Hightower Closing Its Doors

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Our industry is changing and it is anticipated that we will see many changes to our business environment. We are already seeing how it is affecting many of our competitors. Hightower, a long-time friendly competitor of Blytheco closed its doors this week without much word about its intentions to reorganize or cease business.

Today we received a notification that SWK, another Sage long-time partner will take over client support for Hightower clients. There is no mention if this will include the number of pre-paid hours that clients had paid to Hightower for future support.

This brings up two issues: one, the transition of clients from one partner to another – which happens every day in the Sage channel  and two, how pre-paid support and accepting future revenue in advance may be detrimental to a business’ future.

For one, clients have a choice about whom they do business with. Even if one partner acquires another, clients have a choice to make about who they want to do business with long-term. We always recommend that customers go through a process of investigating synergies between their company and a partner to make sure you have similar values and long-term goals for the relationship. This is hard to do in a mass buy-out – and we should know. We have had our share of customers with whom we worked hard to build a relationship after acquiring their partner. The reality is this situation puts you as the customer in a searching mode that you didn’t expect to be in.

On the second point, partners like Hightower and others that have ultimately closed their doors were accepting prepayments for blocks of hours or prepayment for future services, usually at a discounted rate. In every business there is some element of future payment, but it is the management of those dollars that determines long-term success. Deposits on a defined statement of work are commonplace. But discounted rates for future business, yet to be defined, is a symptom of poor cash flow.  Like every pyramid scheme, you do not want to be the last one in. Clearly these partners were using their customer potential future business to stay afloat and were not placing these funds into escrow. We understand that this may have been a factor here.  This is something you want to take a look at when examining your next partner relationship or your own business practices. Living off tomorrow’s revenue defers tough decisions and usually comes back to bite you.

We can always learn from other business failures and successes.

If you are looking for a long-term business partner to support your Sage business solutions, we’d be happy to talk to you about your business goals and how we can help you achieve them. You can find us at 800.425.9843, extension 2500, or email us at solutions@blytheco.com.

 

For more on the unfortunate closure of Hightower click here

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