Obama: Is He Helping Or Hurting Your Business?

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Timothy Shea has been providing IT solutions for 21 years and has never worked as hard or felt as much economic pressure.

Shea, CEO and senior consultant at Alpha NetSolutions, a solution provider based in Marlborough, Mass., says his income as the owner of an “S” corporation that files a personal tax return has dropped 25 percent from 2007 to 2009. At the same time, the health-care costs for his eight-employee, $1.2 million business have doubled over the past three years.

Shea is one of many small-business solution providers interviewed for this cover story who feel that federal economic policies negatively affected business during that period. What’s more, these solution providers say, looking ahead they don’t see how the successful passage of President Barack Obama’s landmark health-care reform bill, which Obama signed into law on March 23, will help.

Shea is one of tens of thousands of small-business IT solution providers in the U.S., working in a field that for decades has created almost unimaginable personal wealth and countless jobs. But over the past year, many of these businesses have closed their doors and many more are struggling in the midst of what by all accounts is the biggest economic downturn since the Great Depression.

Research from CRN parent Everything Channel shows that after reaching a high of 250,000 in 2007, the number of solution provider businesses in the North American market dropped to 200,000 in 2009 as IT spending declined. Most of the solution providers that closed up shop generated less than $1 million in annual revenue.

And the squeeze is continuing.

Everything Channel’s Institute for Partner Education & Development, which provides channel research, consulting and education, reveals that the number of solution providers rated as “in trouble” based on net income data jumped to 9.3 percent in 2010 from 5.8 percent in 2009.

Some of the small businesses that closed their doors did not move quickly enough from capital-expenditure-based IT solutions to annuity-based IT services. But many were simply walloped by macroeconomic issues, which set into motion a flurry of federal government bailouts: large companies such as insurer AIG, General Motors and even financial institutions like Citigroup, among them.

Through all of this, many small-business solution provider owners feel that Obama has showed little understanding of the economic forces battering their businesses -- and is showing little fiscal restraint as they themselves are cutting back and pinching pennies to stay afloat.

Shea has watched three competitors go out of business in the past several years. And he knows if not for his company’s shift into managed services, Alpha NetSolutions might not even be around today.

Next: Much Ado About Health Care

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