To the rescue

Jon Schram’s story is similar to Minnich’s in that he ultimately concluded he needed help. But it took losing $200,000 and a 100 percent staff turnover in late 2006 to make that decision.

Schram is president of Versent Group, better known as The Purple Guys, and considers himself a “serial entrepreneur.” He was aware that he didn’t know everything about running an IT services firm, even though he had run The Purple Guys for about six years when the business had its near-death experience.

That’s when he reached out to True Profit Groups. Had he not done so, Schram admits, “the wheels would have come off the business.”

True Profit Groups, founded in 1991 by Steve Bowser, provides a confidential forum for owners of IT businesses from noncompeting markets to exchange business know-how with the goal of improving profitability. Today, about 50 members participate in four subgroups.

“The group has been fantastic. I can’t imagine running my business without it,” says Schram. Today, with 13 employees, Versent is back on track, with expected revenue of $2 million in 2008. Providing strategic advice about cash flow planning and business growth, he’s learned how to grow from zero dollars to $10 million in 10 years.

Handling change

Like it not, the world around you is going to change, which is why Ranjini Poddar, president of Artech Infosystems, has been a client of the Schwartz Heslin Group, a business management consultant, for eight years. “They give us an outside perspective and help us achieve our objectives,” she says.

Founded in 1992 as a project management and IT consulting services business, Artech currently employs 2,200 part-time and full-time employees and generates $150 million in revenue. The IT services company offers IT staff augmentation and consulting, project management, and business process outsourcing services for an extensive commercial and government client base.

“We’ve reached out to business consultants to help us get to the next level when we’ve reached plateaus,” says Poddar. Three years ago, Schwartz Heslin helped Artech win a major request for proposal with one of its largest customers. “If we had lost that bid, we would have lost a lot of business,” she says.

For a time, Schram was also on the right track with Versent, growing the company from $100,000 to almost $1.7 million in three years. But based on market changes, he eventually concluded he needed to shift the business to a flat-fee services model. Unfortunately, Schram recalls, he failed to recognize that by changing the business model he changed the business.

It was during the transition that he lost 100 percent of his tech staff, which consisted of people who liked being in front of the customer, not sitting at a desk.

By joining True Profit Groups, Schram learned from other companies that had made the same transition. Until then, he says, he was feeling his way in the dark moving to managed services. “If I had found the group earlier, I could have cut the transition time to managed services from over a year to six or seven months, and it would have been a lot less bumpy,” says Schram.

He believes better decision making would have helped him retain about three-quarters of his tech staff and would have saved hundreds of thousands of dollars.

Schram also participates in Vistage International, an organization that brings business executives together to solve tough business problems. But it is True Profit that offers specific tactical best practices for running an IT services company focused on small and midsize business customers, he says. “I get tactical takeaways every time we meet,” he says.

Membership in True Profit isn’t for the faint of heart. “We’re not a social group,” says True Profit’s Bowser.

The group has strict standards for participation, such as preparation prior to attending meetings. For example, members may be asked to bring in sales compensation plans, a training strategy for the company’s service department or a proven revenue-generating idea. They must also be ready for vigorous discussion and critique.