Small Business Owners Community Focuses on Company Value

At 7:30 AM, it’s typically hard to get a good crowd to show up for conference presentation, but that wasn’t the story for the morning CompTIA Communities sessions at the Annual Member Meeting. The Small Business Owners Group had a packed room to start the day, with discussions that focused on the challenges, and related opportunities that face IT services businesses with less than 50 employees.

Bob O’Malley, the CEO of InFocus and Chair of the CompTIA board of directors, lead off with a discussion with his own company’s transition and how it relates to the attendees. InFocus moved from a NASDAQ-listed company a year ago to a small business owned by a private individual. In the process, the American-based company dropped from more than 1,000 employees to less than 100, but is emerging as a stronger entity. While InFocus is still larger than the businesses run by the members of this group, they are facing many of the same issues and O’Malley pledged CompTIA’s support to build beneficial programs to help the members thrive and accomplish their goals.

The second presentation was by Frank Picarello, CEO of Cadence Management Advisors. His company provides business advisory services for small business organizations, focusing on their profitable growth over a long period of time.

Picarello’s presentation Thriving on Greatness centered on factors needed to build value in a business, moving the organization from good to great. By ensuring the business fundamentals are addressed properly, owners are free to focus on technology and business development. Each is crucial to ensuring the valuation of the company (think exit strategy) is maximized. The value of an IT services business is impacted by how they deliver customer service, the technology tools they use, the training of employees, and the long term contracts in place.

Picarello pointed out that there are 1.6 million small businesses in the U.S. (10-100 employees), employing more than 56 million people.  82% of these companies get their IT support from staff members, leaving a huge VAR/MSP opportunity! While many may not be fully aware of the benefits and value of external IT support, I’m sure a few are concerned with losing control of their systems and data (and that is a VERY hard sell).

Most small IT service provider businesses have fewer employees than their client companies. Most small IT business owners are run by a technically trained individual, with fantastic tech and customer service skills, but without formal business training (marketing, sales, accounting, HR).

Impact of the internet is significant on small businesses (customers), but there is a growing gap in the confidence that IT service providers are keeping up with technology to meet their changing IT needs. This is an opportunity for great IT service providers to challenge that notion, by driving new innovation and effectively marketing/selling to the requirements of these companies, competing with internal IT teams to manage their infrastructure and applications.

By selling services and application expertise, and locking in long-term contracts, service providers increase the value of their organization significantly. In addition, the business will thrive and be able to effectively compete for more projects and clients. The focus becomes proactive, rather than a reactive approach to sales (bringing in new clients at any cost, to generate funds to keep the lights on).

The bottom line is that there are several aspects that greatly affect the valuation of an IT provider business, including automation (lower personnel expense) and contracts (longer is typically better). Great companies operate better, make more income and typically make work more fun for employees.  

For the CompTIA Small Business Owners Community, these factors will play a part in the initiatives they will drive and the programs they are developing. Stay tuned for more discussions from the group at the Annual members Meeting in Chicago this week.