Customer Service

Buyer beware! How not to get screwed by your IT company

The Profit is a show that airs on CNBC Prime about struggling businesses finding a “savior” in the person of multi-millionaire Marcus Lemonis.

In each episode, Marcus, the CEO of Camping World and Good Sam Enterprises will find a business in dire need of help and radically change its’ core while investing a hefty amount of his money to save it.

What I love about the profit show is that since it is very real, sometimes the deals work and sometimes they don’t. That’s life isn’t it?

Being a life-long entrepreneur, I absolutely love the show.  Marcus Lemonis is an incredible business man, and seems to have a heart.  I came across a video interview with Marcus the other day.

How can you as an MSP use this to educate potential clients?

This interview really got me thinking.  “I wouldn’t know if someone is BSing me.”, was his best quote.  If someone like him will not invest in tech companies because he’s outside his element, how does the normal business owner make an educated decision about which IT company to choose to support them?  The short answer…they shouldn’t be. At least not by themselves.  Let’s face it.  The average business owner has no idea whether they are being BS’d either.  They usually start looking for another IT company when something is on fire and they need it fixed right away, or their current guy (assuming they have one) has royally screwed something up.  After jumping on Google and calling down the list of names one by one, they finally get someone on the phone.

That’s where you as an MSP come in.  Most IT companies go in and start talking about the tech.  After a “Free Network Assessment”, they drop a RapidFire report on them (which might as well be written in a foreign language to the business owner), and kindly point out all the things that are wrong with their systems and network, and how they are going to be their savior for the low price of $xxx/month.

The business owner has no basis in which to make a decision.  They have no idea whether that IT company will suck as bad as the last guy.  They have no idea whether they are being BS’d.  The only basis they have to make a decision is whether they like the sales guy, and the price.  A decision based upon either of these two alone will never be a good choice.  You already know this.

If I have just described your sales process, PLEASE change it!  You will always look just like all the other IT companies to the business owner, and they will always make the decision solely on price.  Even if you win the account initially, you will lose in the end.  I’ll bet you already know this too.

Stealing Genius is a concept I learned a few years back from Steve Miller.  Feel free to “steal” this content to use in your MSP practice.

stealing_genius

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lesson 7 run it to sell it

7 Lessons I learned from building, growing and selling my IT business | Lesson 7: Run It Like You’re Going To Sell IT

When you are starting a business as an entrepreneur, you don’t really give a whole lot of thought to your exit strategy, let alone selling your business.  You are too excited with the challenge of building a great company.  You’re finally living the dream!

Your new company becomes your child in a sense.  And, let’s face it, you typically spend every waking hour taking care of it.  (If you’re like me, you dream about it too. It’s 24/7.) You forgo sleep whether intended or not.  But, you know that all the sacrifices will be worth it.

When your child is born, you don’t immediately start thinking about the day he/she moves out.  However, when you start a business, you need to plan your exit strategy from the very beginning.  Let’s face reality here.  Most of us won’t have an IPO in our future.  The more likely scenario is a sale or merger.

2004 was a year I had two “kids”.  My son was born in May, and Network Logix was reborn in September that year.  So, for me, the “child” metaphor takes on double meaning as I write this post.

Your child soon learns to walk and then to run.  It falls down and gets banged up.  Welcome to life kid.  Your “child” goes through all of life’s growing pains, and you continue to worry 24/7 like a normal “parent”.  But, you know that all the time, effort and energy will be worth it.

Soon the day comes for your kid to leave home.  In this case, the day came for me to sell my business.  That day came on June 30, 2014.

This was a bittersweet day for me.  Every waking (and sleeping) moment over the last 10 years spent thinking about my IT company had finally come to end.  It was an extremely emotional time.  But, I didn’t have much time to think about it.  I now had more work to do in order to make the transition smooth for our clients.  No rest for the weary!

As I’ve done with the other 6 posts in this series, I’d briefly like to share what I learned.  It is my hope that this information can help at least one person learn from the good and to avoid some of the pitfalls I found along the way.

My Takeaways From Selling My Business

They say that, “Hindsight is always 20/20.”  I agree with that for the most part.  Things that you learn after the fact should have been obvious all along, yet they are not always apparent when you are in the heat of the moment.  Here are the top 3 things I learned from going through the process of selling the business.

  1. Build your valuation early.  This is always the sticky part of getting a deal done.  What is your company really worth?  The short answer; your company is worth what someone is willing to pay for it.  The core “Asset” of an MSP (Managed Service Provider) is the quality of MRR (Monthly Recurring Revenue) and client relationships.  Fortunately, we started as a pure-play MSP in 2004, and MRR was built in from the beginning.  We did very little break-fix work, and most of our clients were with us for nearly the whole decade.  Having Raving Fans is a huge asset.
  2. Have your books and records in order.  I’m not an accountant, nor do I pretend to be one.  (I didn’t stay at a Holiday Inn Express last night)  All revenue and expenses should be clearly broken out by service type.  Solid, long-term agreements with clients proves very helpful.  Make sure they are assignable too.  Non-solicitation and non-disclosure agreements with employees are also key.
  3. Hire A Broker.  When it’s time to sell, find a business broker to help you.  (I’m throwing this in as a hindsight lesson.)  Having a professional broker will help eliminate any personal feelings and miscommunications, and reserve it for what it is, a business transaction.  Selling your business is an emotional thing.  Remember, it’s your baby.  Emotion can cloud your judgement, so let a broker do his thing.

If you base success on a single event as an entrepreneur, you will be disappointed.  As I look back, I have found that the most joy I derive from the last 10 years has been the journey.  The journey of building, creating, learning.  It was a wild ride, and I still have a few war wounds, but it was worth it.

As always, I welcome any thoughts or comments below.  If you found it useful, please share with a friend or colleague.  Until next time….

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7_Lessons_I_Learned_from_My_IT_Business eFolder

[Webinar] eFolder Partner Chat: Tuesday, May 19, 2015

I’m excited and honored to be a guest with one of my favorite partners, eFolder.  Please join me Tuesday, May 19, 2015 at 2:00PM EST where I’ll be giving away all the things I learned from building, growing and eventually selling my MSP practice.  Register here: http://www2.efolder.net/7LessonsILearnedFromMyITBusiness

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Focus on your top clients

7 Lessons I learned from building, growing and selling my IT business | Lesson 6: Focus All Your Attention on your TOP clients

One would think this lesson should be a given.  There should be no need to write about.  It should be a no-brainer. Take care of my TOP clients.  Duh!  Unfortunately, this was not the reality at times for me, or for most IT providers or entrepreneurs.  Let me explain.

“The customer is always right.”  We’ve all heard this expression.  This is one of the biggest fallacies in business.  Think about it for a minute.  What would that actually mean for you if it were true?  If the customer (i.e. everyone who wants to do business with you) is always right, how can you possibly serve them all well?  You might be able to keep some of them happy, but when you try to cater to everyone, you just end up being stretched too thin.  I speak from experience here.  I exhausted myself trying to keep everyone happy.  I ended up making mistakes and letting people down.   No matter how good my intentions were, no matter how determined to make good on my promises, I was overextended at times.  Overextended entrepreneurs inevitably drop the ball.  This was unacceptable for me and my clients.  Fortunately, I didn’t lose any of my top clients, but it served as a wake-up call for me.

Back in Lesson 3, I mentioned the Pumpkin Plan book by Mike Michalowicz.  (If you haven’t picked it up, I highly recommend it.)  In Chapter 7 of the book, “Play Favorites and Break Rules”, Mike wrote that playing favorites is simply good business, and is mandatory for your success.  “Your mission is to keep your top clients so happy you obliterate the possibility that they would ever leave you for the competition.”  That’s exactly what I wanted, and I think that’s how we all feel.

You probably have a few favorite clients, the people you’re always glad to see and hear from, the businesses you’ll bend over backwards to help because you actually like them, and want to do a good job for them.  (Go figure)  I did too.  I had clients that I would go to the ends of the earth for.  It didn’t matter what time of day, or day of the week, I was on it.  They always went to the front of the line.

As entrepreneurs, we want to be nice people.  Sometimes we are too nice at our own expense.  We feel guilty giving preferential treatment.  My parents taught me to play fair.  Let’s get real.  Life isn’t fair.  That’s part of the reason you’re an entrepreneur.  You get to make the rules.

Playing favorites is nothing to feel guilty about.  (I can say that with straight face because I was my dad’s favorite out of six kids.  Love you pop!)  Playing favorites is a winning strategy because your top clients are your favorite clients, and they need special treatment.  How else are they going to feel special?

At times however, I found that some rotten clients were eating up the needed time and energy to focus on our top clients.  I needed to fix that.

After going through the process of defining our Rules of Engagement (Mike calls them Immutable Laws) and completing the Assessment Chart, I now had a pretty good idea of who our top clients were, and what they had in common.  I went through the process of Firing the Rotten Clients, and only our TOP clients remained.  Phew!

Next the fun started!  I now began to focus on taking care of the clients that made getting up in the morning pure joy.  I now had a different approach for our top clients.  We pushed them to the front of the line whenever they put in a service request.  It was kind of like the wristband you pay extra for at Kings Island or Cedar Point to go to the front of the line.  (Yeah, I loathe those people too when I’m standing in the 95 degree heat because I’m too cheap to pay the extra money.)  I was always looking for new and better ways to serve them.  I accommodated their special requests, and even made trips to the cell phone store so they wouldn’t have to.  Most importantly, I always went out of my way to help them grow their business.  I wanted to discover all the right things I could do for them so that I was significantly better than my competition could dream of being.

In the process of doing these things, I found that our top clients were a lot alike.  And, because they shared many of our Rules of Engagement, they were a lot like us.  It actually became easier to serve them.  I knew that I wanted more clients just like them so I could keep growing our top-client list, and that’s precisely what I did.  I stopped taking clients that didn’t fit our business, and focused all my time, effort and energy on our TOP clients.

“The customer is NOT always right, but…

The right customer IS always right.”  Thanks Mike!

It doesn’t take much more effort to have all your clients see you as their world-class de facto provider, and have raving fans for life.  I’d like to think I did something right over 10 years of running my IT business as most of our clients were with us nearly the whole decade.  That’s nearly unheard of in the IT industry.

You don’t need to create elaborate plans to take care of your top clients.  You simply need to be a little bit better, a little bit more helpful, and little bit more creative at solving their problems.  You need to be willing to do the things that others can’t or won’t do.  Don’t get stuck, just get started.

I’ll leave you with one final thought from Jim Rohn: “One customer, well taken care of, could be more valuable than $10,000 worth of advertising.”  Everyone thinks they need more clients, and they spend an inordinate amount of money to get new ones.  From what I’ve seen, the secret to long-term success is taking good care of the TOP clients you already have, and clone them.

My final lesson in this series #7: Run It Like You\’re Going To Sell It is coming up next week. I’ll be sharing a few tips I learned from the actual sale of my business.

As always, I welcome any thoughts or comments below.  If you found it useful, please share with a friend or colleague.  Until next time….

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7 Lessons I learned from building, growing and selling my IT business | Lesson 2: Sell, sell, sell

In my last post I covered  Lesson 1: Find a Niche and OWN it!  Today I cover the second thing I learned along the 10 years of running my last IT business.

Lesson 2: Sell, sell, sell

For most people, selling is a dirty word.  Most folks associate selling with being coerced or talked into buying something they don’t need or want.  (Think used car salesman)  I can see why many feel this way.  There are a lot of sleazy, incompetent salespeople out there.  Some make you want to take a shower after the encounter.  Most salespeople are never trained properly, and most companies view them as a necessary evil.  The hiring qualifications for sales people in most companies is a person’s ability to fog a mirror.  Yet sales is the life blood of any business.  Do you see the conundrum?

I’ve pretty much been in sales since age 8 when I started my first business with my older brother and 2 cousins.  I don’t think selling is a dirty word at all.  If nothing gets sold, there is nothing to service.  Nothing happens until something gets sold.  To me, selling is providing a solution to someone’s problem at a fair price for both the client and for our company.  No “coercion” is needed if both parties find the solution and price to be acceptable.

One of the biggest lessons I learned about selling while running my IT company was this: We were a sales organization first.  I learned this from being part of a Mastermind Group of fellow IT providers from around the globe.  My business coach, Robin Robins, taught us this during one of the first quarterly training trips to Nashville. That stuck with me.  It completely changed how I operated on a daily basis.  We were no longer an “IT Company”. We were a Sales Organization.  It was my job to “sell” an IT solution to our target markets. I provided a solution to a small business’s big, hairy problem…providing competent IT support at a fair, flat-rate, predictable price.  Both of us agree to the service level and pricing.  Done deal.  This is sales.  Simple.

However, I quickly learned that scaling the business would be extremely difficult without a documented, repeatable sales process.  This was yet another lesson regarding sales.  Just “winging it” wouldn’t work.  I wouldn’t be able to get consistent results if the process was different each time.  I documented the complete process in our Professional Service Automation (PSA) software, Connectwise.  (fancy acronym for CRM software for IT providers)  I was quickly amazed at how fluid the sales process went from that point forward.  I knew exactly how the process would go from the time the lead came in to the time the sales was closed.    It was now easier to get consistent results.  Hmm.  [Picture light bulb going off over my head]

I’ve heard so many entrepreneurs say, “I’m just not that good at selling”, or “I really don’t like sales”.  Guess what? You will never be successful if you keep telling yourself that.  Every entrepreneur must develop this important skill.  If you’re not that good at it, get better.  There are plenty of resources available.  Join a mastermind group.  Get a business coach.  Take a class.  Become a student of selling.

Selling is not a dirty word.  Zig Ziglar said it best, “Selling is the transfer of feelings.”  If you believe with all your heart in the solution you provide, you must learn how to sell it.  I will get off my soap box now.  (If you couldn’t tell, I am very passionate about this subject.)

I warmly welcome any feedback in the comments below. Stayed tuned for Lesson 3: Fire Rotten Clients next time.

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