When Your Customers' Sales Decline, You Can Still Come Out On Top

When your customers' sales decline and in turn their IT spending starts slowing, the worst thing a solutions provider can do is panic. Take a deep breath and a long look at your business: You can minimize the damage if you focus on the essentials.

Almost everyone is feeling the pain, but the solutions providers who act thoughtfully and decisively are minimizing their suffering and improving their chances of survival.

Take Navidec, for example. The Denver-based e-business company recently had to lay off 44 people, some 16 percent of its workforce. But Ralph Armijo, chairman and CEO, is confident Navidec will continue to grow 50 percent this year because he has refocused the company on ROI in the vertical market Navidec targets--financial services.

"We all learned a valuable lesson last year with its focus on growth and market share at any cost," says Armijo. "If you're not focused on ROI, it will have a detrimental effect on the company. You can never lose sight of that."

It's important not to panic, but it's also important to act decisively, Armijo insists. As soon as Navidec realized it was not going to meet quarterly earnings projections for the first fiscal quarter of 2001, the company began rethinking its priorities and reducing its costs.

"You need to step back, look a the big picture and make sure you understand what markets you're in. You need to make sure you're ready to step up to the difficult decision of removing businesses and changing rapidly," says Armijo. The painful process of downsizing took Navidec only two weeks.

As VARBusiness research indicates, businesses are continuing to spend money on IT solutions, meaning solution providers can stay alive if they manage carefully.

For suggestions on how to stay afloat when your customers' sales decline, see our May 14 issue, The IT Spending & Strategy Guide.

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