When it comes to the IT channel, sometimes the media — MSPmentor included — is guilty of focusing too much on massive VARs and MSPs. Meanwhile, there are thousands of micro MSPs (sub $1 million annual recurring revenues) navigating the SMB market. Can those micro MSPs thrive as big vendors promote SMB cloud solutions?
That question popped into my head when I head about Stuart Selbst Consulting’s latest coaching effort. It’s called SMB Power Teams — a type of peer group comprising up to six business owners. Yes, the peer group model is getting crowded in the IT channel. But Selbst has two unique twists: The SMB Power Teams peer groups will be virtual, and they’re designed for MSPs with under $500,000 in annual revenues.
In addition to the virtual gatherings, SMB Power Teams members will meet twice annually. It sounds like Selbst is partnering up with Stuart Crawford of Ulistic (an MSP marketing and SEO business) and SMB Technology Network — an association of SMB IT service providers.
Underserved Niche?
Will SMB Power Teams succeed or fail? I have no idea. But Selbst has decided to focus on an under-served portion of the IT channel. Generally speaking, MSPmentor spends a lot of time trying to help MSPs drive far beyond $1 million in annual recurring revenues — pushing toward $5 million, $10 million or more. We sometimes blog too much about growth and exit strategies, while some MSPs simply want to run profitable lifestyle businesses.
Elsewhere, channel sites like CRN offer advice on how to become a $100 million VAR. But that’s not relevant to 99.970% of readers. If there are roughly 100,000 VARs in North America, only about 300 generate $100 million in annual revenues — and a big portion of them are vendors’ consulting divisions — names like IBM Global Services and HP Services.
Meanwhile, there are thousands of Micro MSPs and small resellers serving the channel. And many of them are trying to figure out how to remain relevant as new services like Microsoft Office 365 near launch. The Micro MSPs don’t have enough budget or time to build out their own clouds. And some cloud reseller programs reduce “partners” to order takers rather than strategic advisors. I wonder: Can Selbst and other coaches help the Micro MSPs navigate the opportunities and challenge ahead?
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Posted In: Finance | HR | Marketing | Sales
Tags: Micro MSPs | Micro Resellers | Micro VARs | MSP Coach | MSP Coaching | Office 365 | SMB cloud | SMB Coaching | SMB Power Teams | SMB Technology Network | Stuart Crawford | Stuart Selbst Consulting | Ulistic
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Hi Joe,
Allow me to let the readers of MSPMentor.net know my plans with the SMB Power Teams. I had been giving this a lot of thought lately, Once I saw how well the smaller MSPs work together in groups during our Spring Training for Business event, i knew I had to launch my idea. I have had a number of MSP inquire about the teams and they have signed up. These power teams are designed to get these smaller MSPs to truly think outside of the box and get out of their own way to find success. Like any other group, I have an proven agenda designed to help these smaller firms grow, focus and by successful.
One question that I have been asked is will I not be coaching one on one, the answer to that is no. I am seeing much more success one on one with partners who are over 500k in revenue. Those partners who are over 500k are getting to over a 1 million much faster and most time closer to 2 million in less than 24 months. So I am working with firms one on one that are 500k to about 10 million in revenue with upwards of 25 employees.
While I don’t think that any of us have the magic pill to help small MSPs find fame and fortune, if a business owner has the desire, the drive and is willing to ask for help, anything is possible.
Joe, thanks a lot for everything you do to report on the growth and drive for our industry.
Stu
Stuart: Thanks for the updates. Keep us posted as you further design/launch the virtual groups.
-jp
Joe:
This reminds me of the posting from a couple weeks back. As I said back then, I believe the market will always have space for the smaller MSP/VAR. The SMB is a very diverse space filled with companies that possess very little internal technical skills. Such an open market will always present opportunity for the small, well positioned and scrappy competitors.
JP…congrats to our MSP Coach Stu for helping out the small MSP. My role as a MSP Marketing consultant is geared toward those who are wanting to grow regardless of size. It will be pleasure to go into battle with Coach Stu and help out where I can be of service to the MSP community. After all, it is all about being of service and having a Go-Giver focus.
Stuart
Mitchell: Yup, we do tend to repeat themes across our websites. And truth be told: We root for entrepreneurs/business owners.
-jp
Actually, I think you may have missed the focus of these groups. Specifically, the goal is to move these businesses from lifestyle or micro-MSP status to businesses making over $1M in annual recurring revenues. This has been a focus of the SMB Technology Network from its inception which is why our association has made this alliance with Stuart Selbst Consulting. SMBTN has previously supported successsful initiatives encouraging members to become Microsoft Small Business Specialists, as well as, encouraging to grow their businesses so they can move up to Microsoft Certified Partner status.
In my personal opinion, the concept of lifestyle pactices and micro-MSP’s will be short lived. It is crunch time and either these businesses are going to grow above the $1M mark or they will simply cease to exist, as many have in the past couple of years.
Jim: I think we’re on the same page. But you summed it up more succinctly. I positioned it as time for Micro MSPs to figure out their relevance. You positioned it as do or die. I think you’re right.
-jp
Jim, why do you think “the concept of lifestyle pactices and micro-MSP’s will be short lived?” I understand it’s your opinion, but I’d like to know the reasons.
We certainly fall into that category, and I think 100% of our clients appreciate that. Not two hours ago a client said to me something like “We don’t want to use a big outfit for this (IT services). If we need help in the middle of the night, we know where you live!”
I think we can be viable as long as we want to and continue to provide excellent service. Will some smaller MSPs fade away? I’m sure they will, but that’s true in any industry (especially one with low barriers to entry).
Scott,
If I may interject here on behalf of Jim. I don’t think Jim was speaking to you personally, but in our experience we have seen the super small (micro) VAR/MSP fail miserably. As a business coach, I can tell you first hand that having worked with these micro firms, there is a lot of work to do. This is one of the mail reasons for creating the Power Groups. I have been successful in helping small MSPs and VARs grow their business, in the power teams, I can guarantee that partners will be success by being able to work with me and their peers. The plan that I have for each member will work, because it is proven over the last 3 year.
I hope that you consider joining one of our groups and sharing information with your peers.
Stu
I’ve told this anecdote often to vendors and peers and think it’s spot-on to the impetus of this article: There’s a chain of farm stores called Tractor Supply around where I’m located. A sign out front of one recently read “The stuff you need out here!”.
I think that’s the epitome of the space in which I run my MSP. “Out here” in the sub-$1M marketplace. Out here in the rural SMB marketplace where a 20-seat engagement is a very big opportunity and has all the complexity of any other infrastructure engagement at any level.
Gartner is a load of BS “out here” most of the time. Network World and other published “authorities” seem to think a small business has a budget of $100K for IT when in reality, that 20-person shop may think $10K is way too much (out of touch with reality, but often the mindset anyway).
I both agree and disagree with the notion of ‘do or die’ as expressed above for a smaller operator (the “micro MSP”…first time I’ve heard this term). I *am* in that category as I am the primary billing resource (at least 99% of it) and have been for nearly 10 years, but I’ve consistently added clients and revenue, have very little client attrition, and have been very successful in taking break-fix into MSP and now into holistic cloud-oriented services (figuring it out by selling it!). I came to within a few points of 500k last year and will exceed it this year (based on growing the annuity base and me not getting hit by a truck). I’ve invested heavily, both monetarily and operationally into PSA and RMM and strategic partnerships with master MSPs (some worked, others didn’t). I’ve even owned a franchise in which a was ‘partner of the year’, but the organization is so out of touch with what it takes to be successful “out here” that I pulled all the business out of them as they were killing my relationships with clients. And they were targeting the “micro MSP” as being the key to moving up market. (In the words of my 16-year old: fail!)
The resources that are available to me to figure out how to grow past “me” as the deliverable are few and far between. I’ve entertained the idea of HTG Peer Groups, Taylor Business BIG groups, and others, but I’m delivering the service (and everything else) and there’s no way to wedge such a curriculum into the 27 hours a day that’s routine already.
However, I’m coming to the realization that either my skill-set, my market/opportunity perspective, my ????, or combination of these things is unique relative to most “shops”, especially in the under 2-man variety; I personally know of now one that have maintained longevity and increased numbers year over year without adding man-power. If I have 5 more of “me” and could compare notes and ideas about how to move past “me”, I would sign up for it if it’s done with the realization that my time is more limited (and therefore valuable to me) than anyone in a multi-party practice that has multiple billable resources. I want to get there, but the coaching has to come down to my reality for it to have value and any leverage in helping me get my practice to another level.
The idea of someone looking at “my world” as mentioned in the title piece of this page is very refreshing and very much needed. Out here.
(sorry for what became a rant!)
Terry,
Your rants will always be welcome on MSPmentor. And I don’t view it as a rant. When you win that next $10K deal from an SMB, please email me and tell me how you won the engagement. Plenty of Micro MSPs — heck, let’s just call them entrepreneurs — would love to hear about it. Best wishes and thanks for reading MSPmentor.
-jp
Joe [at] NineLivesMediaInc [dot] com
3-user cloud+haas deal proposed this morning, if closed is 10+K a year @ 60% margin. My proposal was “will you go with me. Check yes or no.” (that’s how small shops do it).
This is a great post! Making yourself standout is important for any size business and isn’t necessarily more advantageous because you have a larger revenue stream. To get to the next level means that you have to focus on your product offerings, marketing and your guiding principles. Having concrete aspirations in this ever changing channel is the foundation for growing your business and making a name for yourself that stands out from your competition.
http://www.doyenz.com/articles/importance-concrete-aspirations
Terry@12: Let us know if you win the deal. Good luck.
Mollie@13: Regarding your aspirations point… When we started Nine Lives Media Inc. our stated aspiration was to “define emerging IT media markets and disrupt established IT media markets.” That was 3+ years ago… We keep looking back on that aspirational statement to ensure we remain focused.
-jp