How To Grow Your Business

For VARs bent on hypergrowth, there's a well-defined road map to unlock success. That's what CMP Channel Group research shows in its 2007 Business Growth survey. Nearly 12 percent of 286 VARs surveyed on their growth strategies and methodologies said they expect growth rates of 30 percent or more above the market in 2007. In addition, more than 22 percent of the solution providers surveyed said they plan to grow 15 percent to 29 percent greater than the market this year.

"We're just steady as she goes and more, more, more of it," says Tracy Butler, president of Acropolis Technology Group, a solution provider in Wood River, Ill., with 2006 annual revenue of $3.4 million. But what Butler calls "steady" is, in fact, fruits of a maniacal transformation of his business model over the past two years from product-oriented VAR to a managed services solution provider. "Everything has to be a managed-service opportunity," Butler says. While his company's revenue was flat during the transition largely because of fewer product sales, Butler says he's on track to grow substantially this year. "We've been focusing on the bottom line as we transition from a products business to a services business," he said. "Now that we've completed that transition, we expect to grow 10 to 15 percent this year. " Butler's decision to target the managed services market for SMB customers in the St. Louis area mirrors the No. 1 growth strategy among rapidly growing VARs. Just over 37 percent of all VARs surveyed said they plan to target new markets over the next three to five years. But for the hypergrowth VARs, that number jumps to just over 55 percent. Also, more than 58 percent of VARs planning to grow more than 15 percent faster than the market this year have plans to expand product lines during the next three to five years. But as they transition to offering solutions rather than point products, solution providers say most of their focus will be on software.

"We're not adding hardware vendors," says Don Richie, president of Sequel Data Systems, an Austin, Texas-based solution provider with 2006 revenue of $27 million and a 2007 growth rate in excess of 25 percent. "We are much more focused on solution sets."

Richie's mindset matches those of the VARs identifying themselves as being in hypergrowth mode in the CMP Channel research. Only about 27 percent said adding new vendors was critical in terms of affecting their business' ability to succeed.

Richie said, however, that his solutions bent translates into stronger relationships with software vendors and a greater focus on services. Sequel, for example, has recently moved into SAP solutions. And Richie noted that virtualization is what's driving much of his new business. "Virtualization is our fastest-growing area right now, both for hardware, services and virtualization software, which in our case is VMware," he says. "We've dabbled in virtualization the last couple of years, but this year we got really serious about it and we'll do several million dollars in VMware applications alone."

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