How 3 Top Managed Services Providers Built Their Businesses

How 3 Top Managed Services Providers Built Their Businesses

At TruMethods Schnizzfest, top managed services providers are on stage describing how they grew their businesses, developed their pricing philosophies and stay energized. The session, moderated by TruMethods CEO Gary Pica, includes MSPmentor 100 companies and leaders such as White Glove Technologies CEO Tommy Wald; EndSight CEO Mike Chaput; and IT Solutions CEO Ted Swanson (pictured left to right). Here's the recap.

Tommy Wald, CEO, White Glove Technologies

Wald suffered a setback when one of his salespeople left the business and took away product sales with him. "We were coming out of the project world and we had that one super sales person leave us which hurt us," said Wald. To compensate, White Glove bet on managed services.

Wald says MSPs that build their initial sales using company principals and top executives in the sales effort are the MSPs that succeeded most rapidly.

For business planning, Wald says he sticks with Mastering the Rockefeller Habits -- a best-selling book. "It gets the organization focused on communicated goals," he said.

Wald measures the profitability of every customer engagement. At the end of the month most MSPs can measure if they had a profit or loss, but "they have no idea how they got there," said Wald.

For the past 10 years, Wald has taken off Thursday afternoons to make sure he has life balance and creative energy.

Wald noted that White Glove no longer offers line-item pricing. "You can't go there and get into a competitive per-device price debate," said Wald. "We don't break that out."

Mike Chaput, CEO, EndSight

When you are at zero managed services, the top executives in the company have to be out selling the managed services message. "It can't be delegated at the start," said Chaput. In terms of building a business you need to either be "super passionate" or pack it up and go find a day job.

"It's important to know about the activities that energize you vs. those that drain you. As your business gets bigger you can go out and find people who can actually do the energy-draining tasks for you. If you're in this for a marathon career than get rid of the energy-draining tasks."

On the pricing front: Selling managed services is a lot like selling wine to a wine novice, explained Chaput. "Going in with a low price sends the signal that my product is low quality," said Chaput. "If customers are going after price than none of us are going to win. Those customers are going to Google and Dell. That's not where MSPs should be competing. If customers want the low-cost shop say 'fine' and move along."

Ted Swanson, CEO, IT Solutions

Swanson got started on managed services when he spotted Pica running remote monitoring and management software.

Manage your numbers, said Swanson. Do you want to be a $50 million company with 2 percent margins or $10 million at 30 percent margins, Pica interjected -- reinforcing the point that Swanson says you need to understand where your revenues will come from and what margins they will produce.

In terms of margins, Swanson said:

  • You can get to 5 percent profit margins by just being in business;
  • 10 percent margins require good service;
  • 20 percent margins require a good sales organization with a great repeatable process.
  • To get to 30-percent or 40-percent margins, you need a real mastery of your own financial operations.
"Promise customers that you will charge them enough to deliver a service correctly," quipped Swanson.

Next Up

That's the end of content today at TruMethods Schnizzfest. But I'm sticking around for tomorrow's discussion about cloud computing to gain more MSP perspectives.

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