Magazine Article | October 18, 2012

Retail IT VARs: Your Key To Increased Profitability

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By Mike Monocello, editor in chief, Business Solutions Magazine

One of the challenges I often hear about from retail IT VARs regarding switching to a managed services model is coping with the way money flows into their company. Many of you are used to getting large lump sums of money for your work as opposed to the smaller steady stream associated with recurring revenue models. The large lump sum might help in the short term and actually be a necessity to keep your business afloat, but a steady stream can be the key to a more profitable and stable company if you make the transition. Keep that thought in mind for a minute.

Over the past couple of years, the Business Solutions editorial team has spent a lot of words and pages pointing out all the new opportunities out there for retail IT VARs. Digital signage, mobile POS, video surveillance, and payment processing should spring to mind as great potential new sources of revenue. These are real opportunities with very real potential to change your business.

Now back to my original point. If you’re thinking of getting on board with any of these new opportunities, consider adding them to your portfolio as services. This way, you can maintain your current core business on your traditional model and slowly add recurring revenue sources to your income statement. Over time, you’ll either build up enough recurring revenue to gain the financial stability to convert your entire business or see how lucrative a recurring revenue model can be and somehow force the switch sooner.

Either way, you can not only make the most of the technology opportunities present in today’s retail world, but you can serve those technologies to your customers as monthly services you can collect on for years. The sooner you make the switch to a managed services model, the sooner you’ll have a more profitable company.

But you don’t have to take my word for it. Turn to page 30 where VAR Andrew Strickler of Tampa Bay POS explains some of the ways he revitalized his company in the wake of the Great Recession. One of his key changes was taking his hardware and software solutions and bundling them as solutions offered as a service. The bundled solution includes POS, complete with credit card processing, which Strickler says yields more money over time than Tampa Bay POS could have earned operating in its old model.

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