How do resellers maintain growth momentum?

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This article appeared in the December, 2009 issue of CRN magazine.

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How do resellers maintain growth momentum?

What are the management secrets to fast and sustainable growth? How do Australia's fastest moving and rapidly growing resellers maintain momentum and avoid mistakes that place them in the hands of receivers?

CRN's Fast50 have a number of strategies. These include building infrastructure, close relationships with vendors and distributors, recruiting and maintaining top staff, and keeping a sharp eye on emerging market trends.

Just as importantly, it's all about discipline, which means saying no to a client when the job is too difficult. For Australia's fastest-growing resellers, reputation is everything. It guarantees referrals and repeat business, and that makes managing accounts easier.

Implementing the right infrastructure is a necessary, if painful, process for a company moving out of the start-up phase.

Rob Cheeseman, director of Brisbane-based Kettering Professional Services, says it's been critical for his company. Kettering has a turnover of up to $1.5 million, compared to $700,000 when it started four years ago. Although most of its clients are mid-sized manufacturers, it is moving into business-process management.

Cheeseman says the growth has not been painless and the company put in a general manager and systems three months ago to ensure things were humming.

"We have got a structure now in our organisation, whereas everyone did everything when we started.

"Things do slip through the cracks and you have got to invest heavily in systems. You have got to have not just money, but time. You really do need to proper systems in place before you need them.

"Where we didn't have those disciplines and systems, we suffered a bit of pain and stuff slipped through the cracks."

Cheeseman concedes it's taken a bit of personal adjustment but he wouldn't have it any other way. His No. 1 passion is running the business, hiring people and helping clients. "This way we can help more of them than we could when we started," he says.

"It's a bit weird for me that I don't know everything that's going on any more but that's a good thing.

"It's probably not as dynamic as it once was but it's a lot more robust."

Blue Apache Information Systems managing director Chris Marshall says his company has invested heavily in having the right systems and infrastructure. It's also very much about discipline.

"We have built the system and infrastructure to support the growth and that is something that has separated us from the some of those fast companies that are in administration the next week," Marshall says.

"We make sure we have the capabilities and systems to support new accounts before we pursue those sorts of customers. We make sure we are in a position to source and support those customers before we pursue them."

Established in 1998, Blue Apache started out as traditional integrator building PCs and supporting micro home-businesses. Growth has been steady and the reseller is now targeting mid-market customers. The big transformation happened over the past three to four years. Services now form the core part of its businesses, with a heavy focus on providing outsourced services and 24/7 desk services. Turnover is $3 million.

Marshall says systems are important for mitigating risk. It is also the key to having a business that is well established while still maintaining the buzz of a start-up. "We make sure we are cross skilled so that customers can feel confident that Blue Apache has the resources to provide very comprehensive high level technical expertise.

"Cross-skilling ensures there is no one person responsible for a particular piece of technology. What we find is that organisations like working with smaller, more personal integrators but the issue they have is that there is a risk associated with intellectual property held by one or a small number of people within that organisation. When those people move on, it presents a number of challenges for the customers.

"We have found we have covered that risk now that we have grown to a more substantial organisation. That risk has been mitigated and yet we are providing boutique, personalised services."

Reputation is a critical part of the equation. David Okulicz, managing director of the Perth-based Kytec Group, says reputation and cashflow go together. And Kytec knows about cashflow. Having started in August, 2006, it has grown 200 percent year on year; last year's turnover was $4.8 million and Okulicz says the company is on target to hit $10 million this year.

Having a good reputation, Okulicz says, keeps clients which ensures the money keeps coming in, and that means occasionally making hard decisions and knocking back work which can undermine the reputation.

"We had one guy trying to sell air conditioning to a big insurance company and I walked in and pulled the pin on that," Okulicz says. "He said it could be a $300,000 profit and I said that wasn't the point. The point is we don't install air conditioners better than anyone else.

"We aren't capable of being the best web designer in the world, therefore we don't do web design. We are not capable of being the best ISP in Australia and therefore we haven't gone there. But we are more than capable of being the best managed service provider or the best system integrator or the best communications integrator so that's the place we go into.

"There are times where we have had to say to our customers we aren't the right company for you. We have said that not because we couldn't make it work but more because we weren't able to service our existing customers effectively if we were to take on that project.

"For us, it's all about reputation. Our reputation is the most valuable thing about our company and all our customers know we get it right the first time and every time. I would rather lose a deal if it was going to damage our reputation. No single deal is worth what our reputation is worth to us."

For Sydney-based reseller Commulynx, reputation is part of the strategy that has seen it doubling its growth every year.

Last year turnover was $1.5 million and the company expects to continue along its growth trajectory. Commulynx MD Stephen Knights says reputation is the key to managing growth. "Our biggest challenge is growth itself," he says. "It's about picking your battles.

"We get a lot of opportunities but we can't do everything. We have to pick the best work that's fits our mould and try not to deviate.

"You can't be everything to everyone. Some of that we have learned from our mistakes and some of that we have tried to engineer."

The critical part of maintaining reputation is managing your networks, and that means developing close relationships with vendors and distributors.

"In particular, it's been the vendors and distributors who have been supporting us heavily. They have passed us off leads and referrals and lined us up with direct business," he says.

"Part of our strategy is to work tightly with them."

He says this is even more crucial in a tight economic climate when clients are slower to pay. "A large part of the business we are getting is referral and referral based business is essentially a shorter sales cycle."

Knights uses networks such as the Macquarie Graduate School of Management to generate business. Vendors and distributors are also part of his network. "You need to put them in the business network category. It's about making sure you are always talking to your network and making sure that when they see an opportunity, they think Commulynx".

Reputation is also the name of the game for Sydney's Fast Track Communications, which has had 40 percent growth and more than $9 million turnover. Sales director Ashlee Ball explains it simply: "Most of our business is referral business because our customers know they can rely on us."

The key, she says, is consistency, something that allows the company to work with large and small customers. "The bigger your client gets, the more convoluted and political it gets, the more consistency plays a massive part in ensuring you keep going back again and again."

She says the biggest challenge is finding the right people. "There is no shortage of people out there but you have to make sure they have the right integrity and values. You can teach process but you can't teach attitude. We are very unforgiving in that regard."

Vendors and distributors are an important part of that matrix. "It would be as critical as the relationship we have with our clients," Ball says. "It would be as critical as the relationship we have with our clients. Without the support of vendors who trust you and the distribution channel that trusts you, your customers are affected."

Mike Ford, managing director of Accord Technologies in Perth, says that is the most fundamental of building blocks for any reseller.

"I have been in the business for over 30 years and it's important to have a good relationship with customers, staff and suppliers."

As part of this, Accord puts a lot of work into training its staff. That includes fortnightly meetings with service technicians to talk about issues including customer relation skills. "We want to provide a quality service, not just a normal service and to do that requires us having exceptional staff and that means ongoing training."

Stephen Borness, owner and managing director of Adnet Technology Australia, agrees. "One of the keys to success in the reseller business is having great vendor relationships and great distribution relationships. Vendor relationships because you've got to fully understand the product and distribution relationships because that's where the credit lies. It's the distributors who provide in most cases the credit for you to buy the stuff to sell to customers."

Borness says a its highly flexible process model lifted Adnet's revenues nearly 80 percent to $11 million last year.

"In an environment where it's difficult to take punts and risk, the challenge is having a business model that is adaptable. Our competitive advantage is that our processes are very adaptable. I don't want to sound smug about it but almost doubling our sales over one year was not a difficult thing to do."

And of course, that also means being close to customers. Derek Ozen, principal of Oztech Business Equipment in Granville, Sydney, says he and his staff spend most of their time with customers, talking to them about them about what they need and what they expect. It has paid off handsomely. In three years, the turnover went from $100,000 to $12 million. And that is set to grow with the company moving into mobile phones and GPS. Ozen expects that will add at least another 30 percent to the revenues.

"I would say that 90 percent of my time is out on the floor with customers." Ozen says.

The skills to grow fast are easily identified. Working with customers, suppliers and staff, being flexible and adaptable and maintaining relationships are key. But then, as the CRN Fast50 learned, the talent lies not in the growth itself but in the ability to integrate the management skills to make it all happen. Their challenge is to keep doing it.

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