Revisited: The Four Key Questions MSPs Must Ask Everyday
Mike Cooch and I have finally reconnected. Cooch is well-known in MSP circles for starting a range of businesses — everything from Everon Technology Services to Kutenda. During 2008 and 2009, we typically spoke or traded email a few times per month. But changing businesses and growing families pulled me and Mike in different directions over the past two years or so. We finally reconnected tonight. After our conversation, I re-read a blog Mike wrote back in May 2011. It included four key questions MSPs should ask themselves every day. There’s pretty darn relevant.
The blog entry, from Mike’s SMB IT Pros site, told MSPs to address the following four questions:
- How long do I think it is until almost all of my clients’ services, applications and data are hosted in the cloud?
- When that day comes, what will my business model need to be in order to be a viable business and meet my personal goals?
- What am I doing today/in the next quarter/in the next year to make sure I am ready for this day?
- If the answer is “I don’t have a clear strategy”, should I consider exiting my business to capture the current value, – and what should I do to prepare?
Within the blog, Mike noted that he spends time with a group of entrepreneurs in Denver. Most of those entrepreneurs had shifted the bulk of their servers and server applications into the cloud. That was back in May 2011. Assuming there’s been no serious setbacks, it’s safe to conclude that those entrepreneurs have continued to push more applications into the cloud (am I right Mike?).
Small Business Servers: Dead or Dying
Curious about Mike’s four questions above, I checked the Google search trends for the term “Small Business Server.” The result: Fewer and few folks are searching for small business server information. Ouch.
Answering Mike’s Questions
So let’s get back to Mike’s key questions, and potential answers for MSPs.
Mike’s Question 1: How long do I think it is until almost all of my clients’ services, applications and data are hosted in the cloud?
MSPmentor’s Reply: It depends. I think the vast majority of start-up companies will run nearly all of their business applications in the cloud. But I see where Mike is going with the question. I think most MSPs underestimate how quickly SMBs are shifting IT assets into the cloud. So my overall answer: I think most SMBs will host almost all of their applications and data in the cloud by 2015.
Mike’s Question 2: When that day comes, what will my business model need to be in order to be a viable business and meet my personal goals?
MSPmentor’s Reply: Notice that Mike didn’t say “if” the day comes. He said “when” the day comes. I agree: Cloud is unavoidable, especially for small businesses. So when that day comes, I think MSPs will need to identify how to cash in on:
- the remaining on-premise assets (smartphones, tablets, notebooks, PCs, routers, printers and some specialized applications).
- cloud integration services that allow MSPs to source, provision and manage a range of third-party cloud services.
- business consulting, where MSPs serve as a virtual CIO to help SMBs march forward.
- good old help-desk services, to ensure end-users’ endpoint devices remain online and connected to cloud services.
Mike’s Question 3: What am I doing today/in the next quarter/in the next year to make sure I am ready for this day?
MSPmentor’s Reply: I’d join a peer group and I’d also spend more time hanging out a vertical market conferences to understand which vertical market applications will remain on-premise the longest, generating the most revenue dollars for MSPs over the long haul. I’d also sort out a killer help desk strategy right now. Help desks let you see and hear how customers are feeling every day, and where they’re heading next.
Mike’s Question 4: If the answer is “I don’t have a clear strategy,” should I consider exiting my business to capture the current value – and what should I do to prepare?
MSPmentor’s Reply: If I was preparing an exit strategy I’d:
- Maximize EBITDA (earnings before interest, taxes, depreciation, amortization) over the next six months.
- Build a solid sales and profit forecast that covers the next 30 months. If that forecast doesn’t have clear growth then you better be very flexible on your valuation.
- Hire a broker to identify potential buyers and manage the solicitation process so that I could continue to run the business efficiently and effectively.
- Find a buyer that makes the best strategic sense, without necessarily selling to the highest bidder.
Looking Back, Getting Ahead
Well Mike, you’ve done it again. Each time we connect you cause me to think hard about the SMB and MSP markets. Sorry for the cliche, but the only constant has been change.
Side note: Mike — if/when you’re ever done being a vendor in the IT or MSP space, please consider a career in blogging… but please don’t compete against me. Your insights were always great.