Three Tips To Succeeding In A Stagnant Economy

IT channel companies are all too familiar with the impact that fluctuations in the U.S. economy can have on their bottom line. Business came easy during the Y2K rush and was just as hard to come by during the IT buying slump that followed the dot-com bust. The economy picked up again slightly in 2005 and 2006, but it showed slower growth rates toward the end of last year, and economists predict a stagnant economy in 2007. So, with an economic slowdown looming, how can you as a VAR ensure you continue to prosper when businesses tighten their purse strings? The following three tips should help keep you in the black this year.

1. Focus On SMBs
While IT growth in the enterprise sector has been flat over the past few years, the SMB market continues to be a hotbed for technology spending. Lower hardware and software prices and SMB-specific solutions have created increased demand in the midmarket for technologies that formerly only large companies could use or afford. Security products, ECM (enterprise content management) systems, wireless networks, storage solutions, and business management tools are currently among the most popular technologies being implemented by SMBs.

Hardware and software vendors have realized the buying power of the SMB community and are turning to the channel to win more business in this sector. Trying to reach a diverse and dispersed network of SMBs is overwhelming and costly for product manufacturers. The average vendor doesn't have the direct sales, implementation, and service infrastructure necessary to effectively penetrate and support SMBs all over the country. These vendors understand that it makes more economic sense for them to form strong regional partnerships with local solutions providers that focus on the SMB space.

2. Create Models For Recurring Revenue
VARs must shed the "box sale" mentality if they expect to experience future growth. One-time hardware and packaged software sales aren't going to cut it anymore. VARs must ensure they have the expertise to offer services that provide value to their customers and keep recurring revenue coming in throughout the year. Being able to deliver a broad mix of services also appeals to the hot SMB market. SMBs typically lack sufficient IT resources. They seek a solutions provider that can be a trusted adviser that not only sells them the technology, but also installs it, trains users on it, and maintains it. VARs also may want to consider offering SaaS (software as a service) or ASP (application service provider) solutions as a means to increase the recurring revenue they generate. This monthly income can go a long way to lessening the impact a poor buying environment has on your overall sales revenue.

3. Specialize In Recession-Proof Solutions
Many organizations simply need to purchase IT products to help them comply with industry or government regulations such as Sarbanes-Oxley and HIPAA (The Health Insurance Portability and Accountability Act). Specializing in delivering solutions around compliance, such as records management and e-mail archiving, can ensure a steady flow of business despite fluctuations in the economy. The economy may slow down, but compliance demands will not disappear because the regulations triggering those needs aren't going anywhere.