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July 28, 2008

4 Min Read
Economy Tests Accidental Entrepreneurs

They say these are challenging times, but I say this is the best time for good business owners and entrepreneurs to shine. Running and growing a company in any economy is challenging. Grow too quickly and risk running out of cash. Grow too slowly and risk losing top talent that wants growth and opportunity. Add a slowing economy, and there’s fertile ground for entrepreneurial terror.

Through the ’90s, growing a technology resale business was fun. There was more work than you could reasonably handle. Clients were spending money on ideas rather than solving problems, and you were there to help spend their budgets. In the past few years, much of that wild spending has stopped. Businesses are purchasing only the technology they need, not the technology they want. For some, this is the problem. For me, it’s the opportunity – the chance to shake out those companies that never should have been in business in the first place.

Some good companies also might be lost in the transition, but the industry will be better off. There will be more talent available to companies that are well-run and profit-driven. Companies that know how to sell and service their customers will thrive; those that don’t will be left in dust. I have spent the past nine years working with business owners in every walk of life — from moving companies and marketing communications companies, to manufacturers and technology companies. And, I have to admit that technology companies, on a whole, are among the most poorly run.

A boom economy has allowed poorly run companies to flourish in the telecom and IT industries. They are accidental entrepreneurs. They started with an owner who could sell something technical, fix something technical, or saw a demand in the market and tried to fill it. Many are learning on the job. They are not experts at solving technological challenges; they are just a bit smarter than the customer. In addition, many have very little internal structure or operational processes.

So where does that leave us? With a lot of companies trying to figure out how to survive in tough times. Even in this economy, there are many companies performing very well. They run effective businesses. They have excellent sales teams and effective forecasting, so they are staffed appropriately. They have customer service departments that work with their clients to solve problems. They also know how to sell solutions to customers that know that they have a problem, but not sure how to solve them on their own. They also understand the financial side of the business. Finally, they have either partnered with individuals that have the skill sets they lack or have hired people smarter than themselves.

So, if your company is facing hard times, here are some suggestions to help you through:
• Understand where you want to take your company and put together a plan.
• Learn to communicate more effectively. During hard times, employees need to feel that things are good and that their future is safe.
• Install process and systems into your business to streamline daily work.
• Measure and monitor more closely than ever. Decide what metrics are most important for your business and pick realistic targets for success.

Most solution providers run into challenges by hanging on to technical resources way too long and burning up valuable cash reserves when there is little business on the horizon. There is so much talk about all the challenges in the marketplace. Take this time to reshape your company into a healthy and solid business. In any economy, good businesses learn how to survive, and when times get tough, those companies that are not built effectively will not be around for long.

Larry Kesslin is the president of 4-Profit, an advisory services company working exclusively within the IT and telecom channel. Over the past 20 years, Kesslin has worked with solution providers as well as numerous vendors and distributors.

Looking for More?

Hear more advice from Larry Kesslin during his seminar, The Accidental Entrepreneur, at the Fall 2008 Channel Partners Conference & Expo, Aug. 18-20, in Boston. For more information, visit www.channelpartnersconference.com.

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