Sunday, October 12, 2008

CT and the Economic Crisis

A popular question I get these days is "So how is the economic crisis affecting Computer Troubleshooters?". Interestingly I get this question mostly from strangers - someone in the elevator who sees the logo on my shirt, for example.

First of all let me share this site from Money Magazine which I think does the best job of summing up how the current financial situation is affecting most Americans. The truth is that despite the gloom and doom in the headlines every day, most Americans are not directly affected by the financial meltdown. True, many retirement funds (including my parent's) have been diminished, and some people are seeing a direct impact on their personal finances: I heard this week from a college-age friend who was laid off from his restaurant job, and from another friend who owns a handyman business and who told me he's seeing less work right now. But most of us are OK.

Like every business I suppose CT is affected by the economic crisis, but not always in the ways you would expect. We've seen isolated incidents of collections problems, mainly with small business clients in the home building or auto sales industries. At least three CT's have had to close because the owner was affected by some poor decisions in the real estate market (these were mostly in southern California and Arizona). But other than that, business appears to be booming for many of us.

Take our small business clients. Even though most small businesses aren't directly affected by the economic situation, there is some anxiety in the marketplace. This may manifest itself in a reluctance to increase expenses, either for large-ticket purchases or for hiring new staff. But for us, as the "IT Department for Small Business" [tm] this just means that those same businesses are more likely to incur higher maintenance costs as they keep older servers & workstations in service longer, and it means they're more interested in looking at ways to work more efficiently with a smaller staff (which is right up our technological alley, so to speak). With all the uncertainty in the market small businesses are also more eager to look for ways to reduce and stabilize their IT budget, which is exactly what our B.E.S.T. managed services program is designed to do. And we've done well in ramping up services this year that small business clients find most helpful during recessionary times - services to help them improve their productivity and their profits through better use of technology such as our new VoIP and Search Engine Marketing services.

We're even taking that one step furthur by expanding our HaaS (Hardware-as-a-Service) offerings this fall. HaaS allows a small business to get the latest & greatest hardware & software, plus a complete Proactive service plan, for one low monthly fee. A typical example would be a small business who gets a a new Dell Small Business Server, four new state-of-the-art workstations, all fully loaded with the latest Microsoft Office, plus our premium data backup package. If purchased up front that could approach $10,000, plus $520/month for our total service package. For a small business worried about conserving capital, that's a lot of money. But in a HaaS offering we could do the whole thing for no money up front and around $800/month. Considering that this includes everything they'll ever spend to cover any normal IT problem (i.e. no surprise bills in the future), that's a bargain -and so far it's proving to be very popular with our small business clients.

As an interesting side note I was talking with one of our funding partners for the HaaS program last week I asked him the same question everyone asks me - "How's the economic situation affecting YOUR business?". Thinking that if it affected anyone I knew, surely it would be affecting a financial guy. But he said it really wasn't - he said that 80% of his funding sources were completely unaffected by the larger financial meltdown, and even for the ones who were it was only a minor blip. Approval rates and interest rates are comparable to what they were a year ago. I guess that's the nice part about working in the world of small business - we're a lot more stable than some other businesses.

There are two other areas besides our core small business clients where CT could be affected: our residential business, and franchise expansion. What we're seeing, both internally and from external news reports, is a "nesting" pattern among our residential customers. This means they're pulling back from external expenses, like expensive vacations or new car purchases or even going to the movies, but they're investing in their home entertainment experiences. And for most residential customers, "home entertainment" is becoming more PC-oriented. In my own living room I've got a PC connected to my HDTV so I can watch shows from, and apparently I'm not the only one. Residential customers are spending more on their home technology, and that's good for us in general but especially good for our H.O.S.T. managed services plans - the industry's only managed service plans for home technology.

And franchise recruiting is going well - we've added 5 new US locations in the last 8 weeks, plus locations in Australia, Canada, the UK, and South Africa. During times like these more people feel uncomfortable in the corporate world and look to "take control of their own destiny" through self-employment, so CT benefits from that as well. True some have more trouble getting financing, and those looking to use our 401k conversion program may be less likely to tap into their retirement funds if the funds are 22% lower than they were last month thanks to the stock market pull-back. But we're expanding our internal financing options to compensate, and I expect our growth will continue to improve.

So as strange as it sounds, the economic crisis has been pretty good for Computer Troubleshooters so far. Granted there are always exceptions and not everyone is doing as well as we'd like them to, but overall things are good and improving. This looks like it will be my third recession as a small technology business owner, and so I can tell you from my past experience that there are good things that come from a recession. As a business owner you may find that things like office space and some services are cheaper because of the reduced demand. Gas prices are coming down, which for a business that does a lot of our work at the customer's location is important. And finding good employees, particularly right now if you're looking for salespeople, general administrative help, or level 1 technicians, can be easier and less expensive than it would have been two years ago. It's also a time when some of our weaker competitors (usually the poor-quality, low-price ones) will close down, leaving more potential clients for us.

It's not all doom and gloom, no matter what the headlines say. I know there are people affected by the economy today, including friends of mine. But I believe very strongly that as business owners we have a responsibility to be successful and profitable, so that we can add value to our employees, our clients, and our communities. And everything I see tells me that Computer Troubleshooters is doing very well, and will continue to be successful for the forseeable future.

1 comment:

geovani said...
This comment has been removed by a blog administrator.