Starting as a IT reseller is impossible.

breffni · 2016-02-25T12:53:35.000Z

I think the thread should be renamed.

Starting as a reseller of anything these days is dead easy, the sheer number of vendors who come baying down my door with offers is crazy.

Starting out as a quality IT provider is much much harder. You have to invest so so much into it.

karanthakkar · 2016-02-25T13:19:04.000Z

Thanks Guys

@Sid Phiilips

I am trying to ditch the home users slowly. But I want to stay in small businesses, there is too much comp in the larger offices. And i just see SMBs in need of IT. I have seen accountants holding peoples accounts, finance data, emailing files around without any security or policy etc.

Running the business without backup solutions etc.

trelstadtech · 2016-02-25T13:46:34.000Z

karanthakkar:

Thanks Guys

@Sid Phiilips

I am trying to ditch the home users slowly. But I want to stay in small businesses, there is too much comp in the larger offices. And i just see SMBs in need of IT. I have seen accountants holding peoples accounts, finance data, emailing files around without any security or policy etc.

Running the business without backup solutions etc.

My bread and butter has been exactly this for the last 30+ years, 17 of which have been on my own (self employed). I look for companies with no fewer than eight users. My largest account is about 50. Once you get in, and treat them fairly, you will have them forever. I have one client I’ve done business with for 30 years, several over 20.

scottalanmiller · 2016-02-25T14:02:34.000Z

karanthakkar:

I want to resell IT hardware and software on request. As I have started to take more on, I have realized that going to distributors does not help with costs on single items.

Its normally cheaper just buy it through a retailer or a re-seller.

So for a small time person like me, how would one even consider getting into this?

OR am I just looking at it the wrong way

OR is it impossible, that some resellers will be cheaper than distributors because they buy in buy in bulk and get drop ship from the manufactures?

Yes, resellers are almost always cheaper. It’s about volume. If you don’t have the volume, there isn’t any means to get margins most of the time. Basically what you want is to be a little corner store that sells almost nothing but makes huge margins on each sale in order to pay the bills, but that doesn’t really work. If it did, absolutely everyone would do it. And the big players would make billions as their margins would go up too! Being a reseller alone means you earn 100% of your money off of people choosing to buy from you, basically it is money for nothing (more or less.) So there is a reason that that business model doesn’t work.

If you want to do this you either need millions of investment dollars like the big boys have or you need to add unique value and make your money based on the value, not on being a store. Any kid can run a store with zero experience and zero effort, if there was money enough to make even minimum wage doing that, everyone would do it instead of other minimum wage jobs.

DragonsRule · 2016-02-25T14:35:54.000Z

karanthakkar:

I want to resell IT hardware and software on request. As I have started to take more on, I have realized that going to distributors does not help with costs on single items.

Its normally cheaper just buy it through a retailer or a re-seller.

Keep in mind, though, that price isn’t everything. I had my own shop for over 20 years and I only purchased through distribution. If a client wanted to save a few bucks and buy a part on their own, that was fine with me. My money was in labor, not the parts - you can make a little bit on parts, but not enough to really care about. Selling parts is about convenience for the client, not about profit for you.

Distribution is the way to go because of warranty and return polices. They are setup to deal with sellers, not end users. If something has a problem, they have the right contacts to help you with it or can just deal with it themselves. When you go to a store, you are completely on your own. The time you waste dealing with just a few defective items can easily outweigh the minor price differences you’ll see over an entire year.

brycekatz · 2016-02-25T15:49:30.000Z

Couple more thoughts from a former business owner:

Think carefully about selling things. In the US, sales tax almost always applies to things but rarely applies to services. I’m not sure if the UK’s VAT is similar. Yes, you pass the tax along to your customers, but you still have to send the check back to the gub’ment. It’s one more layer of complexity in your bookkeeping.
__Think carefully about which things you sell.__ And by this, I mean which things you keep on hand. Improper inventory levels will kill your cash flow. The nice thing about software these days is digital distribution makes it dead simple to sell what you need, when you need it, without having to worry about physical inventory. I made a ton of money on antivirus sales for both businesses and home users. See above, however, re: taxes.
**Know what you know.** This idea is twofold. First, definitely know what you - personally - can do and do well. For the SMB IT consultant this extends to what your business can do and do well. The second bit is being able to clearly articulate what your business does. The “elevator pitch” is critical. If potential customer don’t understand what you do, it doesn’t matter if you’re the best one for 100 kilometers. They won’t be buying.
**Know what you don’t know.** Like the previous bullet, this idea applies on more than one level. You cannot possibly offer all things to all clients. Attempting to do so will do more harm than good. Develop relationships with other vendors and refer out the kind of work you don’t do. As a potential small business owner, your time is very limited. If you’re the only employee, any time you spend not billing clients is effectively money you’re not making. Don’t be afraid to hire a bookkeeper, a lawyer, an accountant, a virtual assistant, graphic designer, web developer, or any one of a number of other services that will take stress off your plate. Yes, they cost money, but trust me here: Spending your weekends doing client work is bad enough. Spending your weekends in your accounting program flat-out sucks.
**Have a voice.** There’s a very real inclination to stick to the middle of the road, not ruffle feathers, and not speak your mind. Don’t do that. People in the middle of the road get run over. Develop a brand that has personality. Read The Power of Unpopular by Erika Napoletano and/or watch her TEDx Talk for examples and more in-depth discussion on this. (She has a half sleeve tattoo, likes the “F word”, and is professional branding consultant.)
**Consider managed services.** These companies can help extend your business. I missed the bus on this and wound up losing two of my biggest clients to an 8-person company that uses Continuum to support companies in three states. This is an edge over other small IT shops who don’t offer such services. Not only does it give you a much-expanded service capability, you gain access to skills you do not personally possess AND a predictable revenue stream. (That last bit is MASSIVELY IMPORTANT.)

brycekatz · 2016-02-25T15:56:07.000Z

LarryG.:

Keep in mind, though, that price isn’t everything.

In fact, price is a horrid thing to discuss. If a client’s primary focus is price, walk. They’ll be trying to nickel and dime you every step of the way. Their current tech will almost universally be a slapped-together mess, and they tend to never want to perform reasonable upgrades. I had a few SMB clients early on who were hyper-concerned about price. “IT is too expensive!” they’d cry, while bemoaning that the 15-year-old computer running their 20-year-old DOS-based business app just died. Without a backup. I quickly extracted myself from them and made more in the process.

Sell value in everything you do. Clients who understand the relationship between price (the amount on the invoice), cost (not the same as price), and value are the ones you want to find and keep.

peterb123 · 2016-02-25T16:43:22.000Z

Bryce Katz:

LarryG.:

Keep in mind, though, that price isn’t everything.

In fact, price is a horrid thing to discuss. If a client’s primary focus is price, walk. They’ll be trying to nickel and dime you every step of the way. Their current tech will almost universally be a slapped-together mess, and they tend to never want to perform reasonable upgrades. I had a few SMB clients early on who were hyper-concerned about price. “IT is too expensive!” they’d cry, while bemoaning that the 15-year-old computer running their 20-year-old DOS-based business app just died. Without a backup. I quickly extracted myself from them and made more in the process.

Sell value in everything you do. Clients who understand the relationship between price (the amount on the invoice), cost (not the same as price), and value are the ones you want to find and keep.

Plus 10,000 likes.

jeffjones3 · 2016-02-25T17:00:08.000Z

Loads of good advice above.

IT hardware reseller? Don’t.

IT services provider? You can do it. Sell the benefits of your expertise and service - that’s how you differentiate yourself.

jeffrash1707 · 2016-02-25T17:06:56.000Z

You got it all wrong friend.

Try being a techno-ridder- not a techno re-seller.

I have been running scrap drives for years and companies call me on the phone BEGGING me to come get their junk.

What’s decent, I sell on EBAY. What too old, I recycle- lot’s of gold in them there hills!

Great thing is, some people throw away computers that are not even a year old! Those bring a fetching dollar on EBAY.

Look into it and I think you will see that one can make more money as a junk dealer- with a small side in reselling relatively new equipment, then trying to be just a tech re-seller.

josh7950 · 2016-02-25T17:11:50.000Z

JoeWilliams:

Concentrate on selling services, not items.

Bingo. Becoming a partner with vendors allows you to mark up the software, then sell the service of installation and configuration. That’s where the money is at, not the hardware.

rrbigger · 2016-02-25T17:23:59.000Z

25+ years ago, (when I was in college) I would take you shopping setup your machine and spend a saturday or sunday teaching you how to use your computer. At $100 for a days work.

I don’t know if this helps in today’s environment.

brianhenson · 2016-02-25T17:24:27.000Z

Bryce Katz:

**Consider managed services.** These companies can help extend your business. I missed the bus on this and wound up losing two of my biggest clients to an 8-person company that uses Continuum to support companies in three states. This is an edge over other small IT shops who don’t offer such services. Not only does it give you a much-expanded service capability, you gain access to skills you do not personally possess AND a predictable revenue stream. (That list bit is MASSIVELY IMPORTANT.)

Can you expand a bit on this? What sort of managed services?

ajgoodrich · 2016-02-25T17:24:56.000Z

Bryce Katz:

LarryG.:

Keep in mind, though, that price isn’t everything.

In fact, price is a horrid thing to discuss. If a client’s primary focus is price, walk. They’ll be trying to nickel and dime you every step of the way. Their current tech will almost universally be a slapped-together mess, and they tend to never want to perform reasonable upgrades. I had a few SMB clients early on who were hyper-concerned about price. “IT is too expensive!” they’d cry, while bemoaning that the 15-year-old computer running their 20-year-old DOS-based business app just died. Without a backup. I quickly extracted myself from them and made more in the process.

Sell value in everything you do. Clients who understand the relationship between price (the amount on the invoice), cost (not the same as price), and value are the ones you want to find and keep.

If this was Facebook, you’d get the “Wow!” Like. Each comment here just got better and better!

Denis-Kelley · 2016-02-25T17:26:05.000Z

Bryce Katz:

Couple more thoughts from a former business owner:

__Think carefully about which things you sell.__ And by this, I mean which things you keep on hand. Improper inventory levels will kill your cash flow.

One thing to note. When I did this stuff, other than some extra parts, I stocked nothing. Everything drop ships from my vendors whether they be Tech Data, Ingram Micro, or Synnex. No reason to stock unless you are brick 'n mortar. In fact the online retailer I buy most of my stuff from, ProVantage, does the same thing. It’s mostly direct ship from the ones I just noted.

johnmeyer4 · 2016-02-25T17:52:38.000Z

As one who has gone down this road. There just isn’t any money in it and warranty work will kill you.

20 years ago we tried to be a startup hardware reseller to compete with gateway. We had some expert buyers that could source parts super cheap. Even then the margin was horrible. And it has only gotten worse.

It’s a tough market to run any sort of local distribution on. You can build some high end PC’s for the performance crowd but most will really want to build their own 2nd one. And most will source parts themselves online.

There is money in IT, just really hard competition in the hardware market.

I’ve moved into managed IT services as it really makes alot of sense for the SMB market, even some large companies will contract us for things that they won’t keep expertise in-house.

ericmc · 2016-02-25T17:55:49.000Z

I sell my services - if someone wants to buy a computer, I will offer a recommendation and do a quick google to offer them best price I can find, but they buy the computer from someone else - one bad box that needs warranty work will eat the profits of 10 systems at today’s markup. Let the big boxes worry about that.

ronfowler2 · 2016-02-25T18:04:26.000Z

The SMB, needing a professional is where your livelihood is.

As you say there are Professional’s out there that only contact “a computer guy” when something breaks. They need someone to help with ongoing issues, process’s and new technologies.

Try to find 4 customers, that need a half day of work, once every week or two. sign them up for a services type contract.

Then go get another 2-4 and repeat until you reach the limit of what you are able to do, and want to do.

The break/fix type work is too unreliable and poor paying. Get 6 great customers and treat them great.

You will really get to know there needs and can provide them spectacular service, as opposed to cleaning keyboards at someone else’s house

booman925 · 2016-02-25T18:28:30.000Z

I tried this route with my dad also… sadly we couldn’t keep the shops doors open for more than a month but after that the school board bought us out and we worked for them for awhile was kinda a good save because services can be maintained and controlled but hardware marketing is always changing and updating.

elgin8949 · 2016-02-25T18:30:29.000Z

As everyone is saying, margins are almost nothing for resellers. The real market is services, fixes, setups, etc.