VARs Seek Each Other's Advice As Industry Shifts

Small and midsize VARs faced with tough competition and tougher questions about growing their businesses are looking to each other for insights. In these instances, trust is a big factor as they bare the financial souls of their businesses in search of good advice.

The advice ranges from what product to sell or drop to shifting business models, said Steve Bowser, president of True Profit Groups, a Phoenix-based consultancy that aids small VARs and integrators in building their businesses.

"They send me their financials every quarter, and I put together a financial composite for each group," said Bowser, who manages six groups, each containing about 12 resellers and VARs.

Consultants like Bowser often hear the hard-luck and good-luck stories during teleconference meetings and face-to-face meetings where VARs discuss the most intimate parts of their business.

But what makes the process work is that VARs involved are from noncompetitive markets, Bowser said. "We pour over the financials and they get peer

reviews," he said.

Meeting three times a year, the VARs in the True Profit Groups have incomes ranging from $3 million to $10 million. "They are hearing [advice] from other resellers," said Bowser, who has run the organization for 10 years.

Oli Thordarson, chief executive of Alvaka Networks, Huntington Beach, Calif., a network integrator who has been in the channel for more than 10 years, has found his business operates better since joining True Profit Groups two years ago.

"I joined it to get a better understanding of the performance metrics that make a VAR successful. Although I had learned my numbers pretty well, I wanted to expand beyond the horizon to learn," Thordarson said.

"I have improved my business by a factor of four and gone into the two-digit profit range," Thordarson said, crediting Bowser's insights and the group's input for helping his $5 million business. "I got a better idea of what I should expect from my sales team," he said.

In addition, sharing such knowledge also helped create new partnerships with other integrators to tackle business opportunities, Thordarson said.

Shirley Collier, president of Paragon Computer Services Inc., Baltimore, a $3-

million network integrator transitioning its model to that of a Web integrator, is following Bowser's lead although she is not familiar with his group.

Collier heads the International Alliance of Technology Integrators (IATI), a group that talks shop every two weeks.

For Collier, discussing business details with peers is instrumental. "It is explosive. It is so good to hear other people outside of our market talk about problems and solutions," said Collier. IATI has 14 members.

Jon Klaus, chief executive of VentureNet Inc., Dallas, a $3 million network integrator, credits his IATI membership as a boost to his company. "We've learned how to become more productive and efficient with our primary product, that is our engineers' time and expertise," he said. "Before the teleforums, our engineers averaged about three hours a day of billable time. We now average about five hours a day."

Through intense group discussions, Klaus has learned how to move VentureNet from a break/fix model to a project-based service model. Klaus finds he is both a teacher and a student.

"I treat the other members of the group as advisors and consultants, and I am quick to return the favor," Klaus said. "There is always someone to talk to who has been through what I am dealing with."