on the new services and technologies Hall installs. "That part of the company is where the money is made and where we can really change our revenue stream."

The trick for a small solution provider is deciding when to add full-time people vs. part-timers. "In the past, we've needed peak-load staff for short periods of time, but now I need part-time staff over longer periods of time," Hall says. He has been able to bring in consultants that he knows from his 17 years working at IBM or referrals through professional associations.

Hall says small solution providers have to think carefully about each hire so they have the optimal effect on the business. "The best place to deploy dedicated staff would be at the front end of the business as sales or nontechnical professionals," he says. "They can do contact-management and office-management tasks so we can be sure that if they do drum up new business, the customer will be getting more than an automated response."