Forgive me for stealing an idea from Inc. magazine (yet again). A few hours ago, Inc. published a list of "15 things every business owner needs to know." It's a solid list but I'd like to add a managed services twist to the discussion. So, here's my own spin on Inc.'s timely list.

Joe Panettieri, Former Editorial Director

June 28, 2010

6 Min Read
15 Steps to Small Business MSP Success

managed services tips

Forgive me for stealing an idea from Inc. magazine (yet again). A few hours ago, Inc. published a list of “15 things every business owner needs to know.” It’s a solid list but I’d like to add a managed services twist to the discussion. So, here’s my own spin on Inc.’s timely list.

You can find Inc.’s list here. Obviously, I think the list applies to entrepreneurs across the managed services market…

Inc. Tip 1: Cash is king
MSPmentor’s spin: Inc. points out that your overhead, including rent and payroll, may be too high. Your payment terms may be too liberal or your billing procedures too slack, the site adds. But savvy MSPs live by the “measure everything mantra.” And many MSPs participate in peer groups to see exactly how their expenses and overhead measure up against peers.

I often hear from MSPs who wonder if PSA (professional services automation) and CRM  systems are too expensive to leverage. My reply: If you can’t afford a base PSA or CRM offering, you don’t belong in the managed services market. After all, how else will you gain visibility into your business finances, forecasts, etc.?

Inc. Tip 2: Though cash is king, making money is ultimately an unsatisfying goal.
MSPmentor’s spin: I have a slightly different view here. Some folks go into business to make money. Speaking purely for myself, I went into business with my business partner (Amy Katz) to achieve financial freedom. Money — in my mind — buys freedom. Freedom to make your own decisions. Freedom to pursue business paths that some critics may dismiss. So making money can be a satisfying goal in my mind — but it’s not the end goal, at least not for me. The end-goal is the business and personal freedom that money can buy.

Inc. Tip 3: Culture matters
MSPmentor’s spin: A good friend of mind once told me that you should measure employees using two metrics: Their ability to get the job done and their cultural fit. In extremely small companies, that’s a delicate balancing act. A productivity superstar may not be worth the risk if they’re a miserable cultural fit…

Inc. Tip 4: Systems can be humane.
MSPmentor’s spin: Inc. refers to a “trust and track” system, which defines the basic tasks of the business down to the letter, then trusts workers to consult lists of directions in order to complete these tasks. Within our own business, we use simple applications like Google Apps to track tasks, priorities and responsibilities. But as we grow larger I suspect we’ll need to explore SaaS-centric ERP or CRM  systems. As for MSPs, it seems like even the smallest service providers are kicking the tires on PSA to help implement business management systems.

Inc. Tip 5: Character is the most important quality to look for in a job applicant.
MSPmentor’s spin: This is a tricky one. Unless you have a longstanding business relationship with the job candidate, how can you really measure their character — integrity, honesty, courage, wisdom, etc — before making the job offer? No doubt, interviewing the candidate’s peers can help. But it seems to me the best small MSPs hire people they already know because they’re already familiar with personal character traits…

Inc. Tip 6: To grow, you must first learn to delegate and to trust.
MSPmentor: No argument here. But you must also have clear job responsibilities. Many MSPs were launched by two or more business partners. To thrive, the business partners have to decide who will run specific portions of the business (sales, marketing, technology, R&D, finances, etc.). Then, those responsibilities must be clearly communicated to the staff in order to ensure fast decision making across the organization.

Inc. Tip 7: Plan for rainy days.
MSPmentor’s spin: This tip pertains to surviving recessions, credit crunches and catastrophies. Here, my most basic advice pertains to your lifestyle. As your business grows, don’t raise your own lifestyle. Avoid the temptation to take on lifestyle debt you don’t need. If/when the market shifts or temporarily torpedoes your business, you’ll be glad you don’t have a heightened lifestyle to maintain.

Inc. Tip 8: Working with partners is easier said than done.
MSPmentor’s spin: Inc. notes that “a strategic or joint-venture partner can help you company enter new lines of business, and expand at a more rapid clip than you could otherwise. But partnerships are tricky to manage.” I couldn’t agree more. We’re frequently approached about partnerships. And we do pursue some of them. But ask yourself: What do you gain — and what do you potentially lose — from the partnership? Do you have time to focus on the relationship or will it distract you from your core business?

Inc. Tip 9: Keeping good records is also easier said that done.
MSPmentor’s spin: Inc. notes that “In most instances, it is wise to execute a written contract with each independent contractor you use.” We certainly agree. But I wonder: Do most MSPs have a central person who actually manages all that documentation?

Inc. Tip 10: To engage workers, let them call (some of) the shots.
MSPmentor’s spin: One of my first managers told me he had a simple approach to business: He hires the best people then allows them to do their jobs in a hands-off way. Each employee was accountable for specific business goals or deadlines, etc. The hands-off, bottoms-up management approach frequently triggered new business ideas or new approaches from the staff.

Inc. Tip 11. Customer service is not a department, it’s a way of life.
MSPmentor’s spin: As Inc. notes, “If you make the engineers answer e-mails and phone calls from the customers, the second or third time they get the same question, they’ll actually stop what they’re doing and fix the code…” Longer term, many MSPs believe that they will have only three ways to differentiate — (1) sales (2) marketing/branding and (3) customer service — amid cloud competition.

Inc. Tip 12: The best salespeople thrive on rejection.
MSPmentor’s spin: Instead of giving up when losing a deal, the best sales folks “find another way” and they also look to up-sell, Inc. notes. ConnectWise CEO Arnie Bellini covered some of this during an MSPmentor live webcast last week, noting that there are nearly two-dozen different recurring revenue opportunities that MSPs can use as cross-sell and up-sell opportunities.

Inc. tip 13: Knowing how to control clients is an art.
MSPmentor’s spin: It’s true — customers actually respect you when you give them honest feedback about (A) bad ideas (B) technologies that aren’t a fit and (C) strategies that aren’t worth pursuing.

Inc. tip 14: Failures are good for you.
MSPmentor’s spin: I don’t deal well with failure so this is a difficult tip for me to digest. But Inc. does offer a valuable insight, noting that the best entrepreneurs are interested in the creative process of growing companies (complete with failures, setbacks and missteps) rather than the singular goal of getting rich. Placed in that context, I agree with the tip.

Inc. tip 15. You need to leave yourself time to dream.
MSPmentor’s spin: My office whiteboard has the following permanent market ink on it: “Innovation time – two hours daily.” Do I really innovate two hours per day? Nope. But the reminder certainly helps me to focus a bit on innovation a few times per week.

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About the Author(s)

Joe Panettieri

Former Editorial Director, Nine Lives Media, a division of Penton Media

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