Value-added Resellers (VARs) have a business model dependent on hardware sales. The big ticket items bring in cash in a lump sum to allow the business to pay bills (like payroll). The business usually is associated with a major vendor – like Dell, HP, Cisco – that presents a quota to maintain gold level support status and discounts. The vendor provides co-marketing dollars, training funds and other incentives for sales. The vendor allows the VAR to leverage their global brand as well. This narrows the focus of the business.
The E-Myth problem is that many business owners spend too much time working IN their business and they don’t work ON their business. As the owner, you have to take time to see the whole ship and set the course.
Stepping back to take a view of the whole ship doesn’t mean doing the books. It means looking 6 months to a year out; talking to peers and industry experts; listening to and recognizing employees; making improvements to processes; and looking for opportunity. It seems like a lot, I know, but if you put it on your calendar, it is possible.
The problem with status quo is that it is static. What will you wish you had started today, this time next year?
No one is saying that you have to scrap your current business model. However, it would be prudent at this stage to recognize that there are new services – cloud services, managed services, conferencing, video, Hosted VoIP – that your customers are buying – but not from you. These services could be an added revenue stream. These services could make you stickier to your customer.
The revenue will be tiny at first compared to your hardware sales. Yet the magic of recurring revenue is that it grows – slowly, over time. The key is to get started. Now. Next year it may be too late.
Tags: strategy, VAR
Related tags: business model, hardware sales, business, services, revenue, sales
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