The Smartest Investment MSPs Can Make In 2009
I admit it: I still read Money magazine and Smart Money because I like the basic investment advice they offer (or perhaps I enjoy reading about everyone’s shared pain). Even as the stock market continues to decline, I’m not ready to completely quit on Wall Street. Still, I’m starting to realize there’s a far smarter place for a small business owner like me to invest my money.
Sure, bonds and CDs are safe bets. But my smartest ongoing investment since 2007 involves pumping money into my own business. I suspect smart managed service providers have come to the same conclusion.
When Amy Katz and I co-founded Nine Lives Media Inc. (MSPmentor’s parent) we had some clear goals in mind. We decided not to pursue outside investment dollars because we wanted to maintain complete creative and financial control of the company.
We ultimately funded all operations out of our own pockets. We did some consulting work on the side to help generate cash flow until our main business properties gained momentum. And I was fortunate to quickly learn that Amy — as I expected — aggressively manages cash flow for our company.
As I’ve met with other entrepreneurs and MSPs in recent months, I’ve noticed that they share key financial and business traits:
- They don’t drive or lease “the latest” cars, and they generally live below their means.
- Executive salaries are generally kept low, but bonus opportunities — based on the company’s financial performance and cash flow — are substantial.
- Extra dollars are pumped back into the business.
- New products and services are developed and launched even as existing products and services continue to generate growth. In other words, new revenue streams start flowing before there’s an urgent need for them.
- Marketing plans are part of the basic annual budget, with established and potential customers receiving marketing messages at least on a quarterly basis. If you can’t afford to market your business you can’t afford to be in business.
- Executives genuinely love what they do. They may have outside interests, but their biggest challenge is (A) maintaining the existing business while (B) striving to find time to implement a range of new ideas. They always have a new idea, but they’re short on free time.
A year or two from now, my mindset may change dramatically. As the stock market recovers — and hopefully delivers double-digit annual returns — perhaps I will try to route more money into the stock market (assuming I have the money to do so…)
But for now, I have far more faith in my own business than I have in Wall Street.