Page 3 of 6
Roadblocks Ahead
The credit crunch and capital drought worsened in 2009. The solid banking relationships I.T. Pros' Ford enjoyed turned brittle; credit lines for a quarter of a million dollars shrank to $100,000 or less.
"Distributors tightened our credit lines, too," Ford said, "even though we had good relationships and had done business with them for almost a decade."
As a result, I.T. Pros found itself in the same position as many VARs: struggling to fulfill orders on what limited demand they could find. So despite its exemplary revenue growth and established track record as a rising star, Ford's company in the end was viewed no differently than resellers wracked with debt and laboring to break even.
Securing product was tough enough, but there were other, expensive challenges for I.T. Pros. "Managing rapid growth was a challenge even before the crash of 2008," Ford said. "But then it got even harder. Finding talent was tough before 2007 but it got easier as more people unfortunately lost their jobs, so that wasn't a problem. We didn't have a lot of big expenses. We had affordable office space, so we were all set there. But the real challenge was in sales -- going out and marketing and branding the company and winning new clients."
I.T. Pros was soon spending more time, energy and resources on building sales. Typically, Ford wanted a staff ratio of 3-to-1 for billable vs. nonbillable employees. But as the sales environment worsened in 2009, that ratio fell to almost 1-to-1. As a result, I.T. Pros had fewer consultants and engineers to service clients. And that was a big concern for a solution provider that had 23 total employees.
"We saw what was happening," Ford said, "and rather than sit around and wait for things to get worse, we put together a very proactive plan to get us through 2009."
First, Ford said his company had to get more aggressive with accounts receivable. Second and more importantly, I.T. Pros searched far and wide for banks that could lend it money, looking at everyone from national financial services firms to local community cooperatives.
"Ironically, we ended up going with a national bank and got a great deal, relative to the economic conditions," he said.
And third, when things were slow -- as they often were -- Ford invested in his technical staff's training and certification for top partners like Dell, VMware and others. "Sharpening the saws during downtime was critical for success," he said. "Some of the training was free. Other courses were expensive, but they were worth it."
NEXT: All Covered Revs Up
