Birth of a VAR

By Rob Wright, CRN
January 30, 2003 3:08 PM ET

VARBusiness is looking for a few new solution providers who have started their businesses in the past year to profile in the ongoing "Birth of a VAR" series. Contact associate editor Rob Wright for more info.

Ever wonder about accompanies that are born during a recession? How, and why, exactly, do you start a business when the industry is in such a poor economic state? Building a solution provider operation has its inherent challenges -- certification and engineer training is expensive, and investing in product reselling ties up a lot of your cash -- but it seems ultra-difficult to begin such a business in a weak IT spending environment.

It is, but it's not impossible. Just ask Scott Miller, president of Server Centric Consulting (SCC). He started SSC in 2002, deciding that the business focus would be solely server-based solutions. Scott quickly aligned himself with Citrix, an obvious choice considering the software vendor dominates the server-based network solutions with MetaFrame. He's one of the few solution providers who have been born during, arguably, the darkest times this industry has ever seen. Here are a few obstacles and important lessons from some young VARs on how to get off the block in this day and age.

Capital Gains: Since moving from covering software vendors to now VAR, integrators and consultants of all types, I've learned that the solution provider industry is not a glamorous one, and thus it is treated as such by investors. Venture capitalists will surely dish out some cash for a bold new server-based software tool, but what about a new professional services group that specializes in such technology? Negative, as they say in the military. So entrepreneurs looking to start a solution provider business need to have cash on hand and be ready to self-finance their operations. And they must be prudent with the cash and refrain from the sort of lavish spending and excessive rewards that have done in larger companies recently.

Vital Vendors: Whether you're reselling product or just offering consulting services around a type of technology, you need vendor support. It's just an unfortunate fact of life, like excessive acne during puberty. So young VARs need to find the right vendor to center themselves around. In Scott's case, he selected Citrix, and it was an excellent bet. Citrix is financially secure, it dominates its market of choice, and has a solid channel program. Even better, Citrix is growing, thus SSC has opportunities to mine because it can offer skills and expertise around a complex technology area. Partnering with a vendor whose channel business is lackluster and license sales are falling isn't the safest bet for a new solution provider.

Star Search: Acquiring talent might be the one area that new VARs have an advantage. Whereas just two years ago, members of Congress were pressing hard for an increase in the number of HB-1 Visas in order to bring more IT professionals from overseas to fill the void here in the U.S., today there are a number of talented people looking for jobs; massive layoffs and crumbling institutions have made sure of that. Even better news is that the number of IT professionals in training at colleges and universities are growing, as are the skills and talent level those institutions foster. And no longer do recruiters have to lay in wait outside the dorms of Stanford University to find a promising student with a computer science degree.

Start Small: Often, new solution providers get their start by dominating a niche area -- both technically and regionally. In SSC's case, Miller decided to build skills around Citrix and the vendor's network software, a lucrative market that is ripe with opportunities. In other cases, newborn VARs will set up shop in an underserved region. For example, Paul Thompson, president of ITP Northwest, has made a living with his small solution provider business over the last decade serving Oregon and the greater Portland area, not exactly a hotbed of IT.+

Do you have any lessons or advice as a newborn VAR? If so, let me know at rwright@cmp.com.

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