Magazine Article | February 15, 2012

How Do You Measure Success?

By Mike Monocello, editor in chief, Business Solutions magazine.

As I speak with readers on a daily basis, I’m often reminded of my time as a VAR. We were a bunch of high-energy, tech-savvy kids with a passion for network solutions. However, we were clueless when it came to actually running a business. I’m talking about everything from bookkeeping to marketing. Obviously, this is problematic and not conducive to having a healthy business, and we suffered for it. On top of that, we operated in our own little cocoon, tucked away in Erie, PA, without a good understanding of what our peers were doing to grow their businesses and how they were solving many of the same problems we faced.

Let KPIs Help Drive Your Business Growth
Many VARs I talk to don't have good visibility into their numbers. Even those that do have visibility don't know how they compare to other VARs. The RSPA (Retail Solutions Providers Association) recently put together a committee to gather KPIs (key performance indicators) from its members. After seeing a sampling of its first collection of data at Inspire 2012, the organization's winter thought leadership conference in Costa Rica, I'm blown away and know that any business owner with an iota of business sense would pay serious money to access such information because it can give you clarity on where your business stands. Let me give you some examples.

The average on-site hourly rate for those VARs surveyed is $146 an hour. How do your rates compare? Can you cheek your rates up a bit and make a little more money? The average percent of revenue that comes from maintenance contracts is 10% amongst those surveyed. However, when you look just at the top performing companies surveyed, 41% of their revenue comes from maintenance. So, the top companies are doing way more maintenance than the average companies. How do you compare?

Consider this marketing statistic uncovered during the survey: The average VAR spends $31,000 per year in advertising, which represents less than a half percent of its overall revenue. Everybody at Inspire agreed that's not enough. Other KPIs included in the study include total revenue, salaries, average receivables, number of salespeople, number of technicians, and much more. Pretty killer information, right?

The presentation at RSPA Inspire was just the beginning. The organization has a committee focused on taking this pilot effort to the next level by gathering data from an even larger segment of the market. Business Solutions plans to help in this effort, and it's my hope that you will be willing to contribute. In the coming months, keep an eye open for more information on how you can participate in this research effort and gain access to the gold mine of data.