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How Do You Make Up For Lost Time?
Other solution providers are feeling a similar pinch. IT Technology Services Inc., a Norwalk, Conn.-based solution provider, also lost a couple of clients because it couldn't find financing for them, said David Lee, CEO.
"We went through every step to secure credit for them and [the financing companies] said it [won't] work. The customers don't want to do personal guarantees. The banks don't want to do the risk," Lee said. "The [banks] said flat out, it's not going to happen. I had to go back to the customer and say we talked about financing, but it doesn't exist for you. They said they'd go to someone else who would be able to do it." In such situations, not only is the customer lost, but the time IT Technology Services put into the opportunity is wasted as well, Lee said.
"I know we spent hours doing a lot of pre-work to get that going and it was dead from nothing to do with our service or our ability to do our jobs. It was dead from the financing," he said. "When you tell someone you can get it done, then you don't get it done, that's a way to lose the relationship."
Lee and other solution providers said they've learned some lessons the hard way and have started to ask for a customers' financial information up front to try to ensure the client can secure financing before they proceed. But that takes time and resources, and a lot of businesses don't want to part with that information so readily either. "In the past, you could get people what they needed when they needed it. Now you have to really work hard at it," Lee said.
Tough Road For New Companies
George Usi, president of Sacramento Technology Group, Folsom, Calif., used to finance nearly 100 percent of his sales through Textron, especially in the public-sector market. When that line closed, Usi quickly scrambled to secure two lines of credit with De Lage Landen Financial and GE. He was able to match the line he had with Textron, but he fears that other solution providers will end up with less credit than their Textron lines.
"We've [diversified] our business model. We do quite a bit of managed services. In my opinion, that helped when we were going through the financial review process," Usi said. Usi also fears that new companies will face additional hurdles to secure credit in the current environment.
"They don't have the relationships, the history. It'll be tough for them to enter the market. This is going to stymie innovation. There were will fewer entrepreneurs, less competition," he said.
Next: Be Proactive, Communicate
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