Monday, September 21, 2009

Fall is Farming Season

I come from a farming family. Farmers know that seasons matter -- a lot.

You plant in the Spring. You grow in the Summer. You harvest in the Fall. And in the Winter? You go hunting. ;-)

Sales people use the same terminology: Hunting and Farming. Hunters go get new business. Farmers tend to the existing business. Businesses need a little of each.

This Fall brings an interesting set of circumstances for most of us. We've been through a tough recession. People with managed service models fared okay, for the most part. As discretionary work declined, revenue declined. And, eventually, as clients cut back, the number of seats under management declined.

Very few one escape an economic fiasco like this without some impact.

Those who were only half committed to managed services were hit pretty hard because more of their income is based on discretionary spending. Those totally reliant on break/fix were hit the worst.

But now comes the "Recovery," promised for Q4. That starts in two weeks. Are you ready for a flood of money to wash your way? If so, settle down and be patient a little longer.

There are several reasons you won't likely see a quick turn-around.

First, we have a lot of economic "stuff" that still has to work its way through the economy. There are still plenty of hedge funds that have to collapse. After the recent run-up in the market we need to retrace a bit and make sure the rally is sustainable. And the housing decline will ripple through the global economy for 5-10 more years.

Second, if you've cut back your staff, will you start hiring on Thursday, October 1st because the recession's over. I hope not. No. You'll wait until the work starts coming in. And then you'll see how far you can go with the staff you have. Only when you know you can sustain another employee will you make that hire.

Your clients are the same way.

Early in a recovery, productivity skyrockets. Why is that? Well, we put off hiring and load up the people we have with more and more work. Eventually, our staff is totally over-workd and we hire someone. It's simple math. When five people are doing the work of six, productivity is very high. When six people are doing the work of six, productivity goes down.

The result of all that is that your clients will put off hiring until they're sure the work is sustainably high enough to hire someone. When they start hiring, you need to be ready. But don't preemptively hire someone unless you have strong knowledge that it's necessary. You'll kill your own cash flow (more?) if you hire someone and don't have enough work to keep them busy.

Third, your clients may have some equipment they've taken out of use that's perfectly good. So they'll put that into use before buying new stuff. Granted, there are servers and desktops that need replacing and are now an extra 12-18 months past their prime. But few clients are going to open the flood gates.

Now For The Good News

The turn-around will be slow, but it will come!

As we emerge from this recession, here are a few things to watch out for:

1) Home Offices

2) Cloud Computing / Hosted Services

3) Altered buying habits

Home Offices will become much more common. In fact, I think this recession will represent a watershed event in modern economics. Very small businesses (micro-businesses) shut their doors, cut their staff, and now have three people working from their homes instead of five people working at an office.

Many of these people are never going to rent office space again.

There are several reasons for this. First, the cost difference is dramatic. They see that now. Second, there are so many hosted services and outsourcing businesses that they don't need to buy all the equipment they used to buy and load up all those depreciating assets. Everyone will run a little leaner.

This is good for you if you work with micro clients and sell your services on a monthly recurring basis.

Cloud Computing and hosted services will allow businesses of any size to make different choices about technology. I believe many businesses will buy their last server in the next two years. For many businesses, they need to buy one more server right now in order to make all that legacy stuff work. But they also need to keep an eye on how they're going to transition away from owning their own servers.

You need to be in a position to advise them. Sell them the right technology, the right server, the right services, so that they can gradually offload processes and databases over the next several years. Don't pretend this won't happen. Help your clients make these plans.

If you don't do it, someone else will.

Altered Buying Habits are hard to pinpoint, and will vary from industry to industry. But keep your ears open. Figure out what your clients are going to do and how they're thinking about technology.

It used to be that people paid $30,000 for a computer system and wanted it to last forever. Five years later they finally gave in and realized they need to replace it with a newer, faster, better system for $10,000. Now, four years later, they know they need to do something and are hoping you can get by on a $6,000 investment that will last three years . . . and then they can stop buying computers.

People don't want to own computers. They ARE willing to pay for technology that makes their business work.

I first heard it from Brian Tracy: No one wants to own a 1/2" drill bit. They buy a drill bit because they want a half inch hole. Clients don't want to own a server.

- - - - -

As you can see . . . This Fall is Farming Season.

That means you need to tend to your business. Call your clients. Let them know you're here. Ask them how things are. Take them to lunch. Call them after you complete service requests. Schedule Technology Roadmap meetings. Engage them.

And, happily, introduce them to some of the cool new technology that has emerged during the last 12-18 months. Many people stop looking when they know they won't be buying. So even techy clients may not know about MiFi or netbooks. You may not be able to sell them, but this is not a selling season. This is the farming season.

Love you clients. Nurture them. Be the one they come to with questions about technology.

Business will be back. And by next Summer is could be booming. Get ready. Prepare.

And tend to your farming.


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1 comment:

  1. Hi Karl,

    Do you know if box office is being launched in the UK?




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