Michael Kulik vows to treat customers at his growing firm the way he did when the company was small.
John Breakey promises to broaden his firm’s managed services.
Andrew Watson will drop his company’s system building unit.
It’s corny, but many business owners make New Year’s resolutions, perhaps in the expectation that a goal set at the start of the year may actually get accomplished.
Targets like these are good starts, says Bruce Stuart, president of Vancouver’s ChannelCorp. Management Consultants. But he warns that to make sure their resolutions see the light of day resellers have to put their company’s financial state in order.
Take Watson, for example, president of Kamloops, B.C.-based, Voda Computer Systems Ltd. which has offices in three other B.C. towns. Stuart approves of his plan to stop building PC systems because with the price of OEM hardware continually dropping, his white boxes can’t compete.
“The time it takes to build basically an appliance today doesn’t make sense any more,” said Watson. For $700 he can sell a brand-name desktop and make his money back through a three-year warranty.
It’s part of his plan to do more with almost the same amount of staff. One person has been hired to test and create standard images with PC solutions for small and medium businesses, with hardware ready to go. “When our sales guys go out they’re really only going to be quoting a couple of solutions, so they’re not going to be wasting a lot of time trying to find things,” Watson said.
In addition, Voda is going to start charging for the hour it takes to create desktop images with the latest Windows updates on OEM machines, a service that a number of solution providers give away. “It doesn’t increase your cash flow” not to charge for this, he said.
These are the types of moves resellers have to make, says Stuart, who offered his own take on resolutions partners should be making:
• Cash is king, he said, so resolve to isolate which operations and people are generating and which are consuming money.
“People in this business don’t die because they run out of revenue,” Stuart said. “They die because they run out of cash.”
It’s easy to identify and drop products and services you aren’t selling, but doing something about people is harder because of what they sell. Stuart advises transforming all internal payments to be cash-receipt triggered – in other words, the sales force gets paid only when invoices are paid. That may give them an incentive to sell products such as leases, which speed up the cash cycle.
• Growth is gold, so resolve grow your business but in a smart way.
First, sell to your base. Second, sell to someone new within your base – find a new buyer for a product within an organization you already sell to. Once you’ve canvassed those opportunities, look for ones within the market you sell to. Only then, Stuart emphasized, should you look at moving into a new market, and only if you have positive cash flow.
• Before moving into a new market or selling a new product, resolve to ask yourself the following questions:
How much money will you have to invest? (Vendors, Stuart said, should be able to help answer that question.) How long will it take for the incremental growth margin to pay that back? (Stuart suggests 12 to18 months should be the target.) What is the return on assets deployed? (Stuart suggests three to five times the prime rate.)
Channel managers can make a few resolutions for dealing with partners, too, said Stuart:
• Recognize which products and programs consume a VAR’s cash or will generate it, so you don’t push partners with cash flow problems the wrong way. “Don’t predicate making your numbers on things that aren’t going to happen,” he warned.
“As a channel manager, your fight in 2007 will not be market share,” said Stuart, “it will be an investment share or share of wallet fight. You don’t grow your business with a channel partner unless you grow the amount of investment the partner makes in your business.”
As for those other resolution-makers, Kulik, president of Markham, Ont.’s, Digital Vantage Point hasn’t set financial goals. “We want to mature,” he said of the firm, which specializes in Microsoft Dynamics NAV. “We’re in our 10th year, and we want to mature into that 10-year, 20-person company while trying to keep our excitement about new technology and ethical behaviour.” By ethical behaviour, he means being dedicated to customer respect and satisfaction.
Breakey, CEO of Unis Lumin, an Oakville, Ont. Cisco gold partner with 140 employees, has resolved to expand the company’s managed services to a more “a la carte” offering. He also wants to expand into converged video security products.
