Summer is Over, and It’s Time to Start Planning
We may still have one-third of the year left to go, but it’s not too early to start making business plans for 2016.
By Larry Walsh
Watching my beloved Red Sox play over the weekend was bittersweet. As a lifelong Boston baseball fan, I was raised on the mantra, “wait until next year.” That axiom has never been truer for the Fenway boys, as they’re currently 14 games out of first place and a longshot for even a wild card slot in the play-offs.
In other words, it’s time to start thinking about next year rather than worrying about October games.
In the technology channel, there’s no post-season, but there is next year. Now that Labor Day is upon us, vendors and solution providers shouldn’t be thinking just about how they’re going to close 2015; they should be making plans and adjustments for 2016 as well.
Over the summer, The 2112 Group released its 2015 Channel Midyear Performance Report, which forecast that the average solution provider will grow at least 6 percent in 2015 – with as many as four out of 10 growing 15 percent or more. These are remarkable numbers, especially against the backdrop of global economic uncertainty and stock market fluctuations.
Solution providers’ success is driven by services. The average reseller, MSP, and integrator is earning as much as two-thirds of its gross revenue through some sort of remotely managed service that’s independent of, or only loosely tied to, a vendor product or service. In other words, they’re generating their own revenue.
While solution providers are growing, it’s not necessarily a healthy or sustainable growth. Most of the increasing revenue is coming through revenue accretion and account expansion. Through managed services and recurring revenue, solution providers are reaping the benefit of compounding revenue. Additionally, they’re expanding the yield per account by adding more services.
Where solution providers are struggling, though, is with new account acquisition. Most solution providers say that finding and closing business with new customers is their biggest challenge. A tacit recognition exists that the inability to capture new customers will ultimately stunt growth and profitability.
This is where vendors can help. Solution providers are looking to vendors to infuse new sales leads, provide marketing support, and open sales opportunities with new products and services. These are things vendors are more than willing to do for their partners, but there should be a catch. Partners should commit to goals, plans and performance expectations to receive vendor support.
Less than 60 percent of solution providers have a formal plan for growth; around 40 percent have guidelines for normal business operations; and about 40 percent have annual sales and growth targets. In addition, many of the growth and sales plans that do exist are inadequate or incomplete, and, in some cases, they’re merely vague notions of direction.
Vendors can make a difference by helping partners plan for next year and their near-term future. While many vendors already draft business plans with partners, much of that planning is geared toward vendors’ self-interests. They’ll look for commitments on product sales, regardless of where the partner wants to take its business. Instead, vendors should engage partners in discussions about their overall business health, and then figure out how to insert themselves into plans for future growth.
Through joint-business planning, vendors and solution providers can gain greater understanding of their respective goals, products and services, and customers. They can strategically apply investments and resources toward reaching those goals, rather than approaching the market haphazardly or opportunistically.
Why would a vendor put the partner’s general business before its own interests? As the old saying goes, “a rising tide lifts all boats.” If the partner is running a healthy, thriving, and growing business, it will bring the vendor’s sales up with it. Sales plans that focus exclusively on the interests of a solitary vendor may produce results for that vendor, but they could also put the partner off balance and risk the health of its operations.
While there’s never a bad time to start business planning, earlier is always better. Vendors should be reaching out to partners to see what they’re thinking for their businesses this winter and into next year, what resources they need, and where they fit into those plans. Even engaging in this conversation can spur partners to think about making plans.
While many people will hold on to summer as long as they can, businesses can’t afford to wait to make plans for the future. Just as my Red Sox are probably already thinking about what they need to do in the off-season, vendors and solution providers need to start thinking about setting 2016 goals, identifying resource and investment needs, and making plans for their operations.
The 2112 Group has tools and resources to help with goal-setting and business planning. For more information, please contact us at [email protected].