17 Feb Distributors take the risks that help resellers grow.
Distributors take the risks that help resellers grow.
Business is a betting game.
Hopefully you win more than you lose, and hopefully the big bets are the ones that come off.
Whether weighing up which vendor to back or doing due diligence on a customer, the odds aren’t always in your favour. You don’t need to be Rainman to make the right calls, but a combination of a lot of talent, major self-belief and at least a little bit of luck seems to be the secret of business longevity.
The biggest bets in business are those that pose significant finnancial risk. When you decide to support a certain vendor, that’s a bet: the stakes are staff time for training, money for certifcation and your reputation in putting that certain technology forward.
Extending credit is one of the biggest, riskiest bets – and one that business owners face day in, day out.
This month, I was lucky enough to host a lunch with some channel leaders, where the topic on the table was credit and finance (read our coverage here). At the lunch were the principals of three reseller/integrator companies: Mwave, CCNA and Dataweave.
While three vastly different organisations, all have been incredibly successful. One common experience that all three shared was that in their early days, when their track records were slimmer and their credit limits were low, suppliers had been willing to take a punt on them.
In the channel, distributors are usually the backers that extend credit and allow young, untested partners to win their first major deal. All of the resellers at our lunch said that without the faith of disties, they could not have built their businesses to where they are today.
It’s a cruel irony that distributors face both the greatest demand for potentially risky investments – and the slimmest margins in the channel.
If a bet pays out, every tier of the channel shares in the upside: reseller, distie and vendor. Consider the millions of dollars of revenue that CCNA, Mwave and Dataweave have generated since they first started out – thanks at least in part to the support of disties.
But how often does this support backfire? How often do distributors get caught in a credit nightmare? How often is it the disties that take the biggest haircut? The answer to all three is, too often.
Steven Kiernan is the editor of CRN.