Author Archive

From the Trenches; New IT Sales Person tells us what’s really going on

February 25, 2013 by   •  Leave a comment

The new year is speeding by at an incredible pace.  I unfortunately am moving at a much slower pace.  BUT, with the assistance of Adam Bielanski at Valley TechLogic we have our first “From the Trenches” interview ready for you to enjoy.

By the way, you’re going to see the name Bering McKinley on this video. That is the company we have created under which all of our upcoming educational and informational videos will be produced. We hope you enjoy!

Remember, From the Trenches is not about owners selling us on how great their business is doing.  It’s all about employees telling us what works and doesn’t work.  Why they will and won’t be successful in their role.  Listen with a critical ear.  Think about how you would operate with this employee and ask yourself how you would help this person be successful.

Enjoy and let me know what you think!  I’m backed up with interview requests at the moment, but please email jp@mspscore.com to get on the roster.  Oh, and if you’re an employee and want to do your interview anonymously; we are offering a $50 gift card as a thank you for your efforts and contribution to the community.

Sales Follow Up Benefit

February 22, 2013 by   •  Leave a comment

Sales Acticity

Keep those activities up to date.

I love this exchange a friend sent me recently. Keep those activity reminders up to date. This prospect went from NO WAY to LET’s MEET two months later!

SMB Nation Reports Sale of Heartland Technology Solutions to Westel

January 2, 2013 by   •  1 Comment

SMB Nation picked up this story early Wednesday morning…http://www.smbnation.com/index.php/content/news/entry/heartland-technology-solutions-to-sell-msp-practice-to-westel

To me the most interesting part is this line from the press release spoken by Arline Sorensen – “This transition will give me more time to focus on a new consulting practice to help other MSPs and IT vendors (Heartland Leadership Group) and will give Jane freedom to pursue other interests.”

The Management Consulting arena in our industry has largely been covered by one company who has a stellar reputation and provides top notch results. There have been a number of horrible one off trunk slammers that come in with a bang and sneak off in the middle of the night having done nothing. Or worse yet they stick around and try and reinvent themselves with some garbage marketing ploy.

I’m excited to see HTG and Arlin go after the direct consulting market; it’s going to professionalize that aspect of our industry and raise the bar so that the trunk slammers truly look like the schmucks they are. MSP’s deserve high quality consulting from firms that are professional and have the credentials to be advising on truly complex issues.

2013..starting off with a bang!

SMB Nation SMB 150

December 26, 2012 by   •  Leave a comment

It’s that time of the year again! SMB Nation SMB 150 Top 150 Small and Medium Business Professionals.

Please take a second to vote for some of my favorites (myself included!)  Vote often!

Josh Peterson  http://smb150.com/story.php?title=josh-peterson

David Spire – The guy is killing it and is quickly becoming a resource for his peers.  He shares like it’s his job!  http://smb150.com/search.php?search=david+spire

Karl Palachuk – you know who he is..you know what he does for the industry…relax, focus, succeed…http://smb150.com/story.php?title=karl-palachuk

Arnie Bellini – CW is contributing to the industry on so many levels!  http://smb150.com/story.php?title=arnie-bellini

Jodi Grubman – If you haven’t heard, then you haven’t been paying attention.  Jodi has this sales thing figured out.  You better be calling and getting the advice while it’s free.  http://smb150.com/search.php?search=jodi+grubman

Harry Brelsford- The man himself.  Harry is a prolific contributor to the industry.  His Pocket MBA is such a huge undertaking and the value will be a game changer.  http://smb150.com/story.php?title=harry-brelsford

MSP from the Trenches Launching January 2013

December 21, 2012 by   •  Leave a comment

As we wind down 2012 we are making some great plans for 2013.  Borrowing from the wildly popular but sadly short lived Salary Surfer series (hoping that starts up again soon!) we are starting a new series called “From the Trenches”.

For each of the 52 weeks of 2013 we will be conducting an interview with an employee from YOUR businesses.

We will interview a sales person, a dispatcher, an accountant, an engineer, really everyone from your business that can give us the REAL scoop on what’s going on out there.  You know me, it’s going to be a fun interview with tough questions and lots of real talk.

Sooo…email us NOW to get your special someone on the list.  I have about 12  slots filled already.  The interviews will be audio only initially.  They will be one on one with me at first but over time, I hope to get a live interview with an audience to ask questions at the same time.  Also, we will go to a video format over time as well.  We’ll try to keep the interviews down to about 10-20 minutes.

If your company would like to participate you’ll be able to rebroadcast the interview and market it however you like.  We will of course post it here and on any other sites that we develop so be ready for the exposure.

Have a great end of 2012.  Talking to TONS of folks that are reporting best years ever!  Lcool huh?ots of guys  stuck in the $1.X M breaking through the $2M mark and a handful about to hit the $4M mark.  Proud of you all!  I’ve seen a lot of you work up from the 6 figure numbers.

Oh and a GREAT big shout out to all the people out there with the dedication and bravery to implement the top down sales method.  It’s not for everyone but those of you who did it right and stuck strictly to the plan, cheers to you and I’m glad it’s beginning to bare fruit!

JP

Rude accounting practices hurt more than help

December 19, 2012 by   •  1 Comment

I receive my fair share of emails from people sending me funny things from their competition or other IT firms. The other day however, I received what might be my favorite email in the history of email.  For that I can thank David Spire and his crew at United Systems.  They forwarded this little number from one of their competitors.
I’m not familiar with the company that sent this email out to their clients but it is clear they are realllly frustrated with accounts receivable and other billing issues. The thing that strikes me as so over the top is that it almost reads like the company notes from the meeting about how to resolve these issues and someone just slapped a greeting on those notes and sent them out.
I challenge you to look for your own voice in there.

Do you ever come across this way to employees? When you’re frustrated with techs not entering time do you turn into Johnny Business Man the robot formal talker? (i worked with one of those…they suck and are alienating everyone around them when they pull that shit).
I call this type of letter, the “we’re mad and we’re not going to take it any more tough guy talk gone bad.” We all know those talks….they usually start off with you sharing a story with a colleague and they come right back with “you know what i would have said is this….OR you should have said this….or when my clients do that, i say this.” Most of you have the sense to calm down and not actually follow the bad advice…apparently, on this day, this company took the bait and got a little too tough.
So with that, i present to you, a gift and a wish that all your competition be this ham handed.  I’ve highlighted my favorite parts!

Dear ABC Client,

We at ABC would like to wish you and yours a very Merry Christmas and a Happy New year! Our Holiday schedule is as follows:

We will be closing on December 21st at 12:00 and will remain closed until January 4th. Normal hours will resume on January 7th. If you have an emergency during our Holiday hours you can reach JOE TECH at xxx-xxx-xxxx. Holiday rates will apply.

Due to the economy, we have and will continue to re-evaluate our client base to properly maintain and provide quality service to our clients. ABC is making changes to our policy and procedures in a way that we feel will benefit everyone and allow us to give each selected client the attention they deserve. In doing so, ABC, at our discretion, will selectively cut-back on some of our Dental offices. These cut-backs and the reason as to why will be privately discussed with the doctor; not a member of the staff.

The following changes are effective immediately:

ABC has implemented a new billing structure for our quoting and invoicing procedures. Accepted quotes must be signed by the Dr. and mailed, faxed, or emailed to badwriter@abc.net along with the signed Terms and Conditions. Once we have received the accepted quote, we will create the invoice. Invoices must be paid by check or credit card in the following manor prior to us scheduling appointments:

? All non labor items, including tax, must be paid in full.

? The specified deposit for the total labor charge(s) will be due at the same time non labor items are purchased. (Also used to hold a requested date)

? The remaining balance will be due the day of your scheduled appointment and prior to us conducting any work in your office. If you are unable to pay the remaining balance at the time of our arrival, your appointment will be rescheduled and additional fees will apply. (Please see the Terms and Conditions for additional fees)

? Please note: If you have already signed and returned a copy of the Terms and Conditions, these changes will supersede the original Terms and Conditions. These changes will replace and add to current paragraphs, and we need for you to send us another copy of the signed Terms and Conditions. You may mail them to the address above or send them to NASTY via fax, or email (awfulservice@abc.net). The Revised Terms and Conditions are attached. We will only need one signed copy on file per location (if client has multiple offices). Terms and Conditions must be signed by the doctor only. I will not send the Terms and Conditions after we receive the initial signed copy, unless changes are made to the Terms and Conditions.

? Services requested, by you or a member of the staff acting on your behalf may not be quoted prior to us arriving at a scheduled appointment if we are unable to determine over the phone the exact issue you are experiencing or unable to specify the estimated time needed to resolve the issue. You will be invoiced for work completed PRIOR to us leaving your office and payment in the form of check or credit card will be due at the time services are rendered and before we leave your office.

? Additional “while you are here” issues that come up during the scheduled appointment will be billed while we are at your office; payment is due at time services are rendered and before we leave your office; However, ABC reserves the right and at our own discretion to reschedule the “while you are here” issues that are needing to be addressed if the time it takes to address those issues interferes with our next scheduled appointment.

? We will be creating paper invoices in the field for work performed. Payment for the paper invoice is due at that time. You will receive a copy of the paper invoice created as your initial receipt. We will use our copy of the paper invoice to create an invoice/statement, when we return to our office, in our Quick Books and apply payment we received to the QB invoice/statement. You will receive an email with the attached PAID invoice as your final receipt.

If you need to update your contact information with us or have questions about your current account balance, please email me with a phone number and a good time to contact you so we can discuss your concerns further. I can be reached at the numbers listed below.

We appreciate your prompt attention to this matter and greatly appreciate your understanding. If you have any questions, please feel free to contact me at any time to discuss these changes. Our new office phone number is listed below. Please update our contact information in your records accordingly.

Sincerely,

Managed Service Agreement Gross Profitability – Open challenge to AutoTask

October 15, 2012 by   •  Leave a comment

I just returned from a terrific trip to SMB Nation Fall 2012 conference.  This was their 10 year anniversary and it was awesome.  Met some really great folks and caught up with some old friends.

I gave a presentation similar to the one that I did for Karl Palachuk on metrics for your business.  This presentation will form much of the basis for the Pocket MBA that Harry Brelesford has put together.

This presentation was very fun to give due mostly in part to the great questions and comments that folks had.  It’s amazing how informed and serious this audience was about running their business.  The NUMBER ONE troubling issue that I have however is how little attention folks pay to managed service contract profitability.  I place the blame squarely on the shoulders of the PSA’s and the RMM folks.  I believe your PSA should have a HUGE RED BUTTON for contract profitability reports on the first screen an owner or manager sees when they log in.

Now, I’ve said this in private and I’ll say it very publicly here.  ConnectWise has had this report since day one.  I love it and I’ve helped 100’s of companies follow the steps to make sure it is accurate.  I’ve obtained massive training from CW directly and from their best consultants on how to make this report as accurate as possible.  HOWEVER, when I talk to my biggest most powerful users of CW, they will still complain that the report is flawed.  I’m not ok with that but from my experience that report gets you very close to what you need to start making informed decisions.

AutoTask on the other hand does not yet seem to have this report.  I WANT TO BE CORRECTED ON THIS.  I have used AutoTask and I’ve worked with many companies that have AutoTask and I have yet to see a report that shows Agreement Gross Profitability in a meaningful fashion.  I do not see a report that I can log into AT, press a button and view all of my contracts and their GP.

Here is my challenge:  If you are a user of AutoTask, an AT consultant, or AT employee, PLEASE email me and I will sit through a demo of you logging into to an MSP’s AT, go to the included (not custom written by the users) contract profitability report, run the report, and view meaningful results.  If I’m wrong in stating that this can not happen in AutoTask, I will pay for VarVid to record this and create a training series about how to run this report!  I don’t enjoy bashing AT, but this is maddening to me that an MSP can’t appear to run what is arguably the most helpful report for an MSP in running their business.

That’s my rant for the day!  Demand this report from your PSA and demand that it is accurate.  If you’d like more information on why this report is so important, let me know!

Steve Jobs by Walter Isaacson

August 26, 2012 by   •  Leave a comment

It would seem cliche if I pretended that the Steve Jobs biography some how spoke to me in a meaningful way because I work in a technical field.  I’m not here to relate to Steve Jobs or to offer a review of Isaacson’s work.  Instead I’ll just say that this was a book that I thought would inspire me and give me insight into the brain of arguably the most successful CEO’s in history.

What I walk away with right now is a tremendous amount of humility.  Steve Jobs was a PRICK.  If he were one of my clients I would have fought with him every day until he eventually fired me.  The humility comes with realization that people can not be labeled.

Jobs was Jobs.  He was neither good nor bad.  Nice nor mean. Asshole nor Humanitarian.  He just existed.  We all assign our belief systems and values onto people, situations, and things.  We judge things and then convince ourselves and others that our judgement is accurate.  Reading this book and applying this insight to my consulting over the years has humbled me into realizing that whoever you are as a business owner is fine as long as you have conviction that your way is the way you want it done and that you’ll inspire those around you to have faith in your vision.

I’ve spent a lot of time with clients working on vision and leadership.  I know from my training that’s what I’m supposed to do.  What I ignored was that perhaps they had this part down.  Their challenge may instead have been that, unlike Jobs, they had not yet surrounded themselves with employees that shared that vision.  Perhaps they hadn’t shared their vision clearly or passionately enough.  Perhaps they did not yet have faith enough in their vision to take critical action when their vision was not being fulfilled by their employees.

This is a book that on it’s surface will not be placed in the Management section of Amazon or Barnes and Noble, but look deeply and you’ll find management and ownership lessons that appear organically not contrived like analogies to busses and pie bakers.  This is the real deal for me at least.

Check it out, or don’t.

Key Performance Indicators

July 2, 2012 by   •  Leave a comment

Karl Palachuk put on a great online series last week and I was happy to participate.  Here are my notes from a presentation I did.  Enjoy, and as always leave a comment or shoot me an email if you have any questions or feedback.

Top Ten Indicators that I’ve observed highly performing IT Providers adhere to over the years
10. DSO – Days Sales Outstanding – 30 days or less. More importantly, how closely does DSO match your payment terms? Here’s the calculation: (Accounts Receivable/Total Credit Sales) X Number of Days in period measured. Do this quarterly and pay attention to how this affects number 9. Cash flow is king; insist that your clients adhere to your payment terms
9. Accounts Receivable > 90 days is less than 10% of total A/R – Now, unless you’re like our good friend Karl, you likely have some sort of receivables. I can typically tell what your client satisfaction is based simply on this number. I can also, as a non accountant, get some pretty good indication about your accounting based on this condition of this report in QuickBooks. Happy clients pay and they pay on time. Sloppy book keepers allow clients with a 90 day balance still receive services. Sloppy accounting allows for negative numbers on this report.
8. Dime on a Dollar – If any of you know me, you know I beat the drum of building a sales force and doing it NOW! But wait, there’s more…you have to do it smartly. You have to budget for this endeavor. Here’s your budget number; 10% or gross revenue can be spent on your sales effort. I’ll allow you to make a small change, if you’re going to go very aggressive you can choose to use 10% of your TARGET revenue, just make sure you’re making progress so you don’t outspend your growth. That 10% should be broken down as – 4% Sales Salaries, 4% Sales Commissions and 2% Marketing/Advertising
7. Effective Hourly Rate – I’ll be honest, I’m not a very popular guy in our industry and this is why – your RMM providers and literally shoved the MSP model down your throat. I love it too, who wouldn’t like recurring revenue, I know I do. BUT, and this is a HUGE BUT!! YOU HAVE TO MAKE SURE YOUR MANAGED SERVICE MODEL IS OUTPERFORMING YOUR BREAK FIX MODEL. I swear to all things holy when I go into your business time and time again you’re getting your butts handed to you on your MSP contracts. Check for yourself then call and brag to me that you’re the exception…I’ll be very happy for you, promise. Here’s what to do. There are three versions of Effective Hourly Rate I want you to consider:
• Total Service Revenue/Total Number of Compensation Hours = Effective Hourly Rate on Total Hours Compensated.
• Total Service Revenue/Total Billable Hours = “I’m scared of the real number” Effective Hourly Rate on Billed Time.
• Total Recurring Revenue/Total Number of Hours Put Against Agreements – Agreement Gross Profitability.
If your Effective Hourly Rate is not greater than your hourly Rate then you have a problem. You’re selling your agreements too low, you’re putting too much time into your agreements, you’re not remediating problems before turning up to clients, or all of the above. My top MSP’s have effective hourly rates double that of their rack rates. The rest are struggling to get to 80% of their rack rate. You figure that one out!
6. Agreement Gross Profitability >60% – only one of the PSA’s out there takes this seriously. You can figure out which one. This report needs to be run monthly. Period, end of discussion. Your entire management team needs to be highly in tuned to this number. My top service managers have this report weekly and make course adjustments. You will not achieve this number if you never manage too it. The worst offenders are the MSP’s who ignore alerts, power cycle and run away from service calls and act surprised when the problems occur again and again. FIX THE PROBLEM!!
5. Employee Turnover – We all know that employee turnover costs of money. I don’t care. Employee turnover means you have a crappy culture and that people don’t like you. You think because you fired them that they are the problem. NOPE. You’re the problem, you have a crappy culture and it ruins employees quicker than you believe. Here’s the calculation. You can do this on an annual basis, or quarterly basis, you can even look longer term if you’re a really small company.
Monthly Turnover = Number of Separations in time period measured
Average Number of employees in time period measured

4. Service Department Gross Profitability > 50% – Take all of your service costs and divide by your service revenue. It’s just that simple. If you aren’t turning over at least 50% GROSS PROFIT then you’ll never have enough revenue left over to pay all those other things like sales people, rent, and YOURSELF. Control this cost by pricing your services correctly. I don’t care what you decide to pay an engineer as long as your rates support the payroll. Don’t tell me that you HAVE to pay a top engineer in your market but that you can’t charge $165/hour in your market! Most expensive employees and cheapest prospects…doesn’t add up!

3. EBITDA – Earnings Before Interest Taxes Depreciation and Amortization > 10% – Minimum people, MINIMUM. If you can’t make this indicator, then we have some work to do. Now if you’re beating that, awesome, this is a minimum, I want you to go higher! My most profitable client to date has hit 26% to 28% for 4 years running. Oh by the way take a guess at how much recurring revenue….ZERO. He will always gladly take those clients that you foolishly fired because they wouldn’t sign a managed services contract…he’s laughing all the way to the bank….unlike his peers he hasn’t spent $50K going through two version of an RMM that is still underutilized and spent 1000’s of hours trying to figure it all out. He put his head down and sold.

2. Net Promoter Score > 50% – Full disclosure, I own a company that performs NPS surveys for MSP’s. I love it. This score correlates to net profitability better than any indicator I’ve even experience. NPS is a wonderfully simple measurement of customer loyalty. Who cares about your survey asking so called satisfaction questions….”did Billy show up with his shirt tucked in?” “Was Susie polite when she called you about your past due invoice?” Yawwnnnnn….What I care about is will this client be with you for the next ten years. Well some really smart people studied this issue and came up with one simple question that YOU HAVE TO ASK YOUR CLIENTS. “Based on a scale of 0-10, how likely are you to recommend our services to your friends and colleagues?” There is some simple math that you to at that point. 9-10’s are promoters of your business. 8-7’s are neutral on your business and 6-0’s are detractors of your business. Subtract the percentage of detractors form the percentage of promoters and voila…you have your NPS. Make this a company wide initiative and get improvement and enthusiasm. The score will blow your mind and when you start tracking against EBITDA you’ll hopefully be pleasantly surprised.

AND NUMBER 1 Indicator…..

How many hours are you spending doing the things you love a week? Don’t even try to B.S. me by telling me you love your work and your business, if you truly do there is something wrong with you. Get a life. You can run this business successfully in under 40 hours a week…I promise, I see it every day. Become a manager….delegate…trust…train…if you’re working more than 40 hours a week, you are doing something wrong! Let’s figure out what it is and get it fixed.

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