COVID-Weary VARs and ISVs: Embrace These 4 Guiding Principles

By: Jim Roddy, VP of Sales & Marketing at the RSPA

To help channel executives stay on course when they feel spun like a top, I’ve compiled a 14-page list of “Guiding Principles for Growing the Value of a POS Reseller/ISV.” The document, a framework developed by Peterson Brothers, Inc. combined with analysis of VAR and software developer organizations during my tenure as a channel business advisor, is chock-full of doctrines and real-world examples.

Because the last four months have been demanding, distressing, and disorienting for VARs and ISVs, I’ve found myself frequently referring to the principles during my coaching sessions with RSPA members. Four principles have proven most helpful to these executives. (Note: principles are bolded, examples are italicized, and my comments/analysis are plain text.)

Save; stockpile cash.
Avoid debt.
Collect receivables faster.
There will always be a next recession; at these times Cash is King.

  • If you are loaded with debt and a recession hits, the debt can sink you. Almost every other expense can be reduced to reflect lower sales, except debt service.
  • Strive for prepayment.
  • Aim for monthly recurring revenue from services to exceed monthly expenses.

It all starts with cash. Several solution providers I talked with in March told me they had enough cash on hand to cover 4-6 months of expenses; I would describe them as stressed but not distressed. Some VARs and ISVs shared they were already barely making payroll each week and were in dire need of immediate government disaster loans and grants; they were panicked. Stashing cash is hard – especially when you’re in price wars with other POS providers. But it can be done if you develop a high-margin value proposition and control your expenses.

Know our clients’ goals and problems well enough to build a business model that provides indispensable products and services to them.

  • Conduct regular 1-on-1 client meetings
  • Embrace Commercial Teaching: “Teach them something new about how their company can compete more effectively.” (from the book The Challenger Sale)

With apologies to comedian Jeff Foxworthy … if your merchants called you at the start of the COVID crisis and asked bluntly, “What should I do?”, you might be a trusted advisor. If you directed your customers to implement technologies that improved their cash flow (e.g. online ordering) and enhanced the customer experience (e.g. contactless payments), you might be a trusted advisor. If not, I hate to break it to you this way … you might be dispensable.

Visit the RSPA Solution Center – a web platform designed to connect VARs and ISVs to providers of innovative solutions

Affiliate with the best suppliers and outside service providers.

  • Examples: product vendors, subcontractors, accountant, legal counsel
  • As fast as possible, reject vendors that are less than “Grade A”

Like all new legislation and federal programs, the PPP (Paycheck Protection Program) was complicated and open to interpretation. And then there were additional details of the CARES Act to understand. And you had to navigate EIDLs (Economic Injury Disaster Loans) plus the FFCRA (Families First Coronavirus Response Act). If you didn’t have a strong accountant and attorney (or if you didn’t lean on the RSPA General Counsel) for expert advice, you could have made a mistake that sunk your business. Likewise, your business suffered if your vendor partners weren’t helpful in terms of financial arrangements, products, and support during the crisis. If you don’t have “Grade A” partners now, go find some.

Failure Analysis: “Analyze and profit from our failures.”

Whenever we find ourselves frustrated, in pain, failing at our goals, confronted with a problem, or having made a mistake, we recognize this as an opportunity to improve the business, and ask:

  • What changes can we make to our process, or
  • What form, policy, checklist, system or control can we install, or
  • What training can we institute, so we don’t repeat this problem in the future?

Before the next opportunity to encounter this problem again, we install the permanent solution.

My friends call me “Bad News Jimmy” because I say this often: “There will always be a next recession.” (That’s the second time I’ve mentioned that downer of a principle in this piece.) If your business got bludgeoned by the pandemic, stop feeling sorry for yourself. Take action today to ensure you’re in better shape for the next recession.

Don’t feel like you have to go it alone to move your business forward. If you’re an RSPA member, shoot me an email if you want to talk one-on-one or if you want your own copy of the “Guiding Principles for Growing the Value of a POS Reseller/ISV.”

Don’t forget to visit the RSPA Solution Center – a web platform designed to connect VARs and ISVs to providers of innovative solutions

Jim Roddy is the Vice President of Sales & Marketing for the Retail Solutions Providers Association (RSPA). He has been active in the POS channel since 1998, including 11 years as the President of Business Solutions Magazine, six years as an RSPA board member, one term as RSPA Chairman of the Board, and several years as a business coach for VARs, ISVs, and MSPs. Jim is regularly requested to speak at industry conferences and he is author of Hire Like You Just Beat Cancer. For more information, contact