Why resellers have no plans to expand

Driscoll: Why not consider expansion abroad?

Last week’s poll on the CRN web site asked channel players if they are considering expanding their businesses outside the UK.

I fully expected the results to be a foregone conclusion: who wouldn’t want to expand their business and aim for sunnier climes? Of course VARs want to expand, either European or US-wide.

Except it seems that this simply isn’t true (see results, below). For the larger players – the Super VARs of the channel – they have either floated or received venture capital funding. This has allowed them to spread their wings, either through acquisition or organic growth, with a safety blanket of cash tucked neatly around them.

But below these hefty players there is a void, where mid-tier resellers have found the barriers of entry and expansion abroad – be it European or the US – so great that many will not even attempt it.

There are several reasons for this and it is not about a lack of entrepreneurial spirit from these mid-tier and smaller channel players.

Funding is the perennial problem: to buy or grow costs cash and in this mini-margins game most resellers do not have spare readies floating about.

Then there is the risk of dilution: take focus away from the UK market to look to abroad and VARs run the risk of missing out on deals at home. There are also cultural difficulties, which is an invisible, yet immense barrier.

Expansion abroad should be viewed with caution, not least because of the risks involved and the fact that vendors don’t make things easy – most require contracts to be signed in each country and very few operate as truly international.

Perhaps the poll results show not a lack of entrepreneurship, but a realistic view of the difficulties of achieving global domination.

Sara Driscoll is editor of CRN. Email her at sara_driscoll@vnu.co.uk