April 9, 2020
A new program from Kaseya, Kaseya CARES, aims to help partners through the COVID-19 crisis. It’s a scary time to own a business. Thanks to the global coronavirus pandemic, economies around the world are plummeting, businesses are tightening their belts or closing their doors altogether and channel partners have their fingers crossed that they were in a good enough position before the world even heard of COVID-19 that they’ll be able to weather the storm.
The CARES Act
After weeks of uncertainty and panic among American business owners, Congress passed the CARES Act on March 30. The $2.2 trillion bill is meant to bring relief to mainly small to midsize businesses, loaning funds to help them keep the lights on and avoid layoffs. But like any legislation, there are miles of bureaucratic red tape to navigate and mountains of legalese to try to understand. Taking advantage of the relief act isn’t as easy as just signing up for the loan. There are multiple factors every business owner has to tackle one by one, and some areas are nothing but gray. There are employment taxes, provisions around net operating losses and funding of benefit plans. That’s all over and above the actual forgivable small business loans, where qualified businesses can take advantage of the Paycheck Protection Program (PPP) to pay ambiguous “utilities” and cover payroll.
The Paycheck Protection Program
Friday, April 3, was the first day that businesses could apply for PPP, and it’s clear the financial system is still racing to catch up to the legislation. Not all banks accept applications for the program. Some place restrictions around who can apply. And the federal guidelines surrounding the loans are still so murky that some banks, such as JP Morgan Chase, just flat out couldn’t launch their lending process on time.
On the Thursday nightprior to the application period opening, Chase sent notices to customers that warned, “Financial institutions like ours are still awaiting guidance from the SBA and the U.S. Treasury. As a result, Chase will most likely not be able to start accepting applications on Friday, April 3rd, as we had hoped.”
It’s clear that SMBs in every sector will need help navigating the bill, refining and pivoting their business plans and best practices, and accessing funds to keep them going. In the channel, many vendors, distributors and master agents are rolling out programs to help their partners through this crisis.
Kaseya’s Alexandra Letts
Kaseya CARES aims to do just that. The company carries a large legal staff with tier one auditors and boasts a global network of legal firms and investment firms. Led by general counsel Alexandra Letts, Kaseya is doing much of the legal legwork for its customers. In addition to webinars, reference sheets and workbooks, Letts’ team is working in real time to answer questions MSPs have about their loan application process. Letts says that in the end, Kaseya CARES is all about providing clarity.
“We brought in BDO, one of our accounting and past partners, to break down piece by piece what their interpretation of different clauses of the laws are,” said Letts. “So they could fill out an application that we think would be accepted by those lenders under the PPP.”
But navigating the CARES Act is only …
… one small part of partners’ strategies to survive this unprecedented economic situation. MSPs started off 2020 with a list of mandates that, in many cases, were about upping their business maturity, expanding and standardizing solution stacks and creating repeatable revenue streams from security solutions. They were maturing their businesses.
New Business Approaches
Before the pandemic, Rob Schenk, CEO of MSP Intivix, says his company was focused on marketing initiatives like updating its website. Their 2020 mandates were things like internal process improvement, additional automation and providing clients with multimodal support options. Today Intivix’s goals are much more targeted. In a sense, it’s back to basics.
“[Our] primary concerns are communicating proactively with clients, cementing our position as critical business partners. These communications are very important to understand our clients’ financial position and working with them accordingly,” said Schenk. “[We’re] also sorting through the transition to work-from-home for client end users: coming up with creative ways to ensure that the transition occurs in such a way as to be secure, productive and efficient as possible. Also ensuring that marketing tone is human, vulnerable, and supportive.”
Schenk today must revisit how he communicates his value proposition to clients, understand the new basic business outcomes customers are desperate to achieve, and reposition his marketing strategy. It’s almost like starting from scratch, and Schenk isn’t alone. We heard from multiple partners that are having to backpedal from the ambitious, sophisticated strategies they had planned for 2020 and pivot somewhat back to the foundations.
“We started off the year with security audits for everyone! Based on our findings we planned to implement any changes needed to make our clients as safe as possible. We were also meeting with each client to listen to their needs and get their feedback concerning our service and what services they would like to see us provide,” said Adam Bell, president of MSP Sublime Computer Services. “Our concerns right now are getting our clients working from home … I think the entire industry is facing this problem right now.”
Teaming Up to Offer Assistance
Kaseya’s Fred Voccola
Kaseya has had a business advisory assistance program for a while now. Called Powered Services, it’s run by former MSP Dan Tomaszewski and provides resources for partners on things like pricing, scaling efforts and business planning. Now, the company has brought in a high-profile consultant, TruMethods‘ Gary Pica, whom Kaseya CEO Fred Voccola calls “the godfather of the channel,” to serve as an added resource for partners.
“We’re teaming up Gary with Dan’s group,” said Voccola, “and we’re allowing all of our customers free access into our Powered Services program, where they will be getting free consulting from Gary Pica and his organization in conjunction with our team of services experts on how the world has changed post-COVID.”
Pica is building a content track to ensure that Kaseya customers know how to …
… protect their businesses, uncover new opportunities and thrive in a post-COVID economy. He’s already completed the first module, called “Protect Your MSP Business,” and says in the coming weeks and months, he and his team will deliver live and off-line content to guide them through the crisis.
“I am working hard to support not only my TruMethods members, [but members] of the MSP community as a whole,” said Pica. “This gave me a chance to touch the lives of more business leaders when they need it the most…There will be winners and losers in the MSP space this year. I’m here to ensure that Kaseya customers are on the right side of the equation.”
Weathering Channel Changes
Who will win and who will lose in this “new” channel post-crisis is the topic of a lot of conversation these days. Tomaszewski says before coronavirus swept over the world, Powered Services was meant to help partners go to market faster with new solutions. His mission was to help partners set their profit margins appropriately and be flexible enough in their business to execute necessary pivots. Those MSPs that took those lessons to heart, says Tomaszewski, will be the ones left standing when the dust settles.
It’s a sentiment echoed by many partners when asked what they think will happen to MSPs through the epidemic. Those in good shape when the coronavirus hit will come out the other side stronger than ever. And those with somewhat sloppy operations might not make it.
“I think efficient MSPs that entered the pandemic era fully aware of their revenue streams and service profit margins will come out stronger,” said Matthew Tucker, CEO at managed service provider Pegasus Technologies. “MSPs that haven’t been actively tracking and managing their KPIs will struggle with cashflow, clients and staff retention. This opens the door for stronger MSPs to capture new business, be it organically or through acquisitions.”
The Ups and Downs of Business Shift
Voccola and Tomaszewski are optimistic about the future health of the managed services market. This paradigm shift to remote work has brought into stark relief the need for businesses to have contingency plans. This includes modern, cloud-based solution stacks, tighter security, adequate backups and updated, mobile equipment. Where MSPs in the SMB market are used to the “I don’t need that, we’re too small” objection, enter COVID-19. Disaster doesn’t care about your company size or what you think you can get away with not having. It is America’s small businesses that are the hardest hit by the current economic freefall.
Powered Services’ Dan Tomaszewski
“It’s really sinking in that, ‘When we come back post pandemic, I need to have my stuff in place. I need to have a pandemic policy, a disaster recovery plan in place. So when my workforce has to work from home, they cannot miss a beat,” predicts Tomaszewski.
But there are MSPs out there for which legal handholding won’t be enough to stop financial disaster. Things may look optimistic for our industry as a whole, certainly. But the prognosis looks pretty grim for a lot of partners.
“You know, we were the world’s greatest economy a month ago,” said Voccola. “Now we’re in a depression.”
Sharing the Wealth
This is where the third piece of the Kaseya CARES program comes into place: direct financial assistance. The company has set aside …
… $10.5 million via Kaseya CARES to help its partners through the coming months. Voccola stresses that Kaseya isn’t a bank, and it isn’t trying to act like a business-to-business lender. There are also no “one size fits all” solutions here. The recent stimulus bill, for example, gives most Americans a check for around $1,200. In contrast, Kaseya CARES is taking each MSP on a case-by-case basis.
You’d think, similar to the mad rush of desperate American small businesses upon banks when the CARES application window opened last Friday, that Kaseya partners might be fighting for their share of that money. But many of the partners we spoke with say they are holding off on taking advantage of Kaseya’s offers. Why? The simple fact is that other MSPs need them more.
Ook Enterprises’ Luis Giraldo
“On the direct financial assistance end of things, we’re watching our cash flow very carefully, but we’ve been lucky not to require it thus far, despite a few customers having to make unfortunate staffing changes,” said Luis Giraldo, CEO of MSP Ook Enterprises. “So, we’re doing our part to ensure we don’t dip into programs that may benefit other MSPs more profoundly.”
Coming Together in the Time of Coronavirus
In the wake of disasters, it isn’t unusual for a sense of unity to sweep through societies. Every World War, terrorist attack, natural disaster and pandemic sees a rush of generosity and engagement with community. People feel the need to anchor themselves and to be there for others where they can. The channel today is no different.
“I’m mostly concerned for the wellbeing of our families, staff, customers, and their families and staff. Our hearts are heavy with everything that’s going on. Many people will be affected emotionally and financially,” said Giraldo. “We’re OK to go a little while without net-new growth. It’s more important that we are on the ground for the customers we have today.”
For Tomaszewski, watching the channel come together has been the most gratifying part of how he spends his days lately. Groups of competitors are coming together in Facebook forums, social groups and virtual gatherings to give support and encouragement.
“I have seen the channel,” said Tomaszewski, “and it’s always been this way. We’ve all leaned on each other. You’re seeing a lot of sharing right now.”
Further CARES Act Help Resources
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