SWOT Time in Calgary

I am on the road to Calgary to do a SWOT at IT Matters, a member of our HTG3 peer groups. Brad Schow and Dan Hay will be joining Nancy and me to spend a day and a half of intensive activity diving deep into the business. These events have been transformational for the companies that have experienced them over the last few years.

Why does it work to let other business owners come in and turn over the rocks? Because we often don't want to deal with the hard things in our businesses. We have relationships and patterns of communication that make it hard to really deal with the tough issues. We don't want to cause any unhappiness or disrupt friendships. We are afraid to do what we know needs to be done down deep inside us. So a SWOT allows some outsiders to come in and provide fresh sets of eyes to help drive change.

This will be a fun SWOT - the team from IT Matters has done a fantastic job of giving us background info and helping us be prepared to make a lasting impact. I look forward to seeing the company in a year as Tony, Rob and Stuart make changes and lead their team into 2009 with a new focus and level of accountability.

Remembering why....

Joe Mercandante from HTG4 sent a great reminder to his group today that I want everyone to consider. Thanks Joe for helping us focus on things that matter.....

"As we prepare to wrap up prior to a long weekend, I want to wish you all a very happy and enjoyable Memorial Day. Cherish the downtime and especially the little extra time you get to spend with the people you love.

Please also take a moment or two to pause to remember the reason we have the day off. Since the birth of our country in 1776, over 1.1M service men and women have died as the result of war, and over 1.5M have returned wounded. Everyone knows someone who served or is serving in our armed forces. Those that serve sacrifice a great deal to keep us safe and to preserve our freedom. Some of them – far too many perhaps - make the ultimate sacrifice.

Regardless of one’s political position on any given war or conflict, I beg you to pause for a moment to thank those who serve and have served, and to remember those who gave their lives to keep us safe and make our lives better."

Great words to consider this Memorial Day weekend. God bless the USA!

Do you know an inspired teacher?

Do you know a teacher with an inspiring story? Invite them to participate in the Microsoft Inspired Teachers campaign to share stories of their most inspiring students.If you know a teacher who inspires—and is inspired by—students, simply send them to: http://www.microsoft.com/education/inspiredteachercontest/default.aspx.

Inspiration: When's the last time a student you know returned the favor? Every day, magic happens in the classroom. Moments when students realize there's more to learning than tests—and do truly amazing things. Sometimes, students actually inspire their teachers, when usually it's the other way around.

Get teachers you know to share their most inspiring story.Tell about the last time a student sparked inspiration in the classroom with an amazing discovery or creative solution. It's easy to share. Before you know it, they'll be communicating, connecting, and exploring with other teachers who are sharing stories of inspiration. They may even find inspiration in others' stories in the process.Once posted online, peers will be able to read and rate it. Prizes are available.

What do you get for passing this along - the knowledge that you are helping build community and that is what matters. Invest in educators and students.

So what about credit

I had an interesting discussion with a guy I respect very much from the credit industry this week and he gave me some very powerful insight into how we should position our organizations for rough times. One of the things that just does not compute for me is how many small businesses and particular resellers just do not understand the importance of a strong credit relationship. We need to have a very deep relationship with our banker and distribution partner so we have some breathing room to grow. Way too many think credit cards are the answer - and they are the absolute worse answer to this need.

So rule #1 is to establish a banking relationship and build your credit history. Have a line of credit and use it some, making sure to make all payments on time. DO NOT pay things off way early as that does not create a credit history. Pay it when due, but not way early.

Rule #2 is to do the same with a distribution partner. Work to get a line of credit with them and pay on day 29 or 30 if you get net 30 terms. Don't pay on day 31, or day 25, pay right on time EVERY TIME.

Rule #3 is that once you have this established with your key bank and distributor, expand it to others. Get a small line of credit with another bank and also a couple other distributors. This is not in order to spread purchasing and financing but rather to build a broader credit history. Make an occasional purchase from your second and third disty partner and put a little on a credit line at a second bank. Be up front with all this with your main finance partners so they are completely in the loop.

When times get tough, you may face a shrinking credit situation at your primary lendor and disty. Having secondary relationships may be critical for you to continue normal operations in times when the economy is tough. It is too late to do it then. This has to happen when you are doing well and there is time to make it happen.

Do not even think about it if you cannot discipline yourself to pay on time EVERY time. Bad credit builds up just as much, or more so, than good credit. The last thing you want is to create a series of bad credit history postings. But if you are a good money manager, this is an area you can create a very strong competitive advantage against most of your competition as well as position yourself for success in down times. It has to be done when you can absolutely perform, but it can really put you on top when things get tough.

Do you have a skydrive?

There is a new way to share files now called Windows Live™ SkyDrive™.Want to send large files, like vacation photos and home videos, without worrying about exceeding your friends' e-mail storage space? With SkyDrive, you get 5 GB of password-protected online storage. That means you can get to your files from wherever you're online, and so can the people you give permission to. You're always in control of who sees what.

The power of thank you

We had a fantastic HTG3 meeting this week in Buffalo. Great business sharing but the biggest impact the two days had on me was around the people. We spent time sharing what we call “thank you time” on our agenda. It is a spot where we stop and just say thanks to those who have made a difference in the last 90 days. The wonderful thing is that a lot of this doesn’t revolve around business, but life. Life happens every day, and it is often the things of a personal or family nature that really matter. Sure the peer groups are bound by a desire to grow their businesses, but more and more they are understanding that unless life is right, the business stuff really does not fulfill and ultimately does not matter. So it encourages my heart and brings a smile to my face when people say thank you to those who have impacted them. I encourage you to take some thank you time this week. If you want to see some eyebrows raised and some people wonder what you are up to, just say thanks. When we stop and say thanks, we give a gift that can make someone’s day or even week.

As we finished our meal last night, I asked our waitress, one young lady who drew the short straw and had to take care of all of us by herself, to have the manager (who was actually the owner) come see me. I could tell as he approached he was bracing for a negative response. So I stuck out my hand and told him thanks for taking care of our group and providing a fantastic meal and experience as well as having this special waitress that performed at a very high level. Within 30 seconds the owner was thanking me for bringing the group in, for being patient, for understanding how busy they were and smiling from ear to ear. I have to say that is not my normal approach unfortunately, but as I spread the thank you circle, it was equally effective to the way it works with those closest to us. Unspoken thank you’s are not nearly as effective. You have to open your mouth and say it. Make sure to do it today!

Are you part of an orchestra?

We completed our HTG3 meeting last night after two days of awesome interaction here in Buffalo. There were some fantastic business ideas and leadership thoughts but the one that struck me most was from Kathy in Florida – the idea that most businesses start out a soloist whom is very good, then surround themselves with a few others like them and create a jazz band which is made up of stars that agree to play together with some loose direction, and finally need to become an orchestra where the conductor leads the group of extremely gifted players down a single path focused on the end result of playing perfectly together. What a powerful illustration. That is so true of small businesses today. The different transitions are the hard part. That final transition to becoming part of an orchestra the biggest change as everyone has to be willing to give up their own desire to be a star in order to give their all to the sound from the entire group, which done right is always better than any one player alone. Are you a soloist, part of a jazz band, or are you building an orchestra. There can only be one conductor when you have an orchestra and all others have to focus completely on doing the best they can to follow the lead and excel at their part of the playing the score. That is how a fine tuned company needs to run. Are you doing it that way? Now is the time to make it happen.

Finally Pricing for SBS and EBS 2008

Microsoft has released the pricing for the upcoming releases of the new SBS and EBS products later this year. Here are the facts:

Windows Small Business Server 2008 Standard Edition software, including five CALs, $1,089 (U.S.); additional CALs $77 each (U.S.)

Windows Small Business Server 2008 Premium Edition software, including five CALs, $1,899 (U.S.); additional CALs $189 each (U.S.)

Windows Essential Business Server 2008 Standard Edition software, including five CALs, $5,472 (U.S.); additional CALs $81 each (U.S.)

Windows Essential Business Server 2008 Premium Edition software, including five CALs, $7,163 (U.S.); additional CALs $195 each (U.S.)

Microsoft also today announced rebates of up to $200 (U.S.) for solution provider partners configuring Windows Small Business Server 2003 R2 for their clients who acquire the software and purchase Software Assurance within a certain time period. With Software Assurance, customers will receive the upgrade to Small Business Server 2008 at no additional cost when it is available, as well as access to support, tools and training. Terms and conditions of the rebates are available at http://www.SBSrebate.com.

There are some things to keep in mind about this. There are some licensing improvements over the current Windows Small Business Server 2003 R2 product including:

Customers will be able to purchase single client access licenses (CALs), so they will pay only for the exact number of employees using the product.

Customers can cost-effectively purchase a mix of Standard or Premium CALs, as appropriate to the technologies that individual employees are using.

CALs now apply to other copies of Windows Server, SQL Server or Exchange Server on the network, eliminating the need to purchase additional CALs.

The full press release is at http://www.microsoft.com/presspass/press/2008/may08/05-13PublicPreviewPricingPR.mspx.

The net is that the mix is different but the cost to the end user is extremely close to what it was prior. It is just done differently - higher price server and lower priced sku's. Don't let the change cause you alarm without getting the facts first. It really is a good thing from my perspective. Customers have wondered why it was so cheap - now the server is more in line but the cals are less. Check out the details - but the real key is to sell SA now and get a free upgrade to SBS2008.

So who needs a distributor

I was in NYC this week to serve on a panel for the GTDC (global technology distribution council) http://www.gtdc.org/. This group consists of 32 of the leading distributors of IT products worldwide and this was their Wall Street briefing. The room was filled with disty execs from Ingram, Tech Data, Synnex, Bell Micro, Arrow, Avnet and others as well as a room full of Wall Street investors from the large players. The audience was there to determine the health of distribution and determine investment strategies for the coming year. I came in a sports coat and no tie and was about the only one there not is a black suit and tie. Sort of didnt' fit but they still let me serve on the panel.

There were three panels during the morning session. The first consisted of four specialty distributors, the second a panel of resellers, and the third the four broadline disties. When we went through the introductions it was questionable why I was up there. Reseller number one did over 1 Billion in sales last year. Reseller number two a mere 950 million. I was number three with a puny 17M and the fourth on the panel was a services reseller who did about 4M in revenue. So it was quite a variety to say the least. The main focus was on the economy and how we see our customers impacted. These investors wanted to know if things were going to be impacted by poor purchasing. We have not seen that in our customer base and the overall feedback was that resellers are optimistic about the year. We certainly are at HTS.

It was a good experience and I learned a lot about distribution I did not know. These guys obviously play to Wall Street. One thing I have really began to understand is the power of Wall Street to control the behavior of our distributors and vendors. They cause unnatural activity around month, quarter and especially year end. These guys have the ability to take the stock price down in a heartbeat and there is a real concern about keeping the folks on the Street happy. Seems like the CEO's and other key leaders in the IT sector are very focused on that.

I did learn some facts that are pretty amazing. The GTDC members did over 100B in sales last year (yes that is B as in Billion). So for me to think I have a lot of impact on these guys is just plain crazy. They experienced 14% growth and their gross margin was 8%. They have been making a shift to more value add for us as resellers which is the same thing we are trying to do with our customers. They have a bit over 5% of their sales in operating expenses and that leaves them a little over 2% in margin. Their overall operating income grew by 23% year over year which is good - we need these guys to stay in business or we are all out of work.

Some other interesting facts were as follows:
Desktops grew at 10.6% on a 1B sales category. And people think the desktop is dead.
Notebooks grew at 14.4% on 3B in sales.
Storage grew at 6.8% on 1B in sales
Warranties grew at 72.8% on 1B in sales. There is some real action on this one.

The most amazing statistic I heard was that the 100B in sales from the disties is out of a total sales bucket of 1T (T as in trillion) so they are only getting today abouit 10% of the total technology sales worldwide and the general attitude was lots of optimism as there is certainly plenty of upside for them.

So I encourage you to show some love to your distribution partner(s). Our strategy is to consolidate our purchasing primarily to Ingram and go deep in our relationship with them. We don't buy on price but on value. That is how we sell, so it only makes sense we are consistent and focus on the relationship and value rather than the price. We actually practice what we preach to our customers and it is working out quite well for us. Far too many partners think they have to get the lowest price on the products they are reselling. We just don't find that to be true at all. Splitting your purchasing among a number of sources dilutes the relationship and ultimately the value that a disty can provide. Take a look at how you run your purchasing. Incent people to bring in the most value to your organization and customers, not the lowest price. Price can be extremely decieving and often does not reflect the reality of what value a distributor can provide. We do have a second disty that we use if product is not available to us - now we are aligning with Synnex for that role - but it only happens when we can't source it from our primary. Our purchasing people don't waste time getting competitive prices - they consolidate all our purchases and place the order. That alone takes a lot of cost out of our model and is a part of the value we get from single source purchasing.

Hug your disty - we need them as much as they need us!

Thoughts on the SAS conference

I was in San Jose on Tuesday night to speak for the SCSI Trade association - STA (http://www.scsita.org/) about SAS technology in the SMB. I was on the program with HP, Microsoft, an analyst and Seagate. So certainly I was the novice in the crowd. There were pictures of the first event from 2004 called a plugfest, which is actually what it sounds like, a bunch of gear plugged together to prove it works. Today SAS is running at 3 G soon to be 6 G by the end of the year. Storage is becoming a critical part of many SMB networks. It isn't just for the enterprise boys any more. You can get the presentation at http://www.scsita.org/aboutscsi/sas/SAS_OH_2008_v8.pdf and learn a bit about the upcoming roadmaps for SAS and get some ideas on just how important this technology is for the future of computing. It was an extreme honor to be in San Jose speaking to the Silicon Valley crowd and sharing a customer evidence story about how SAS solved a data access issue. I am not a technical guru by any stretch of the imagination, but I certainly have a much higher appreciation for this technology and how it will continue to serve our clients for many years to come. Thanks to LSI and HP for the opportunity to represent them and present on their behalf.

Are you going to WPC?

Microsoft's WPC is coming quickly - July 7-10 in Houston to be exact. One thing you may have noticed is the price certainly has gone up a bit. This year it is $1795 to attend. That is pretty expensive for any conference but for those of us serving the SMB market it is very costly. Well your SBSC membership will help defray $400 of that cost - check out the link at https://partner.microsoft.com/us/40059948.

For HTG members - we have a busy week planned there. HTGALL will meet Sunday afternoon from 3-6 PM at the Holiday Inn Convention Center. There will be other events going on during the week - more details as we get closer.

WPC is definitely something you need to do a lot of planning ahead of time in order to get the value of your investment. So if you are going, know your schedule, plan your interaction with other partners and Microsoft folks, have a plan in place so you can recover the cost of your time there. I can honestly say it is one of the most valuable conferences we attend because of the access we have to people but it only happens if we are very prepared before we get to Houston. So do your homework, make the investment, and then commit to making that time and money produce an ROI. It is very possible with some planning and discipline. See you in Houston!

Announcing

New HTG groups are being formed. Our Canadian group kicks off first with Stuart Crawford from IT Matters facilitating. The first meeting is in Calgary on June 2/3 and I will be in town to wish them well as they begin the journey together. There are only a few spots left in HTG10 - the Canadian group - so if you know any folks from north of the border who would benefit have them connect with Stuart or me. Stuart is a member of HTG3.

HTG11 is being facilitated by Dave Sobel from Evolve and will consist of friends from Great Britain and areas across the big pond. Our goal is to begin recruiting and have a time together at WPC in Houston in July for those who are over here and then kick off the group officially later this year. Dave is part of HTG5 and runs his company in the Washington DC area.

HTG12 will be led by Erik Thorsell from Success Computing in Minneapolis. This group will primarily be filled with companies who recently graduated from the MS-HTG online group and want to move into a face to face group. The first meeting will be in Council Bluffs on July 28/29 and will include a trip to the farm to see the HTS headquarters. Erik is part of HTG3 and has been involved since the inception of that group a couple years ago.

HTG13 will meet also in Council Bluffs on those same dates but be led by David Cooksey from CNS in St Joseph. This group will be filled from our application wait list pool of over 120 companies. Dave has been part of HTG since its inception back in 2001 so has as much experience with this peer group thing as I do.

The good news is that we will be creating more groups as we go through 2008 and 2009 with our goal to be at 20 groups by the end of next year. We also will be announcing two different online programs at WPC for people who have graduated from the first program and also a new restart of our year one content. The HTG family is growing. Now is the time to get involved with your peers and grow you company in ways you can't even imagine. There is power in peers. Get involved today!

We are 1/3 done with 2008

Time to take a check on how things are going with your business plan. Did you realize that as we start May, we are 33% done with the year already. That means we need to evaluate where we are in comparison to our goals and make course adjustments as needed. Too many of us wait til way to late to try and make corrections to what is happening. We need to be watching our financials and other KPI's regularly and making adjustments along the way. If we don't, we get to July 1 or even much later and have to make huge changes to try and correct issues that have been present for a while but we just weren't paying attention. Then our moves have to be much more intense and bigger in scope to get the needed outcomes. If we make small changes along the way, we have longer for those to make a difference and move us where we want to be.

There are some key areas you need to be watching as you move through the year. One key area is to watch monthly at a minimum how your bottom line (EBITDA) number is tracking. It is important that you have established what a satisfactory profit looks like to you and then manage to achieve that number. Profitability should not be what is left over after all the bills are paid - it should be a planned amount that is required to have a successful year. Far too many of us just run our company and hope we come out with a profit at the end. We don't plan for it far less manage to achieve it. But as I watch successful partners, they know what they expect to achieve and manage to achieve it. They are not content with anything less and they make course adjustments through the year to make sure they hit that number. That same strategy should be used for other key metrics. I suggest you need a half dozen or so that you watch and manage against. But don't wait til Dec 15 to try and "save" the year. Now is the time to begin and to consistently do so going forward. Success is not an accident. It happens to those who work hard and have a plan. Then they execute against that plan and at the end of the year they have succeeded. It is a choice - so chose it and get to work!