Real life of an IT Provider

February 19, 2014 by

I talk to over 150 IT owners every year in one capacity or another.  I feel like I know what your work life looks like and I feel like I can sympathize and empathize with you.  A couple months back I was on one of my 10 a day sales call days for our peer groups.  I called Seth*not real name* and had my socks blown off.  This guy was REAL.  He’s a one man shop and he is one of the most articulate people I’ve encountered ever.  He has a great analysis of his situation.  After our call he sent me this email.  I asked him if I could share it on my blog.  He said definitely.  It’s taken me 5 months to finally get around to it.  I reread his email every few weeks.  Every time I read it I’m impacted differently.  Right now, I’m inspired.  As a management consultant our goal is help people SEE what life can look like, help them define what they want, and then help them achieve that end goal.  I want Seth as a client.  I want to see what happens when a 51 year old man gets serious.  After I post this, I’m going to call him and see what I can do.  What are you going to do after you read this?


A little bit more to explain my situation…

 As I’m sure you’ve gathered since you mentioned the “older guys” deciding to “get going,” I’ve been in business for a very long time and have more or less intentionally been comfortable, but not really trying to grow.  I never wanted to be one of those guys who lives for business, and misses out on things like going on vacations (long or short), being able to eat dinner with the family, sit and watch TV in the evening, etc.

 So with the exception of having an actual employee for a few months back around 1992, and having my then 19-year-old nephew as an unpaid intern about a year ago, I’ve been just me all along, and have done VERY little marketing.

 Unfortunately, I’ve got two major things that are problems with that.  First, as I said on the phone, I lost a good 100+ seats from my best client about 3 years ago and that’s not something that’s easy to replace, particularly if you’re not doing anything in the way of real marketing.  More recently, another location of that same client with a server and about 30 seats was sold off.

 So now I’m left with a small handful of clients, nowhere near enough income (at this point, I’m not even sure if I’m breaking even), and pretty much no budget.

 Add to that the fact that I’m 51 and have nothing stashed away for retirement except my wife’s fairly small 401K.

 So yeah, I HAVE to try to really ramp up the business over the next 10 years if I’m going to have any chance of ever retiring.

 Of course, I’m obviously on an extremely tight budget.

 My best year ever was 2010, which was a little shy of $200K gross.  Probably my worst year ever was 2011, which was UNDER $100K gross.  The good news about 2011 was that I sold almost no product (under $5K COGS) whereas 2010 was about $55K COGS.

 I’ve been edging back up since then; this year is (so far) well over $100K (closer to $150K) but I had about $40K in COGS.

 Being short on cash, I have to make the BEST decisions on how to use what little there is.

 $250 a month isn’t HUGE, of course.  Add in two trips to Chicago (around $400-$500 airfare each), hotel, meals, etc., and you’re probably talking about a good $2K additional ($1K per trip) and you’re really at more like $5,000 a year (a little over $400 a month amortized out).

 But I have to weigh that against using that money for other things.

 There’s <PDQ CONSULTING>, for instance, which, from what I understand and from watching the webinars, is more TRAINING on how to be better and more efficient.  I forget, but I think that’s around $350 a month (and is month to month, so no long-term anything).

 I wouldn’t even consider XYZ’s ABC Club at $1,200 a month plus the quarterly meetings in <the south>.

 There’s also simply taking that money and putting it towards actual marketing, which may very well have the LARGEST return on investment.  If I spend the last little bit of money on a peer group, that’s fine and dandy, but then if there’s nothing left over for actually building the business, what’s the point?

 Certainly, a decent peer group can be worthwhile.  That’s not my issue.  My issue is whether with an extremely limited budget it is the BEST use of the money at this point.

 Obviously, my biggest concern right now is getting more business.  There are other things that could improve, of course… better billing practices (I’m horrible at it – slow and money flies out the door because it never gets billed), being able to better handle the paper on my desk, being more efficient in using Autotask (or CW if I switch to that), being more efficient and better using Kaseya, etc.

 But none of that matters if I’m not able to have enough business to pay the bills.

 Marketing is easy if you know who your target is and why they should buy from you.

 That part is one of my biggest questions: why ME instead of any of the other 10,000 computer guys in LA?  I’m realistic.  I may have more experience and knowledge than 90% of the guys out there, but that doesn’t translate into anything you can SELL to clients as a real benefit.  “I’m smarter” isn’t a usable USP.

 As a “one-man-band” I know full well that there are things I just can’t do as well as larger competitors.  LA traffic can be horrible; my best client is 19 miles via freeway and it is usually a MINIMUM of half an hour and most of the time, at least 45 minutes to an hour to get there.  Another client is 8 miles driving and it has taken me over an hour to get there; minimum is around 25 minutes.  As a one-man-band, I just can’t ever guarantee that I’ll be anywhere within some given period of time.   I can’t guarantee one hour or two hour response time, which is something that a firm with multiple techs that are physically all over the place on any given day can guarantee.

 I can’t guarantee that I’m going to answer the phone, and I don’t have a real helpdesk that a larger firm might.  In order to do that, I’d have to outsource, which costs more money, which means that I’d be more expensive than the competition just to have what is probably worse service.

 So my sticking point for a long time has really been “why me?”  That’s one of the most important things for marketing.  If I can’t tell someone why they should buy from me instead of someone else, then how am I supposed to get clients?

 Interestingly, I’ve spoken to a LOT of other guys over the years, many on ASCII, at conferences I’ve attended, etc.  Nearly all face the same problem – having no real idea why someone should use them instead of someone else.  If they give a reason, it is the same reason that everyone else gives – which isn’t a reason at all.  When EVERYONE says, “Buy from me because I’m purple” then being purple is no advantage (and no, “purple” isn’t code for anything; I just picked a random, nonsensical trait).

 Another big fear and concern is the whole cloud thing, along with Microsoft clearly not wanting partners.  Manufacturers want cloud because they can make all of the money themselves, forever.  If they have anyone to pay, it is peanuts.  Many guys who push cloud services talk about all the money they’re making doing conversions.  Unfortunately, that’s a one-time thing and isn’t sustainable.  Once you have (or someone else has) converted all of the prospects out there, then there’s simply no one left and no income to get.

 Some talk about how “cloud” makes it easier for us because we don’t have to worry about the day-in and day-out work of maintaining things like email servers.  True, but once you’re outsourcing everything, what value do YOU provide?  What makes a client want to give YOU money to use Office 365, for instance, instead of just going direct – for probably less money?

 Here in LA, Internet connections aren’t that great or that cheap.  DSL is too slow, cable is unreliable and not that cheap (although probably the best option for most), and EoC is just expensive and not necessarily fast unless you spend a LOT of money.  Some people I talk to talk about 10 Meg connections for a couple hundred bucks, but around here, something like that would be more like a grand.  It is just too much for a small business of maybe 10-15 people to spend every month.

 Yet as companies like Microsoft virtually FORCE everyone into a cloud model (discontinuing SBS, for instance), there’s still at least some resistance in places like LA – but it is harder and harder to buck the trend.

 Nearly everyone understands that you can’t make a living on just the measly commissions you’d get from cloud services.  The one real way of surviving in a cloud world is to be a cloud provider, and that means providing server solutions for clients on your infrastructure, whether you build it out in a datacenter or rent someone else’s infrastructure.  Unfortunately, that all tends to mean a lot of money, and that means being large enough to have a large client base to make it worthwhile.

 The change isn’t going to happen overnight.  There will still be conventional “MSP” business for some time to come.  But unfortunately, as there’s less and less of that business, it is going to be harder and harder to GET that business.  It is unlikely that smaller, onesy-twosey shops are going to survive for very long.

 Sorry if I’ve gone on too long.  I just wanted you to know some of my concerns and that I’m not necessarily just one of those, “Oh, he’ll never be a client” kind of guys but rather that I have to address the concerns in the most efficient and cost-effective ways and at this point, I’m not necessarily sure that a peer group would be the BEST investment.


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