Business is looking bright for the channel as summer approaches, although ‘go get’ management and sustainable business models are still crucial to success, according to one market watcher.
In its latest report, analyst Plimsoll has reported that one in three companies in the channel have strong sales. However, one in seven are currently at risk of failure.
Speaking to CRN, David Patterson, senior analyst at Plimsoll, said that businesses in the channel have improved since the same research was conducted last year. “We think that more companies are moving into a strong position. However, this is also a natural occurrence, because any company within the danger category does not stay there for long; they either improve or go under.”
Patterson said good management that is prepared to act and a sustainable business model – many channel firms are still operating on minus one per cent margin – are the secret to success.
“There was no particular size of company that had any advantages; it is all down to the business itself. Some channel companies are just not good businesses; they have a commercial disadvantage just from their business model,” he said.
Des Lekerman, director at VAR Eurodata, agreed that channel business is looking up. “It is a buoyant market right now,” he said. “Interest rates are low, the financial service market is booming and firms are spending more money because they realise that there is a business advantage of having a good IT infrastructure. Also, consumers are spending more money, which has an impact on businesses.
“But there are still firms out there who are not changing with the times, and have managers who still have a ‘if it ain’t broke don’t fix’ it kind of attitude. These firms need to look at the economy and position themselves early so that they get onto the crest of the next wave.”
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