Technology solution providers are some of the most resilient businesses I know. Their leaders braved the gale-force winds of supply chain issues, hiring challenges, inflation pressures and today’s economic uncertainty.
But let’s think about it—when has business been easy? Hasn’t there always been some sort of new challenge as we grow our businesses to the next level? If we aren’t experiencing challenges, we might not be pushing ourselves hard enough to try new things, expand in new ways or push the boundaries of the status quo.
I’ve worked with office technology solution providers across the country for nearly three decades, advising on financing and other business solutions. Whether you’re preparing for a potential softening of the economy or simply trying to run your business as effectively and efficiently as you can, the following are cornerstones of success no matter what obstacles you face.
Strong Focus on Contracted Recurring Revenue
Contracted recurring revenue provides stability and assurance that income will continue to flow into the business. Companies with recurring revenue are often viewed with a higher business valuation because of that stability and the ability to forecast future revenue streams. This helps you acquire net-new customers or plan for expansion into other products and services. Bundling any associated ongoing usage, service and supplies costs on the same contract as the equipment protects that incoming future revenue stream. Additionally, proper documentation that includes escalations protects against inflation.
You can gain insights into your customers’ behaviors by moving from a transaction-based model to a recurring model. This data can be leveraged by your marketing, sales and services teams for predictive and proactive responses such as upgrading into larger equipment or servicing prior to a breakdown.
Lead with a Monthly Payment
It should be no surprise that your customers benefit from having a monthly payment option; they’re modern technology buyers and desire the subscription model. They find office equipment leasing helps manage budgets, preserve cash flow, and prevent technology obsolescence. In fact, in a 2022 survey by GreatAmerica, 68% of end-users prefer to work with a vendor that provides a solution that includes financing.
I’ve seen many office technology providers hesitate about offering a monthly payment when interacting with IT decision makers. The IT buyer differs from those they’ve worked with previously on the imaging side. Whether it be a systems administrator, CIO or CFO, it’s common for these IT buyers to separate their IT budgets from their printing budgets and capitalize their purchase by paying cash.
While it may be tempting for you to allow these customers to pay cash up front, this may not be the best long-term strategy for your business—or for them. Instead, help them realize the benefits of acquiring technology on a monthly payment. Education around the benefits of a financing option is key for IT decision makers. This can’t happen without educating (and correctly compensating) your own employees first.
Diversify Strategically
Uncertainty about the economic climate may make businesses hesitant to embark on new product or service offerings, but it may be the best time to embrace change and find new ways to meet your customers’ evolving needs. I’ve found that organizations that continue to make thoughtful and intentional decisions around diversifying their revenue streams end up as the strongest. Organizations that prioritize diversification provide security to their bottom line and become a total technology solution provider for their customers.
It’s exciting to see the many products and services our channel adopted to remain relevant to its customer base, from managed IT to outsourced marketing services. The Keypoint Intelligence 2022 Channel Survey revealed IT services offers the greatest revenue opportunity for our channel. And IT service providers are more essential than ever; reliance on them grew in the work-from-home world to keep businesses up and running.
As your product line grows, it’s important to ensure your financing partner can support you and your customer’s needs. The GreatAmerica Hardware as a Rental (HaaR) document provides flexibility via a master agreement with supplements model, which allows new technologies to be layered in as dealers grow, scale and innovate.
Enhance Cash Flow Through Proactive Billing
Cash flow is an important indicator of an organization’s health, and having a strong cash flow tends to help weather economic downturns with less impact. Though this is widely understood, it’s still a common challenge for many business owners. Even businesses that are growing quickly and seeing a steady rise in year-over-year profits can have issues related to cash flow.
Getting paid on time is one of the biggest drivers of cash flow, and it may be accomplished easily during economic upturns. However, during economic downturns, your customers may experience difficulties making payments or simply aren’t using the equipment, thereby reducing image and service charges.
Even so, there are things you can do to improve the likelihood of getting paid. If you’re invoicing service charges separately from a lease, commit to a disciplined process for sending invoices each month. Staying consistent will help your customers do the same.
However, as a technology provider managing through an economic downturn, you may also need to do more with less when it comes to processing your invoices. Through automation processes, you’ll generate accurate and timely invoices, which prevents delays in payment due to customer disputes on billing charges. Additionally, you can outsource much of your billing and collection efforts to your finance company by bundling your service payments with the financed equipment payment, providing overage data and creating pass-through charges on the monthly financing invoices.
Prioritize Customer Retention
When the economy softens, earning new business becomes even more challenging and costly. You’ve worked hard to earn and maintain your current customer relationships, so protecting that business is a high-stakes game. Customers may cut back on spending, hesitate making new commitments or get lured away by a lower-cost option. They certainly won’t continue to pay for products and services that don’t bring real value. Helping our customers keep their customers for a lifetime has been a key objective of GreatAmerica since our inception and requires a strategy that puts our customers’ needs in the foreground. Focus on listening and responding to your customers’ needs, optimizing processes that impact your customer interactions and performing regular customer reviews or PBRs (periodic business reviews) to protect and even strengthen your relationships.
Seek Out Efficiency Gains
Office tech solution providers are focusing on digital transformation projects to improve their customer experience and gain efficiency. So begin to automate whatever you can. Are you fully taking advantage of technology integrations to free up time, specifically technology integrations with your financing provider? A finance company should seamlessly integrate with the platforms you rely on to bill for usage and supplies, such as e-automate or Forza. Through these kinds of integrations, many of the manual and tedious steps traditionally involved in service billing, direct deposit and reconciliation of service money can be automated.
In Summary
Business takes intentional, hard work—no matter the environmental factors. By paying attention to your contracted recurring revenue; what matters to your customers; billing and cash flow; calculated diversification; and better operational efficiencies, you can be strategic in your approach. No matter the challenge, you can find success. I believe in the resiliency of the office technology provider.
