Choice Solutions was a $21 million general practice networking VAR when we first spoke with their president, Jim Steinlage, back in April 2009. The company was projecting 17% growth at a time when the economy was tanking. Three years later I caught up with Jim Steinlage to see how things turned out and was surprised to hear what he had to say.
How has your business fared since we last spoke with you?
Steinlage: We've eliminated five technology practices over the past few years:
1. An Avaya VoIP/Unified Communications practice
2. A Great Plains CRM practice
3. A Web development practice
4. A hosted software practice and
5. A SharePoint practice
Initially, we downsized from 80 employees to 30 employees. Since then, we've been building the business back up with virtualization experts, and we're at 50+ employees now and could add another 15 before the end of this year. This was a strategic decision, not a reactionary one, however. More than three years ago we identified that virtualization was going to become the way of the future, and we knew that we couldn't be the best at providing virtualized applications, storage, and services and at the same time be the best in our other technology practices. Even with the economy hurting, and the temptation to "take whatever work you can get" becoming greater than ever, we stuck with our decision to reposition ourselves as network virtualization experts.
What were the signs that you needed to make this transition?
Steinlage: Even though we were first to market in our area (e.g. early adopters of VoIP and SharePoint), we weren't the best at anyone of our practices. This caused two problems: we were only winning about 4 out of every 10 deals we were in and our competitors were cherry picking our best employees within our business practices.
What was the toughest part of the transition?
Steinlage: We had long-term customers within each of the five business practices that we still had obligations to service, and we had good people within our business practices that we didn't want to let go. In some cases we found other VARs that we felt had been viable competitors within a technology practice, and we approached them and turned over certain customers to them. In some instances where we had a good employee who wasn't able to make the transition to a virtualization engineer or technician, the competitor hired that employee.
What signs are you seeing that confirm you made the right decision?
Since making the decision to become super focused on virtualization, we've seen four confirmations that we're on the right track:
1. Our expertise is leading us into deals with larger companies than ever before. We even have Fortune 500 companies seeking our consulting and implementation expertise with their server and desktop virtualization deployments.
2. Our employee culture is stronger than ever and our turnover rate is lower than ever.
3. Our close rate on new business is now between 8 and 9 wins out of 10 engagements -- more than twice what it used to be.
4. We're able to charge a higher rate for our services. Three years ago we charged about $170/hr. Today, we're charging $205/hr. -- a 20.5% rate increase. And, we receive less push back on price than we did previously.