Belt-Tightening Time

By Steven Burke, CRN
October 27, 2008 12:00 AM ET

The economic meltdown is hitting solution providers of all shapes and sizes. No matter where you play, you are going to be forced to deal with cash-flow issues that are sure to take a good number of solution providers out of the market.

	STEVEN BURKE
Can be reached via e-mail at sburke@everythingchannel.com.

Even the best and brightest solution providers are feeling the pain. At the recent CRN Fast Growth event, about 50 percent of the attendees indicated in an informal straw poll that they expect slower sales growth next year. What's more, they said they are seeing companies pull back on IT projects that were in the pipeline. And companies that usually go on a buying spree at the end of the year to clear out their budgets as part of the use-it-or-lose-it budget cycle have told solution providers not to expect the end-of-year windfall.

One CEO of a large solution provider, who recently laid off a number of employees, said tightening of accounts receivable and payable terms are affecting his business. "You can't sit there and put your head in the sand or you'll be swept away," he said. The worst thing you can do is be "business as usual" in an economy like this. Here are five tips on how to be successful in the midst of what looks and feels like the most severe economic collapse since the Great Depression.

1. Give Clients Who Pay Bills Within 14 Days A 2 Percent Discount: Cash flow is the killer of small businesses. Reward clients that respect your value-add and pay on time.

2. Give Clients A Discount For Moving Forward With A Big Project: Give up some of your profit (5 percent to 10 percent) to get a big capital project off the ground for a client that may be on the fence.

3. Embrace Leasing/MSP Monthly Billing: Clients want a single monthly bill for all their technology services from broadband to mobile devices to SANs. Solution providers that give them that will win.

4. SaaS Rules: What better time to get rid of huge software licensing fees and IT infrastructure that is costing big money than in the midst of an economic downturn. This is a slam-dunk with huge cost-savings benefits.

5. If All Else Fails, Make An M&A Deal: This is a great time to buy and sell a solution provider business. Don't be foolish. If you are in a bad situation, be proactive and seek a partner. Don't be one of those mortgage holders that watches the bank foreclose on you. Make a deal before your back is up against the wall.

Do you have any other survival tips?
E-mail me at sburke@everythingchannel.com.

Related: Videos | Slide Shows | ChannelCasts | Comments

More Channel Programs

Comments by Vanilla

	Five Companies That Dropped The Ball This Week For the week ending Feb. 10, CRN looks at five companies that were either asleep at the wheel or just didn't make good decisions.
	Five Companies That Came To Win This Week For the week ending Feb. 10, CRN looks at five companies that brought their 'A' game and made moves to beat out competitors
	10 Challenges That HP Wants Partners To Tackle Right Now CRN speaks with HP's business unit chiefs to get a sense of where they'd like partners to focus in the coming year, as well as how CEO Meg Whitman is making a difference.
	More Slide Shows