How Data, Networking, and Communication Equipment Providers Can Make 2012 a Bounce Back Year
Posted by Andrew Hunt on Wed, Jan 04, 2012 @ 08:24 AM
The forecast is looking good for most data, networking, and communication equipment providers. Corporate profits are on the rise coming in at 7.9% in Q3 2011 over the same period in 2010. Solutions such as VOIP, convergence of technologies as well as fiber provide the opportunity for most to see significant increases in 2012. This is especially true since most of the marketplace has not been in a financial position to update aging technology due to cash flow or company budget constraints. Tides are changing in 2012 and it’s the communications and data executives that place themselves ahead of the curve that will see the greatest positive change.
Just because the winds of change are blowing, that does not mean that you’re going to see your sales increase. With manufacturers selling direct to large consumers and increased competition from low cost competitors, many technology companies need to do more in order to achieve their desired results. It’s no longer enough to offer superior service, special deals, integration services, product support and maintenance agreements. Today these are merely good business basics. Progressive technology executives need to start thinking outside the box and look for new ways to add value to their customers bottom-line
Nevertheless, while the cost savings and the business case for a VOIP solution can be very enticing, many companies are just not yet ready to sign on the dotted line. With the uncertainty of the global marketplace as well as the risk of a delayed domestic growth, US businesses want to hold on to their hard earned capital. Many businesses are still hesitant to spend money just now on the latest telecommunications technology, even though they need the telecom upgrades.
One key way data, networking, and communication equipment providers can overcome customer hesitancy is by offering leasing and financing options. Unlike purchases – which involve the outlay of large sums of cash – leasing and financing does not result in a large, lump-sum payment. Instead, clients pay a fixed monthly fee through the term of the contract, which may be two, three, four, or even five years. Frequently, leasing enables customers to implement multiple solutions. With purchasing, they would be limited to one implementation per year, negatively affecting their competitiveness, productivity, and cost-cutting measures.
Although we are coming out of the worst recession in recent history and demand for technology products is up 3.9% in the past year, solution providers’ and their customer’s access to bank funding continues to be limited. This provides a great opportunity for data, networking, and communication equipment providers to offer financing and leasing options that will help fuel sales and ignite channel business.
Even at the economy’s high-points, traditional moneylenders did not always lend to small and medium sized business (SMB) for their necessary Data, networking, and communication equipment purchases. Sixty-three percent of those SMBs that applied for a business line of credit from a bank were denied, reports Federal Reserve Bank of New York’s Community Affairs Office after conducting a Small-Business Finances Poll in June and July 2010. In February 2011, a study by the Equipment Leasing and Financing Association found that lenders approved 76 percent of capital spending credit applications, the highest level in at least two years, as credit standards eased, according to a report by Reuters.
Despite signs of improvement in the economy, access to capital continues to be a hindrance to growth for many telecom companies. This has caused an increased demand for alternative financing including equipment financing and leasing.
By offering your customers greater payment and amortizing flexibility data, networking, and communication equipment providers can make 2012 the much needed bounce back year that they need.
To learn more download The Telecom Executives Guide to Financing Options.