Business in Africa - the bright spot

Here's something that I'll bet a lot of folks don't know about Africa: taken as a whole it's one of the fastest growing (and still growing) economies in the world. Up until recently economic growth in sub-saharan Africa (including the three countries I'll be visiting on my trip) was expected to grow by between 6% and 7% in 2009 (compared to economic shrinkage in most western countries, including the US). And even though those estimates recently got revised downwards, growth still continues despite historically low prices for many of Africa's mineral and petroleum exports.

The problem with business in Africa has essentially boiled down to three things: Culture, Violence, and Infrastructure.

While each African country is unique and stereotyping is very unfair, generally speaking Africa is still a land of hunters, gatherers, and farmers. There is a lot of history here - Ethiopia has some of the oldest churches in the world, Egypt is considered the birthplace of civilisation, and Morocco has Casablanca, my favorite old movie - but by and large almost all African villages and most of the population is agriculturally based. Business, in the modern sense of commerce, is a relatively new thing, but is really booming in many ways.

Violence is still an unfortunate part of life in too much of Africa. Last year's violence in Kenya, which was (and still is) considered a highly progressive and strong African country, showed just how deep tribal conflicts can go. There are numerous signs of ongoing problems - the arrest warrant for the President of Sudan, the suspicion of foul play in the wreck that took the life of Kenya's prime minister's wife, and the coup in Madagascar (all of which happened just this weekend). But one thing that can really help reduce violence is commerce: as people's standard of living improves they either care less about the divisions of the past or find new ways to deal with them. Plus they don't support things that can reduce that newly found standard of living - which often means their support of any causes that may lead to violence is greatly reduced. We're seeing this in Kenya and Rwanda today, where the tensions between groups of people is still present, but all sides realize that if they don't find a peaceful way to resolve their differences it can cause long-term harm to the standard of living for everyone. This is part of why Kenyans hope their truce-government holds together, and much of why DR Congo allowed Rwandan and Ugandan troops into their country to help extinguish some of the militias that have plagued eastern Congo and hampered their ability to benefit from their rich mineral reserves for decades.

Infrastructure in some countries is advancing rapidly. Here in Kenya the big news is that their first major internet backbone, between Nairobi and Dubai, will be completed this year. Right now almost all internet traffic in the country is handled via satellite connection, which is slow and expensive. Right now I'm downloading a 60MB file. Back home it would take a couple of minutes, tops. Here it's about an hour, and sometimes just stops for no reason. And it's costing me $20/day for that. And only a few hotels even offer internet. Starting this June that should all change - as Kenyan internet gets exponentially faster and exponentially cheaper, we should see an explosion in IT services (and Computer Troubleshooters will be ready!), which should lead to even more business opportunities. Rwanda and Kenya are two countries that have realized the importance of IT infrastructure, and are investing heavily in it.

So despite the economic downturn you can expect business development in certain African countries to grow much faster than the rest of the world for years to come. And I'm happy to say that Computer Troubleshooters is here riding that wave, thanks to some smart Master Franchises in South Africa, Egypt, Kenya, Nigeria, Ghana, Botswana, and Cote d'Ivoire. And interest is increasing - we expect to open in Democratic Republic of Congo, Rwanda, Zambia, Morocco, Uganda, and Tanzania over the next few years.

Today I had dinner at Galito's, a popular chicken franchise. Two interesting things about Galito's - it's not US-based like so many other food franchises, it's a South African company. And it's biggest competitor is Nando's, another South African franchise. While the KFC's Colonel has nothing to be worried about anytime soon, if they're smart they'll do what a lot of smart businesses are doing today - invest in Africa.

First stop - Nairobi

Hello from Nairobi!

One of the hardest parts about traveling to somewhere like Rwanda or Congo is that it takes forever to get there. There are few if any direct flights to this part of the world, and even when they are they are very expensive. Here are some well known but worth-repeating tips for folks considering similar journeys:

• Use kayak.com. This site is your best friend in booking cheap travel, because it scans most of the common airline and travel sites looking for flights that meet your criteria.
  
• Book your "from US" travel using a major international airport - usually JFK, LAX, or IAD will get you the best flights to/from Asia, Africa, and Europe, and Atlanta, Miami, and Houston have the best flights to South and Central America. For example if I try to find flights from Atlanta to Kigali, I'll find nothing. But searching JFK to Kigali finds some flights using British Airways, and searching IAD to Kigali finds the best deal on Ethiopian Airways.
  
• Try to find which airlines serve the airport you're going to, and check their websites to find their flight schedules to the airport. For example Kenya Air flies daily from Nairobi to Kigali, but Ethiopian Air (which has the best rates from the US) only flies to Kigali 3 days a week. So if you use Kayak.com and look for a round-trip flight from IAD (Washington-Dulles), if you pick departure OR arrival dates that don't match with one of those 3 Ethiopian air flights your best rate will be $3000+. If you take the time to match your dates to those 3 daily flights you'll get a rate of under $1500, which is a great deal.
  
• Layovers are unpredictable. On my trip I was able to include a 2+ day stopover in Nairobi for less than $300 extra, which was useful for me to check on Computer Troubleshooters Kenya and meet with my friend's sister. But a stopover in Ghana, which would have also been helpful, was $1400 - almost as much as the ticket from the US! Airline pricing is magical, and has nothing to do with actual costs and everything to do with the perceived value of the ticket.
  
• Travel Agents are your friends. For a small fee they can do alot of the searching for you, although I find it still helps to do your own search first so you can know if what they find is really a good deal or not. And often, especially with African airlines, you'll find you cannot pay them except through a travel agent. Major African airlines - Ethiopian, Kenya Air, South African Airways, Egypt Air - do try to take credit cards via their websites, but it's not uncommon for it not to work. For my trip I did manage to successfully pay Ethiopian through their website (first time that's worked for me, out of 4 attempts) but I could not pay Kenya Air - they kept insisting my credit cards were declined, even though all 5 of the ones I tried insisted there was no problem on their side. I had to call in my friendly neighborhood travel broker to pay them through the Sabre system, and I paid them via credit card plus a $35 fee.
  
• Speaking of money, examine your money before you come. US dollars printed prior to 2004 may not be accepted, nor will torn bills. I ran into this trying to buy my visa for Kenya - one of the $20's I handed the immigration official was torn, and she refused to take it. Fraud is a big problem here, so they're hyper-vigilant about some details.
  
• On the bright side, most places will take US dollars, although local stores and restaurants may prefer (or in some cases require) local currency. Many places may take Euros and South African Rand as well, but your safest bet is to carry local currency and USD. Keep in mind that panhandling is very common here so keep some small bills or coins ready, and also theft is common so keep your wallet, purse, or whatever close to you. I keep my wallet in my front pants pocket here, because back pockets are too easy to "pick".
  
• Go with the flow. Airports and airlines are mostly designed to be easy for novice travellers to navigate, so just follow the signs (which are almost universally in english plus the local language, or sometimes in french + local). Be friendly, follow instructions, read signs, and everything will go smoothly.
  

My main flight was an interesting group of people. Lots of missionaries, including a college-age group and several individuals (I think my mother, who worries about ME traveling alone, would be surprised by how many young women are on these flights by themselves, but it's really very safe). Also a singing group who were booked for a lounge show in Ethiopia, plus the usual tourists and returning residents. Ethiopian is an OK airline - I think it will improve drastically once they start getting the new 787 Dreamliners next year. Right now they fly older 767's with limited entertainment options, but the service is good and their safety record is decent.

So after 20+ hours of travel, which included a 8.5 hour flight to Rome where we refuled then continued for 5.5 hours to Addis Ababa (Ethiopian's hub, naturally) and a 2 hour connection flight to Nairobi, I finally arrived. I was very fortunate in that Vincent Njoroge, owner of Computer Troubleshooters Kenya, offerred to pick me up at the airport and take me to the hotel. All I wanted to do was sleep and take medicine (I've had a cold for about a week, which makes air travel even less fun).

I did wake up in time to take a stroll to see some local sights last night. Nairobi is a big city by African standards but would be considered a "town" back home. My hotel is right downtown, surrounded by office buildings and a sea of people (especially on a Saturday night, which is clearly "date night" here too). Adjacent to the hotel is a square where the matutus (local minibuses) all gather to get passengers. It's hard to describe the scene, but imagine 30 or 40 15-passenger minibuses all crowded onto the same street with both a driver and a hawker shouting out their destinations and trying to woo local business. Meanwhile thousands of people walk through the buses looking for one going to their destination, and dozens of street vendors walk around selling cigarettes, flowers, fruit, etc. Diesel exhaust is everywhere, and the art of walking between moving buses and traffic takes some getting used to, but the easy way is just to find someone walking in the general direction you want to go and follow them -closely!

Kenyans are friendly folks, and several tried to strike up conversations with me as I walked around. Since it was 7pm locally I was trying to find a local Nando's which was supposed to be close by for dinner (Nando's is a South African fast food franchise). No luck. But as I walked along a man named John struck up a conversation, about where I'm from, how long am I in Kenya, what do I think of Nairobi, etc. He also helped me to fend off a panhandler on one street, though I did give the guy 500 shillings (about $4), much to John's disappointment. (He said it was for crippled children, not sure if that's true or not but it's hard to pass up.) John asked where I was going, and I told him I was looking for somewhere for dinner. "Are you vegetarian?" he asked, which I thought was strange. "Because if you are not vegetarian, there is a place down there which is good local food." I asked him if he would join me, and he agreed so we headed towards the place he recommended, which turned out to be this little hole-in-the-wall joint. I like local hole-in-the-wall joints, so it looked good.

Kenya is an easy place for Americans to visit because, as a fellow former British colony, English is widely spoken and almost all written materials are in English, which included the menu in this restaurant. Still I only recognized a couple of things which were clearly Indian (Chicken Tika and Chicken Curry), but I chose something called "Beef Fry". It was served almost immediately, and turned out to be some sort of beef-bits in a gravy, with something like spinach, and a large slab of something starchy like polenta or dry grits. It wasn't bad, and I washed it down with some sort of tangerine-soda. (By the way, Coca-Cola, who distributes most soda in Africa including the tangerine thing I had, still uses original Coke formula in glass bottles here - wonderful!).

During dinner I got to know John a little - he has a wife and 3 kids, ages 22, 15, and 11. The 22 year old is a step-son. He does temporary jobs for an Indian contractor in Nairobi, but work has been slow lately. He is often surprised that I know things about Kenya. He expected me to know that Obama's family is from Kenya (and, btw, Obama signs, stickers, and books for sale are very prominent in Nairobi). He was somewhat surprised that I had heard about the violence and problems Kenya had last year. He was completely floored when I said "You mean the violence between Kikuyu and Lua?". I explained that I have many friends who are in Kenya or who have been to Kenya. He found out I was Christian and he asked me about my church, and my mission trip to Congo next week, and told me about his "born again" experience.

He also asked me about America. Does America have panhandlers like we have here? Yes, maybe not so many but we do have them. Do Americans have problems finding jobs like we do? Again yes, but maybe not as bad. Why would America elect a black president from Kenya? Because we felt he was the best choice for the job. Are black people equal to white people in America? Legally, yes, but in reality the situation is more complicated. Do Americans have malaria? No, not like Africa. Do Americans have HIV/AIDS? Yes, but not like Africa.

And then, "Do Americans realize how fortunate they are?". No, I conceded, most probably don't.

After dinner we exchanged email addresses, and parted company. John headed to find a matutu, I walked back to the Hilton. I gave him a few dollars to help with his son's school bills, and he said he would pray for me next week. All in all, it was a great way to start my month-long Africa journey.

The journey begins?

Yesterday I took some friends to lunch at the SunDial restaurant in Atlanta. The goal was to find an interesting place where my friend Paul could get pictures taken of him, his wife, and their kids that he could show to his family back in the Democratic Republic of Congo (DRC). Now any trip to the SunDial is always interesting - for those who don't know the SunDial is the restaurant on top of the tallest hotel in the western hemisphere. It's a rotating restaurant on the 73rd through 75th floors of the Westin Peachtree Plaza hotel in downtown Atlanta, and normally offers gorgeous views of the entire metro Atlanta area over the course of a meal. But Sunday was different. Sunday was snowing. Hard. And since the SunDial's glass elevators are still blacked in after last year's tornado damage, you really couldn't tell we were 73 stories up. All you could tell was we were in a big restaurant with giant windows and a big swirling mass of clouds and snow outside. The SunDial's best asset - it's view - was totally useless.

In a way though that's a good place to start the story of my trip. Becuase the pictures Paul was taking, and is still taking in fact, are for me to bring to his family when I visit them in Kenya, Rwanda, and DRC this month. I'm spending most of March on a mostly personal trip into rural Africa, partly to help an old friend and partly becuase a new friend invited me. Mostly because I feel called to go, and I can't really explain why becuase you'll think I'm crazy. But I do know that what I usually think of as my best assets - my tech skills, and my business skills - are going to be as useless as the SunDial's view when I'm walking through a region with no electricity, no phones, and no businesses.

People ask me why I'm going, and when they do I've noticed there are two very distinct types of question. One is the question asked with a look that clearly indicates the questioner is trying to determine exactly how crazy I am and how much longer they can politely talk to me before they step back into somewhere or some topic that's more comfortable. It's the same way I treated the homeless woman shuffling through a Denver burger shop last month, who included each table in turn in her one-side conversation about how her kids had never been on welfare in Kentucky. "That's good." I told her, as I focused my attention on my french fries. "That's interesting" is the response I get from my uncomfortable friends as they too find something more comfortable to munch on.

The other people ask me why I'm going with a sense of envy and excitement and anticipation. These are the people who I think will seriously consider joining me on this trip next year, and hopefully some can make it work. It's not an easy thing to get away from work and civilization for a month, and I don't know that I'll be able to do it again either. But these are the friends who either understand the need of the people I'll be visiting, or the understand the need to see what life is like for a completely different culture than mine, and they share my excitement and my nervousness and my sense of responsibility, and I appreciate that.

So this Thursday the journey begins. I'll leave Thursday for DC, leave DC Friday morning for Kenya (28 hours from first takeoff to final touchdown, yikes!), and after a couple of days working with Computer Troubleshooters Kenya and buying some supplies I'll head to Rwanda where the real heart of the trip begins. The first week and last week of my 4 week trip will be spent in Rwanda, with my friend Jean's organization ARDR, helping them in their mission to imrove the quality of life for people in rural Rwanda, especially widows and orphans of the 1994 genocide. I was there last year and saw some of the work they do, and it's overwhelming in every sense of the word how much need there is in that part of the world. I met a woman in Rwanda last year who lost her family in the genocide, but still has a banana field. Once a month she cuts down a bunch of bananas, takes them to the market, and sells them for $20, and that's how she lives. Her dream in life is to one day be able to buy a wheelbarrow so she doesn't have to carry the bananas on her head.

The other two weeks of my trip are the ones I'm more concerned about, because we'll be going into areas where the woman with bananas would be considered well off. South Kivu is a province in DRC which has seen more than it's share of war over the last decade. It's relatively peaceful now (unlike North Kivu) but there are no guarantees it will stay that way. I know people from South Kivu, refugees I've met over the last two years who live near me and who sometimes go to my church. The stories they tell are often horrifying to American senses, and I won't repeat them here but suffice it to say that massacres, killing, raping, and starvation are a sadly normal part of their life. Their government is poor, far away, and really unable to care for them. The local armies only care about what they can use from them. The international community is rarely even aware of them. So into this world where injustice and poverty are the norm, a Christian group from Germany is going to show them that even when no one else cares, God cares for them. Thus the name of the group: GodCares. It's one of GodCares principals who invited me, a man named Nelson Mukiza who grew up in this area and is now a Canadian citizen. Nelson invited me, and I realize this is not an invitation that comes along every day, so I am going. I don't know what I'm going to do when I get there - my vision on that is just like yesterday's view from the SunDial, nothing but haze and fog and swirling shapes. But I know that I'm invited, and even if they don't have electricity or businesses to run I know I'll find some way to be helpful.

If you're following my blog, I would appreciate your prayers and support too. I will do my best to keep this space updated while I'm over there, and I've included some photos and other information on my other website, www.godcares.us. If all goes well I'll be back in the US on April 4th, no doubt exhausted and thinner and with many more interesting stories to tell.

Do You Have to be Crazy to Start a Business in 2009?

Earlier this month I knew it was long past time for me to do a webinar for potential Computer Troubleshooters,so I started thinking about content. Normally I'd put together something about all the new features and benefits we added to the franchise over the last year, or some case studies of existing franchisees. But this year, given all the economic news we hear about constantly, I figured I should start with the big question every potential entrepreneur has to ask themselves right now: "Do I have to be CRAZY to start a business this year?".

Having settled on a title, now I had to fill in the details, so I started doing some research. Fortunately we've got a lot of experience with this, since I've personally started four businesses now and two of those were started during previous recessions. I also researched outside sources, including business publications and news articles. And I found some very interesting information - the consensus among all the experts I researched was that a recession is a GREAT time to start a business, but you have to be careful. You need to think about your business, and focus on what it will take to be successful. But if you do build a successful business during a recession, you'll be well poised for even greater success when the economy recovers. And you'll be in good company: Microsoft, HP, Google, Disney, and McDonald's are just a few of the well known companies who were started during a recession.

Why is a recession good for business? Generally speaking there are 8 benefits that any business owner will see in a recession:

1. Wages are lower
2. Top talent is readily available
3. Office space & Retail space is cheaper
4. Used equipment & furniture is cheap and plentiful
5. Advertising venues are more willing to negotiate prices
6. Poorly managed competitors may fail
7. Building a strong foundation now can lead to explosive growth when the economy improves
8. Forced frugality and tight focus are common in long-term successful companies
   
   

But to be successful, we identified 9 principles for business success during a recession:

1. Must have a Strong Business Plan
   It's that old adage, if you fail to plan, you plan to fail. A strong business plan will guide your actions as you get your new business off the ground, by focusing on who your customers will be, how you will reach them, and how you will make money serving them.
   
2. Must use Strong Financial Management (i.e. Waste Nothing)
   Success in a recession is all about efficiency. Every dollar you spend needs to do it's part to improve your business - there's no room for waste.
   
3. Must Use Smart Marketing
   This builds on the financial management principle. Not all marketing is created equal - you want to identify and implement the marketing methods and messages which will give you the most bang for your buck with your target customers.
   
4. Must Use Personnel Effectively
   The reason why layoffs are so endemic in a recession is because businesses start taking a hard look at which positions truly help them reach their business goals. As a new entrepreneur it's critical that you hire the right people, compensate them fairly, and manage them well.
   
5. Must Focus on What Sells
   This sounds obvious, but it's often forgotten. What sells well during a recession? Every industry has opportunities, but there are five general categories that do better than others when the economy is on the rocks:
   a. "Essentials" (groceries, office supplies, internet connections, pc repair)
   b. "Discounts" (dollar stores, thrift stores, pawn shops)
   c. "Small Indulgences" (spas, candy, hair salons, massage parlors)
   d. "Nesting Accessories" (home entertainment technology, some appliances)
   e. "Productivity Boosts" (some training, some software & consulting, websites/SEO)
   (And it's worth noting that Computer Troubleshooters fits in 3 of the 5 categories!)
   
6. Must Invest In Technology & Tools
   Being competitive in a recession means being more efficient and effective than your competition, and that often means better tech & tools.
   
7. Must Network
   The best marketing in a recession is one-on-one, doing business with people you know.
   
8. Must Treat Customers Like Royalty
   Self explanatory - customer service always goes up in a recession.
   
9. Must Stay Inspired
   This one surprised me, but several authors mentioned it in some form, and it makes sense. It's easy to let the daily barrage of bad news get you down, and that's especially true during the challenges of a first-year business. You need a way to stay upbeat and focused on your long-term goals. Mentors, inspirational literature, entrepreneur groups, or franchises can really help you stay positive and stay successful.

If you'd like to view the webinar recording, it's available here:
http://comptroub.com/downloads/webinars/ProspectWebinar1.30.09/lib/playback.html

Opportunities in '09

Whatever else happens, 2009 is unlikely to be "business as usual" for anyone. Some industries are struggling, some regions are struggling, and pretty much every small business is taking a hard look at their expense sheet to figure out where they need to "get lean". Downsizing is rampant, prices are falling, and people in general are just anxious about the overall state of the economy.

For the most part small business IT consulting has not been as directly affected by the downturn as other industries. For me personally I started my computer consulting business during the recession of 1991, grew pretty strongly during the recession of 2001, and the feedback I'm getting from our franchisees is that for the most part things are going well for them in 2008/2009. But there are some challenges, and some opportunities too, so I wanted to take a minute to outline some of the major ones:

• Challenge: Downsizing Everywhere
• Opportunity: New Hiring Opportunities! Many small business technology firms are historically reluctant to hire, especially in areas like sales, marketing, and business management. Most firms, including most Computer Troubleshooters, are started by someone with a technical background who may not feel comfortable managing additional people, particularly in areas that aren't directly income-producing like Sales & Marketing. But there are a LOT of highly qualified people looking for work right now with backgrounds in sales, marketing, management, and accounting, and they're often highly motivated to look at more flexible salary structures (perhaps wholly or partly commission-based) than they may have considered in the past. Why not help them out and let them help you grow your business?
  
  
• Challenge: Reduced Business Spending
• Opportunity #1: Higher demand for maintenance, repair, and upgrades! While many businesses, even the ones who are doing well financially, are reluctant to invest in significant new capital projects right now because of an overall lack of confidence in the economy, their businesses still depend on technology. And while spending $4000 on a new server project may be put on hold, spending $500 to upgrade an existing server can be an attractive short-term alternative. Truthfully as a service provider we'll earn just as much for our time performing an upgrade as we would on a new install, so these sorts of short-term alternatives are a win-win for both sides: the customer gets better performance without a huge initial expense, and the service provider gets continued business and income.
  
• Opportunity #2: SaaS Solutions!
  Another similar opportunity is the shift to SaaS or cloud-computing solutions. For a small business who can benefit from new services, for example Microsoft Exchange or calendar & project sharing via Sharepoint or Webex's Web Office, spending $50/month on a cloud-based solution can be much more attractive in the short term than paying $1000 or more to have the same solution configured and installed locally.
  The value proposition to shift existing services to "the cloud" is also strong but harder to quantify on a short-term basis: for example shifting a 10-user office to Hosted Exchange would cost maybe $150 per month, and that same solution if already installed and working is essentially costing nothing - right now. But a typical Exchange implementation will cost $2000 every 3-5 years in new software, $1000 every 2-4 years in new hardware, plus on average $1250 per year in maintenance and service costs. Over 5 years the locally hosted solution cost between $9000 and $12,000 or more, plus bandwidth, power, and backup costs, while the SaaS solution is a nicely predictable $9000.
  (BTW, Computer Troubleshooter's SaaS portal with 15 cloud-based solutions is launching in February!)
• Opportunity #3: HaaS & Leasing Solutions! While businesses want to hold on to their cash, they still need new technology. That's where having a strong financing or leasing program is a huge help - during times like this a small business may balk at a new infrastructure project for $10k, but give them all those same benefits for just $300/month and it's great for everyone. That's why CT is happy to have some great financing partners like our HaaS partners MSP On Demand and our traditional lease partners Popular Equipment Leasing and Wirth Business Credit.
  
  
• Challenge: Downsizing puts more demands on remaining staff.
  
• Opportunity: Technology Solutions that provide REAL Productivity Enhancement. Businesses who must downsize will look to get more work done with fewer people, and the way to accomplish that usually involves technology. Computer Troubleshooters is ramping up support for the productivity solutions we see as being key to this: CRM, VoIP, Search Engine Marketing (more effective and less expensive than traditional marketing if done right), electronic document management, telecommuting, managed service plans, and collaboration tools.
  
  
• Challenge: People are cutting back expenditures on restaurants, vacations, and new cars.
  
• Opportunity: Since they're spending more time at home people are looking for Better Home Technology. This is the classic "nesting" behavior we've seen in past recessions, and it's in full force today too. And it helps that today's recession is coinciding with some really exciting new home technologies, like Windows Home Server, Apple TV, Roku, Amazon Video-On-Demand, and more. Look for the launch of www.ctonline.tv next month to show off our capabilities in these areas. But even basic tech, like setting up a media PC connected to the family big-screen so they can watch YouTube and Hulu.com videos from the couch is something we're seeing a lot of demand from these days.
  

As you might expect Computer Troubleshooters is tracking and monitoring all the challenges and opportunities we see in today's environment so that we can continue providing the best support to our franchisees and their customers. What other challenges and opportunities do you see in 2009?

The Economy is No Excuse!

Officially we're 12 months into this recession, and let me tell you there's one thing I'm already very tired of - people using the economy as an excuse! Yes, times are bad. Yes, credit markets are tight, financing is more difficult. Yes, more people are unemployed, and exponentially more people are anxious about the future. Some industries are struggling, particularly some real estate, automotive, and tourism-related areas. Some geographies are struggling, particularly parts of Florida, California, Michigan, Ohio, and some pockets around New York City and Washington DC. If your business is heavily dependent on these factors, then you are being impacted by the bad economy, and there are few if any businesses entirely unaffected right now. And there is certainly no doubt that businesses and individuals are hurting right now, and I'm not meaning to minimize that pain.

But I've been in this industry for three recessions now (four if you count the post-9/11 downturn), and even though this situation is unique among all of them, one thing is still the same - people like to blame things on the economy. Having a bad sales month? It's not your lack of marketing or a bad sales staff - it's the economy! Need to let an unproductive employee go? It's not you making a management decision - it's the economy! Going out of business? It's not poor management, it's the economy!

It came to me this morning when someone sent me a news item about one of our competitors, who is reporting their 7th straight annual loss (this one nearly $5 million), is being sued by 10 of their franchisees, and had to report that their auditors expect them to run out of cash and potentially shut down operations within 6 months. In their regulatory filing do they accept responsibility for the problems? Of course not - it's the economy! They mention the "current financial turmoil" in the banking industry, and blame the lack of franchise sales on the inability of candidates to get financing. If they do go under, as appears likely, will they apologize to the orphaned franchisees for not running a healthy organization? I don't think so - the economy is too easy a scapegoat for that.

The thing is, anyone who scratches beneath the surface can see another picture. They haven't ever had a profit - ever, not since they started in 2001. Their fiscal 2008 operating expenses were $5 million more than their revenues, and their revenues were $2 million less than the previous year. (Just for comparison's sake Computer Troubleshooter's franchise network is double theirs, and our total franchisor operating budget is a comparatively miniscule $600k/year - apparently we're the "lean & mean" franchising system here!). What exactly in today's economy caused them to lose money in 2001, 2002, 2003, etc? And how exactly, if we were not in a recession today, would spending $5 million more than you bring in look like a smart move?

No, the economy gets the blame but the economy is just the magnifying glass today, showing all the faults in the systems people previously claimed were healthier than perhaps they really were. Today's recession gives management teams carte blanche to escape any personal responsibility in the failings of their businesses, and that's doubly-unfortunate since its' that same lack of responsibility on a larger scale that seems to have gotten us into this mess!

Now I'm not intending this diatribe to make it sound like I'm the perfect manager. Lord knows I'm not! In fact we just got the new Entrepreneur magazine with the Franchise 500 rankings for 2009, and for the first time since 2001 Computer Troubleshooters is not ranked. At all. Even though we're by far the largest in our industry, even though we grew by 5% last year, we got no ranking at all. Why? Entrepreneur doesn't disclose their formula for rankings, but I'm sure it's based on our financials, and because the rankings are done in July they use the financials from our last full year, which for us was fiscal 2007. And in fiscal 2007 we posted a substantial financial loss - well, substantial for us anyway, since we lost $111k that year. (By comparison our parent company, MerryMeeting, posted a nearly $4 million profit, so we're definitely the small fry in the family as far as financials go). Still, a loss is a loss, and our $111k loss was due entirely to a write off of $198k in bad debt - old receivables that we never cleaned up or monies that we didn't do a good job of collecting. As the CEO for Computer Troubleshooters that loss is entirely my fault, and thus our lack of Entrepreneur ranking for 2009 is entirely my fault as well. (But our 2008 financials are strong, and we're seeing a TON of new folks opening new CT franchises, so watch us bounce back strong in next year's ranking!)

My point though is that business is business and management is management, and if you want to run a business you have to be prepared to manage it during economic booms and economic busts. The world has not stopped turning just because unemployment has hit 7%. The economy has changed, in some ways temporarily and in some ways perhaps permenently, but there is still an economy, and that means people are buying and selling goods and services right now. Some of the buying patterns have changed, and a good manager needs to adjust for that.

For example what we're seeing with Computer Troubleshooters is that nervous business owners are less likely to buy our "all you can eat" BEST plan (managed services), which is normally our best seller. But we offer 4 plans, and we're finding that there's good demand for our next plan down the ladder, so we're adjusting our monthly marketing upates to focus more on those. We're also seeing that as people cut back on discretionary spending on things like vacations and eating out, they're exhibiting traditional "nesting" patterns by spending more on things they can enjoy at home - so we've ramped up our focus on our residential managed service plans and home entertainment offerings. I can't give away all our secrets of course, but things like flexibility, customer choice, and clear productivity enhancement are the buzzwords that are driving a lot of our marketing development for the first half of 2009.

Today's economy is an opportunity. It's an opportunity for stronger, healthier companies to distinguish themselves and grow, sometimes by acquiring other less healthy companies (and yes, CT may do some of that as well). It's also an opportunity to make excuses for poor performance, but don't fall into that trap. Use this opportunity to start or grow your own business - there are customers out there right now who need you. And the economy needs you too.

Choosing your Managed Services platform, part 1

Lately it seems the whole managed services industry has been turned upside down. Major vendors have suddenly changed how they operate - not so much changing prices as much as adding, changing, or outright removing key features. Frankly it's caused more than a little frustration for those of us who depend on those platforms for our managed services offerings. Computer Troubleshooters is in the midst of reviewing all our managed services partners, so I thought it would be helpful to share what we're looking for.

First, let me clarify and expound on one of my great pet peeves. "Managed Services" doesn't mean anything. Or, rather, it means so many different things to different people that the term is meaningless. It's like saying "IT industry", as if software developers and hardware manufacturers and network consultants were somehow a homogenous group. (I know, I know, most non-IT folks think they are, leading to the popularity of things like this.) Those of you who have been through CT's training on our managed services program (B.E.S.T.) have heard me talk about watching the video discussion among three people identified as the industry's top managed services gurus, and how midway through the discussion they began arguing about things like whether or not managed services as a concept even applies to desktops and notebooks.

For Computer Troubleshooters, our target clients are small businesses (another vague term which I'll probably expound on in another posting later), specifically those in the 5-25 seat area. That's not to say that we don't service smaller clients with 1-5 computers, because we do, and some CT's have been known to service networks of 100 or more. But as an organization we've always targeted the 5-25 seat business, because as a market those small businesses (which are most small businesses) have a high demand for outside IT support from people who understand their needs. So when we talk about "managed services" for this market, we're talking in general about a program that does 4 things:

1. Provides a baseline for "best practices", showing our clients how their systems compare to our combined wisdom on how computers and networks should be configured for maximum productivity and minimum downtime.
   
2. Provides proactive support via 24/7 monitoring, alerting, and management tools.
   
3. Redefines the traditional financial relationship, where the service provider was only paid when their client has problems, to one where the service provider is paid to prevent problems from happening, and where the client's budget (and service provider's income) is more stable.
   
4. Once the client's technology infrastructure is stabilized with parts 1-3, look for new technologies which can enhance the client's business. This means going beyond the basic recommendations like which anti-virus or backup solution to use, into more complex but more beneficial technologies like search engine marketing, IP Telephony, electronic document management, or hosted CRM solutions.
   

Now if you are targeting different sized clients, like mid-sized businesses or enterprise businesses, your definition of "managed services" will be radically different. And even among those targeting similarly sized businesses you may not agree with all four of our points. But this is the strategy Computer Troubleshooters adopted for our BEST program, and it's worked very well for us and for our clients.

But in order to make this work, we need vendor partners who can supply critical parts of the managed services strategy. In this post I want to look a the basic pieces of a managed services platform today, and in my next post we'll look at what new pieces might be added in the near future. At the moment, these are the pieces of our managed services platform which we look for from our vendor partners (including internal CT vendors/departments as well):

1. Remote Monitoring & Management tool (RMM): This is the most fundamental piece of any managed services strategy. In theory you could sell managed services without RMM, but it would be like selling a car with no wheels - it sort of missses the whole point. A good RMM tool should be easily installable at a client site, and provide a good range of monitoring and alerts for all desktops and servers on the network, including mobile machines (laptops, and optionally smartphones as well). It should be easy for the technician to use, provide reasonable diagnostic & remote support abilities to allow the tech to quickly respond to any alerts produced, and it should generate easy to read executive reports for our clients.
   The RMM tool market is the most associated with managed services, and includes vendors like Hyblue, Bird Dog, Zenith Infotech, Level Platforms, N-Able, Kaseya, IT Control Suite, LogMeIn IT Reach, Paragent, and MSP Center Plus. (As well as others I'm sure I've forgotten to mention).
   
   
2. A NOC (Network Operations Center) partner. As managed services has evolved, so has the dependence on a NOC for maximum support. Using a high-quality 24/7 NOC partner allows local service providers to guarantee high levels of service to their clients, without the high expense of hiring excessive technical staff themselves. Some NOC partners work specifically with one RMM tool, others may support a variety. Ideally you want a NOC partner who will not only help you manage the alerts which come in, but who can also accept work on-demand, particularly for work which is best done after normal business hours. NOC examples include Zenith, Seismic, MSPSN, NetEnrich, ITVista, and others.
   
   
3. Integrated Anti-Malware. This was not originally part of the managed services model, but Zenith started it and it worked extremely well in our models (unfortunately Zenith no longer supports this in the small business market). And when CT started offering residential managed service plans, integrated anti-malware became essential. Including anti-malware (anti-virus & anti-spyware) with managed services is a great bundle for any clients, and can be done a la carte using hosted McAfee options, licensing Trend Micro on a monthly basis, or via vendors who integrate the protection directly into their RMM products (Kaseya, Hyblue, or Zenith for larger businesses).
   
   
4. Integration with industry-leading PSA (Professional Services Automation) software, including Autotask or CT's own TOPS program. Having one ticket system which interfaces with the RMM system and the NOC is a great time saver and productivity enhancer.
   
   
5. Helpdesk. Most MSP's include unlimited telephone support in one or more of their service plan offerings. In our case it's included with BEST Proactive and BEST Trouble-free. For smaller service providers it can be money well spent to hire an outside helpdesk to handle those incoming calls for you, thus providing your clients with faster access to qualified telephone support. Helpdesk vendors include Dove Helpdesk (my personal favorite), MSPSN, Zenith, PC Helps, and more.
   
   
6. Advanced Management Tools. In this category I would include things like software deployment, employee activity tracking, internet traffic control, and desktop imaging. In the small business world these are nice to have, but not essential.

Those six make up the bulk of almost any managed services platform today. Individual service providers can "roll their own" solution by combining any of these, but in a franchise like Computer Troubleshooters we're able to do some screening and negotiating internally to make sure we're picking the best partners for our market, and to negotiate group volume discounts as well.

What's missing in this list? I haven't talked much about backup solutions, including NAS options or online backup. I haven't talked about virtualized environments or hosted (i.e. "cloud computing") solutions. There are also anti-spam options to be discussed, and even more advanced management tools. These aren't technically part of "managed services" today (although they're often added to or included with BEST plans), but they may play a larger role in the next generation of managed services. I'll talk about that more in my next post.

Agree or disagree with me? I'd love to hear your ideas on managed services, and how your implementation fits with (or doesn't fit with) the structure I've outlined here.