The Recession-Proof Reseller

Economic upheaval is upon us, and regardless of rescue plans, bailouts and motivational speeches by politicians and political candidates, we are in for a long and deep recession. Companies are already implementing layoffs, while others are being bought out, going bankrupt, or going out of business completely. The question for VARs and others in the business of reselling IT goods and services is how to survive these harsh economic times, and they have proven to be a very resilient lot. Many of the VARs contacted for this series are doing quite nicely, due to some unique and innovative recession-proof strategies.

In this series

Despite VAR optimism, IT spending is down, due to the problems in the US housing and credit markets, not to mention the weak dollar. IT spending trails the rest of the economy, and isn't impacted immediately like for example, discretionary consumer spending. While you may put off buying that big-screen TV, you can't put off the day-to-day technology demands of your business.

VARs in general have enough business in the pipeline at the present, and the IT business showed positive growth during the first half of the year. But that optimism may not last, and VARs are already looking warily at next year. R.W. Baird's Q3 2008 Enterprise VAR Survey shows a weak third quarter, with 41 percent of respondents below plan, saying "VAR feedback for the quarter is about as negative as we have seen in years with more resellers below plan than above plan for the quarter." And it's not looking good for the immediate future, either. The fourth quarter looks negative, with a majority of respondents expecting fourth quarter to be below normal. Gartner research also predicts downward pressure on IT budgets through 2009, although states that Congressional actions taken to loosen credit will save the IT industry from a "worst case scenario."

On the positive side, Jobfox, a job search website which ranks top professions, listed "sales representative" as the number one recession-proof profession. However, a closer look at various VARs' performance reveals that success in a downturn depends on what you're selling, how you're selling it, and who you're selling it to.

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