In addition to what they're buying, resellers are also paying more attention to who is buying. On the lowest end of the market in the SOHO segment, there is some unexpected growth, particularly as more people are thrown out of work and launch their own small businesses. All these new small businesses need computers, and this represents an opportunity. According to AMI-Partners' research showing the top SMB trends for 2008, home-based businesses are becoming an important revenue stream for vendors, and forecasts a "recession-driven home-based business boom."
In this series
- The recession-proof reseller
- What to sell during a recession
- Companies that are still buying
- How the economy is impacting your business
- How VARs are surviving the struggling economy
- Advice from seven successful VARs
But even though there may be more of them, that doesn't mean that they won't be vulnerable, and historically, the small business sector is one of the most vulnerable to economic crises. According to the American Express OPEN Small Business monitor, a semi-annual survey of small business owners, a third of respondents cite the uncertain economy as the greatest challenge they face in growing their businesses. Small businesses are less optimistic, with 48 percent optimism this fall compared to 64 percent last fall. In addition, capital investment plans are at their lowest in the history of the survey.
One client that will never go out of business is the U.S. government, and according to Accelera Solutions' President Joe Brown, the federal market will be less affected by economic downturn. "We still see continued growth there. I do think we're going to see, depending on the results of the election, some budget changes from potentially DoD to a civilian space within the Federal market, but that's probably twelve months out before there's any actual impact." Rick Marcotte, President and CEO of DLT Solutions, notes that within the Federal market, IT spending levels have not been reduced, "although some spending is likely to be elongated or delayed." At the state and local level though, the impact has been greater, with Marcotte observing that local agencies "already are slowing their spending and commitments; with longer decision processes and increased scrutiny."
Size of business isn't always as important as type of business, according to Compunite's President Steve Ferman, who says, "I don't see it as size of business, I see it more as type of business. Obviously, the people in the housing market aren't spending a dime." Dave Taylor, co-founder of Sparxent, agrees, saying, "It probably depends not on the size, but more on the vertical space they're in. I think there'll be large enterprise companies that are hit very hard and there will be small businesses that will go under completely, but it depends mostly on where they are in the vertical sector. A midsize company that specializes in the Web will be absolutely hammered in that cycle, but a midsize company that specializes in something more foundational and required will do well."