As we move into the busy Federal Contracting proposal season, there is one category of GovCon that really feels the crunch at the end of government fiscal year – VARs (Value Added Resellers) or resellers.
This type of company is generally very different than the typical services company. They move to their own drumbeat. The name of the game is speed. When the government is ready to spend, resellers/VARs must be able to react quickly to go on contract, procure, and deliver – all while maintaining compliance with FAR, TINA, and other fun acronyms that govern our GovCon lives. Oh, and they’re margins are slim – they make their money in volume. Or manage cash flow as they manage distributor and OEM relationships amidst a flurry of customer demands.
The upside? Streamline your process, know what you are doing and there is a ton of work out there with limited competition in the small business space. Even better, you can do it with a heck of a lot fewer people.
Useful tips for VARs as you go into the prime selling season:
- Have a central repository for all of your contracts’ paperwork. We don’t mean just throwing the email into a folder and calling it a day. We mean utilizing a streamlined retention and organization procedure. The better organized you are, the easier it is to process.
- Utilize this streamlined process so you can easily look up and flow down terms as appropriate with the myriad of business relationships that VARs maintain (partners, distributors, vendors, etc.). Pass down the risk where you can and know who is doing what to whom. And do it quickly.
- Have solid agreement templates that you review at least bi-annually. This way you know, without a shadow of a doubt, what is in your agreement. You can negotiate quickly.
- Create automated features that allow the sales folks to do a quick data entry that is communicated to contracts – without the need for an email. You already have too many emails.
- Speaking of contracts, know your vehicles inside and out. How will your customer buy from you? Do you have the vehicle they like to use? If not, be ready to team if they procure via a different contract vehicle than the one you have.
- Sales teams generally rule the roost in most VARs. The company can live or die by them. BUT…they are quick to put the company at risk with quick acceptance of terms that may inflict more harm than good (especially at the end of a quarter!). Contracts folks identify and mitigate risk for a living. They should always act in the best interests of the company. But they should understand shades of risk, when they need to accept it and the speed in which business needs to move. Creating a culture where both the sales team and the contracts department value the other’s strengths and respect their differences and points of view is critical.
- Know your financing options. Be current with all your distributor partners and have a firm grasp on credit limits they have extended to your firm. Will your distributor accommodate that one-off $3,000,000 order? Should your flooring lines and vendor financing not be enough to cover surge season, be sure to have a plan B in place. Preferably some sort of supplemental non-recourse receivables financing facility.
There are a lot of moving parts associated with resellers/VARs, but there is a great business model if you can get the battle rhythm. Take care of the back end now, before the fiscal year-end sprint begins.
BOOST has helped resellers/VARs with streamlining their contracts department, organizing their data and serving as an outsourced contracts administration house with contract authority of $10M+. If you need help, please email us at [email protected]. If you need reseller financing, we’re happy to introduce you to a trusted partner.