Comments on: 14 Business and Financial Tips for MSPs http://www.mspmentor.net/2009/10/15/14-business-and-financial-tips-for-msps/ Managed Services & Cloud Services Blog for VARs & MSPs Tue, 14 Feb 2012 18:25:29 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: StuFinancesTech http://www.mspmentor.net/2009/10/15/14-business-and-financial-tips-for-msps/comment-page-1/#comment-50422 StuFinancesTech Mon, 19 Oct 2009 14:51:51 +0000 http://www.mspmentor.net/?p=4374#comment-50422 Just an observation, for better or for worse (or for neither), this 1/3 and 2/3 in #12 is exactly what law firms who use the partner/associate model do. The one exception is that law firms split it 1/3 associate who brings in the deal, 1/3 partners and 1/3 to the firm. That's just an FYI for you guys and depending on whether you like or hate how law firms do it or not. That being said, most do have polished woods and marble floors in their offices at the big firms :-). Just an observation, for better or for worse (or for neither), this 1/3 and 2/3 in #12 is exactly what law firms who use the partner/associate model do. The one exception is that law firms split it 1/3 associate who brings in the deal, 1/3 partners and 1/3 to the firm. That’s just an FYI for you guys and depending on whether you like or hate how law firms do it or not. That being said, most do have polished woods and marble floors in their offices at the big firms :-) .

]]> By: Geejay http://www.mspmentor.net/2009/10/15/14-business-and-financial-tips-for-msps/comment-page-1/#comment-50419 Geejay Sun, 18 Oct 2009 23:09:41 +0000 http://www.mspmentor.net/?p=4374#comment-50419 Good points Gregg and Lane. Just one thing, measuring utilisation isn't good enough anymore. You need a clear understanding of employee productivity per task. If you don't think that is important then more than likely you are heading for trouble. The more accurate and productive your staff and processes are the better for the staff, your clients and your bottom line. Good points Gregg and Lane. Just one thing, measuring utilisation isn’t good enough anymore. You need a clear understanding of employee productivity per task. If you don’t think that is important then more than likely you are heading for trouble. The more accurate and productive your staff and processes are the better for the staff, your clients and your bottom line.

]]> By: Greg Donovan http://www.mspmentor.net/2009/10/15/14-business-and-financial-tips-for-msps/comment-page-1/#comment-50413 Greg Donovan Fri, 16 Oct 2009 19:48:15 +0000 http://www.mspmentor.net/?p=4374#comment-50413 I have to agree with Lane and state that from a simple analysis, the tips are good for those trying to make the shift from VAR to MSP. One thing Larry seems to have missed is the points to work on for the transition to being a profitable MSP being a VAR. I have always advocated the following: 1. Teach every employee about the inherently elegant beauty of recurring services contracts and why they are the lifeblood of your company. 2. Develop a Service Level Agreement for your customers and stick to it. Design your SLA to be in concert with your service delivery and then expound the value that you provide. 3. Forget about hardware margins - make it a convenience to your customer not a profit center. Use SaaS solutions like ChannelOnline (http://www.channelonline.com) to streamline the procurement process. Sell from a cost plus basis and you will never lose money on a deal. If you follow this strategy in respect to hardware you will never suffer when there is a shortage of Capital Expenditures (the last 18 months...) 4. Forget about utilization rates - focus on automation, process and procedure not billable hours. Managed Services customers do not like surprise hourly bills for work that is not covered. For your technicians and engineers, billable utilization rates encourage the wrong activities - it tells them to spend more time fixing the problem rather than preventing it. 5. Invest in yourself - hire the best, use the best tools, develop systems that fit your customer’s needs and your company’s offerings. 6. Sell on value not on margins - The day you start selling on value and not a multiple of your costs is when you will achieve the most profitable phase of your company’s existence. My opinion, your mileage may vary. I have to agree with Lane and state that from a simple analysis, the tips are good for those trying to make the shift from VAR to MSP. One thing Larry seems to have missed is the points to work on for the transition to being a profitable MSP being a VAR. I have always advocated the following:

1. Teach every employee about the inherently elegant beauty of recurring services contracts and why they are the lifeblood of your company.
2. Develop a Service Level Agreement for your customers and stick to it. Design your SLA to be in concert with your service delivery and then expound the value that you provide.
3. Forget about hardware margins – make it a convenience to your customer not a profit center. Use SaaS solutions like ChannelOnline (http://www.channelonline.com) to streamline the procurement process. Sell from a cost plus basis and you will never lose money on a deal. If you follow this strategy in respect to hardware you will never suffer when there is a shortage of Capital Expenditures (the last 18 months…)
4. Forget about utilization rates – focus on automation, process and procedure not billable hours. Managed Services customers do not like surprise hourly bills for work that is not covered. For your technicians and engineers, billable utilization rates encourage the wrong activities – it tells them to spend more time fixing the problem rather than preventing it.
5. Invest in yourself – hire the best, use the best tools, develop systems that fit your customer’s needs and your company’s offerings.
6. Sell on value not on margins – The day you start selling on value and not a multiple of your costs is when you will achieve the most profitable phase of your company’s existence.

My opinion, your mileage may vary.

]]> By: Joe Panettieri http://www.mspmentor.net/2009/10/15/14-business-and-financial-tips-for-msps/comment-page-1/#comment-50411 Joe Panettieri Fri, 16 Oct 2009 17:45:10 +0000 http://www.mspmentor.net/?p=4374#comment-50411 Hey Lane: Our comment boards will always remain open to constructive criticism, like the info you've offer up. Thanks for taking the time to add your perspectives. There often is a blurry line between VAR and MSP. You've helped to make the line a bit clearer. -jp Hey Lane: Our comment boards will always remain open to constructive criticism, like the info you’ve offer up. Thanks for taking the time to add your perspectives. There often is a blurry line between VAR and MSP. You’ve helped to make the line a bit clearer.
-jp

]]> By: Lane Smith http://www.mspmentor.net/2009/10/15/14-business-and-financial-tips-for-msps/comment-page-1/#comment-50410 Lane Smith Fri, 16 Oct 2009 15:51:35 +0000 http://www.mspmentor.net/?p=4374#comment-50410 These are some great tips except for #6 and #8. This is MSPMentor NOT The VAR Guy. If service is only 35% of your business and recurring service is only 1/3 of that you are NOT an MSP. You are a product focused VAR that dips it's toes into Service. When we were a VAR our rule of thumb was 30% product 70% service, now that we are an MSP it is 100% service and 90% of that is recurring. These are some great tips except for #6 and #8. This is MSPMentor NOT The VAR Guy. If service is only 35% of your business and recurring service is only 1/3 of that you are NOT an MSP. You are a product focused VAR that dips it’s toes into Service. When we were a VAR our rule of thumb was 30% product 70% service, now that we are an MSP it is 100% service and 90% of that is recurring.

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