As our cover story documents, the economy is not only humming, it’s driving real opportunity for strategic service providers, who are experiencing significant growth in 2018.
While every growth cycle ends at some point, for the foreseeable future there is little indication the market will turn negative. U.S. household net worth rose by more than $2.2 trillion in the second quarter of the year, driven by stock growth and home values. With unemployment at sub-4 percent, we are essentially at full employment.
Employers are increasing benefits to attract workers, and real wage growth adjusted for inflation is also climbing—although at a slower rate than many would like. The uptick in the cycle is being driven in large part by the changes in the tax structure and the result of the corporate and individual tax rate reductions enacted by the current administration. More cash on hand makes it easier to invest and, for many businesses, investing in high-tech has a clear return.
There has never been a better time for SSPs to be doubling down on sales and execution around advising customers where best to invest in high-tech infrastructure, automation or management technology. Most customers are having good years in their own right and generating cash that needs to go to work.
Part of that profit coming from a growth economy and a reduced tax burden is going to be spent to keep the engine primed. Additional employees are a portion of that, which drives added demand on the IT infrastructure. More importantly, however, is the push to add software that drives increased productivity. Businesses are working to give current employees all the tools necessary to be more productive—and that means technology enhancements.
And with a growing dispersed workforce that telecommutes, additional technology solutions are being added, including cloud-based videoconferencing that allows workers to participate in more meaningful ways without being in the office daily.
SSPs that have built practices to enhance the ability of a business to meet the needs of the individuals in its workforce are seeing dramatic growth.
How long all of this will keep up is anyone’s guess. At some point, the politicians will mess it up somehow but for now the trend of lower tax rates and a reduction in the government regulations that have become so overwhelming for many businesses are driving a healthy business expansion we all hope continues.
Solution providers are adding capabilities and technology vendors to their line cards to meet demand, and consolidation of the partner base is accelerating as the private equity market discovers and funds the partner community’s desire to get bigger via acquisition and organic growth.
The opportunity for SSPs to grow has never been greater. Frankly, the market is so good it’s also forgiving of those that don’t have a well-tuned growth model but do have technical expertise. As sure as your next birthday is going to come, so too is an end to this type of growth and opportunity. Partners looking to be part of the consolidation should be pushing that strategy now. SSPs that are driving into new markets should accelerate that strategy as well. If your business isn’t growing, it’s dying. And if you are not pushing hard in this environment to build a bigger and better business, it’s time to do just that. In the meantime, let the good times roll.
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