Eggs in Two Baskets -  A Resellers Guide to Having a Back-Up Plan

When Andrew Carnegie metaphorically said in his 1903 essay (How to Succeed in Life), “Put all your eggs into one basket and then watch that basket...” I am confident that he couldn't have foreseen the 2004 Medical Software Industry.  No offense to Mr. Carnegie, but I prefer two baskets.

Your life -- the life of the independent reseller -- can be a lucrative, but uncertain road. There are things that remain out of your control that directly affect your business.  There are decisions that your vendor might make about their business or product, that you can do nothing about.  It is in your best interest to have a back-up plan in the form of a secondary medical software product.

The Vendors:  Over the last 10 years in the medical software industry the independent reseller has been directly affected by several vendor decisions in which the resellers had no voice and no control.

Vendor A was thriving as a privately owned company in 1999. With over 800 independent reseller nationwide and steady profits, it appeared as if they were going to continue along that path for many years to come. Suddenly, and without warning, a large multi-billion dollar organization came in and purchased them. Their reseller program has been changed and manipulated nearly 10 times in the last 4 years, with margins being cut, reseller requirements and expectations being changed, and resellers being cast aside along the way.

Vendor B recently had two of its top-level executives leave for other opportunities.

Vendor C, with little notice, terminated its agreement with any reseller who purchased less than $300,000 in product annually, leaving small and mid-sized resellers (especially rural resellers) looking for another product to sell.

Vendor D recently terminated its reseller program altogether in exchange for direct sales. In an effort to avoid lawsuits, it made some of its larger resellers offers to purchase their businesses for pennies on the dollar. All of their resellers were left scrambling for a new core product to sell.

If these stories sound familiar to you its because they mirror real-life medical software companies over the last 10 years. Should you have had the misfortune to be negatively affected by a similar situation, you can probably relate.

It is with several years of experience in this industry that I urge all resellers to HAVE A BACK-UP PLAN. Never put all of your eggs in one basket. If I were in your shoes as a medical software reseller and knowing what I know now, I would select both a primary medical software product and a secondary medical software product to sell.

Primary Product: Picking a primary product is as much an art as it is a science. Decisions should be based on functionality, margins, company stability, reseller support, product potential, and more.  The bottom line in choosing a primary product involves finding a company that you'll enjoy working with and a product you believe in.

Most of you have already chosen a primary product (that is probably why you are reading this newsletter) and hopefully are happy with both the company and the product.  Remember that there are hundreds of options out there, a number of them good young companies with stable products and great reseller programs.  If you are unsatisfied with your relationship with your Primary Vendor, you may consider shuffling them to the secondary position in your product mix and promoting a different product to be your primary line.

Secondary Product: When picking a secondary product, it is important to select a package that offers something that your primary product does not have. Perhaps you'll choose your secondary product because of its price point – your primary product line might be a high-end package and your secondary product line a less-expensive package (or vice-versa). Perhaps you'll choose your secondary product based on its functionality – your primary product might be better at handling practice management functions, while your secondary product contains a unique fully-integrated electronic medical records package. Or perhaps you'll choose your secondary product based on a specific practice specialty or need – consider adding a chiropractic, physical therapy (see PDSSolutions), or mental health (see ICANotes) specific product to your mix.

Regardless, making the choice of what software will be your secondary product line is a business decision that only you can make based on your location, the market you are pursuing, and the features available in both product lines. The main question I would ask yourself is, 'If needed, could my secondary product support my business?'  Because, there could come a day where it has to.

Tertiary Products: For small to mid-sized dealerships with limited resources, I don't recommend adding too many more products to the mix. Soon you become a “jack of all trades, master of none,” which is unacceptable in this business. You have to, at the very least, become both the master of your primary product line and genuinely proficient in your secondary line. If you have the company resources to add a third or fourth product line to the mix without taking away from your primary or secondary product lines, then it becomes an option you can evaluation and consider.

In Case of Emergency: When and if problems with your primary vendor strike, you have already put yourself in a position to be successful. A simple restructuring and your secondary product line becomes your primary line and you are off in search of a new secondary. You can continue to support your existing users and keep them on their current system, or switch them over. You have options. You are in control.

In the end, this article may make me unpopular with some of your vendors, however, I'm not especially concerned with that -- I AM, however, exceedingly concerned with your business and helping you make the best decisions for it.  Focusing all your energy into one product, without having a secondary product in your mix, is an unwise decision in this industry.

Until one Vendor can guarantee you in writing they will never sell their company, they will never change their reseller program, and that their software will never have any serious problems -- putting all of your eggs in two baskets should be your status quo.

 -- Kevin Burdick,               
InvestMedLLC.com        

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