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This is interesting stuff.  HaaS has a ton of potential but has been stuck in the mud for a long time because it is too complicated/frustrating to find the right financing partners.  It looks like MSPAlliance has taken a big step in solving this problem by partnering with Varilease to create a program specifically for MSPs.

Others are doing this as well, most notably MSP On Demand.

An interesting conversation is taking place on this subject over at MSPMentor…check it out here.

MRC

This is an interesting question for me.  Everon has grown our managed services business fast since its inception, but we are still a very small company, as are 95% of our competitors.  So how big should we expect to be able to get, and how fast?

Entrepreneurs, including me, aren’t exactly known for being patient.  I would like Everon to be a $100 million company right now, and I’d like to do it without any additional outside funding.  Given our current service mix and the margins they create, that isn’t a possibility.  I’ve figured our self-financable growth rate (SFGR) to be around 30% at this point, and that’s what we are shooting for in terms of growth this year.  At that rate, it will be  a decade before we hit $100 million.

Now, anyone will tell you that 30% sustained growth is amazing and very difficult to achieve.  So maybe I should be satisfied with that; but I’m not.

Which makes me think of the levers we can use to increase our growth rate beyond this current limit:

1. Acquire companies
2. Raise additional cash to fuel faster growth
3. Increase our margins on our current services to increase our SFGR - giving us more internal resources to fuel the fire
4. Sell different products or services that are faster to sell and have higher margins
5. Develop a growth model that has a more variable cost or self-funding model, such as franchising

All of these are viable options, and are being done by one company or another in our industry.  It remains to be seen if one of these models will prove to be “right” or superior to any other.  Will faster-growth models allow them to maintain high levels of service, or will customer churn end up spiking?  Will certain models allow for flexibility and speed to meet the changing demands of customers and changing trends of technology?  Time will tell.

One thing I know for sure: Everon will be putting the pressure on ourselves to find faster ways of growing, as it is a land-grab right now.  The worst-case scenario for someone who builds a decent business in this industry right now is to get bought at a fair price, and the bigger you are, the better the price.

I’d be curious to hear other’s thoughts on their growth rate plans and how they hope to achieve them and even accelerate them.

MRC

Charles Weaver from MSPAlliance sent me an email over the weekend clarifying some points about their certification proces and their newly announced insurance program.  Here is his email to me (I edited out some text before and after to only include what I thought was relevant):

I heard that there have been some discussions on another website regarding the MSAP and insurance and I wanted to provide some clarification:

• The MSAP costs $1500 ($995 depending on some special promotional programs); there may be travel costs associated but it depends on the situation.
• MSAP is completely voluntary for members; i.e., not required.
• MSAP is gaining tremendous recognition across the globe as an official standard. There are reports from members, including one who recently secured a managed services client, of the MSAP certification effectively being used in lieu of a SAS 70 report.
• The MSPAlliance Professional Liability Insurance™ is not exclusive to accredited MSPs. This insurance is available to ALL MSPAlliance members. If you are an accredited MSP then you do get a premium discount on the insurance (again, providing additional validity of the MSAP exam that Lloyd’s of London would recognize your profession).

Thanks for the clarification, Charles!

MRC

I was thrilled when I read this announcement from the MSPAlliance. Read it here.

Why is this such good news?

I’ve been working with our insurance agent for some time now. He’s a good guy and a very capable insurance broker, but he doesn’t understand the details of our business at all. The term “Managed Service Provider” means nothing to him.

Often times the role that we play for clients involves assuming a great deal of responsibility. Combine that with the fact that most of our customers don’t understand much about technology, and you have potentially volatile situations when something goes wrong.

Getting access to an insurance program that is specifically meant to suit the needs and alleviate the risks of the MSP could potentially be a big win for our industry.

Good work Charles Weaver - thanks for looking out for us!

MRC

This weekend Josh and I are skiing with Trent Dyrsmid, the owner of Dyrand Systems of Vancouver, Canada.  The sun is shining and Breckenridge has over 30″ of fresh snow in the last week (ahhhh…Colorado)!

It’s always nice to get together with somebody else in the industry to learn from each other and share war stories.  Trent is a smart and ambitious guy; we always have a good time and learn something from each other.

I’m a big believer in learning from others.  I know of two resources that people have told me are very good - you should look into them:

• True Profit Groups (I think I’ve linked to the correct website…but I’m not sure.  They need some help with their web presence!)
• Service Leadership Executive Peer Groups

Both of these organizations run peer groups that allow you to confidentially discuss financial performance, business strategy, etc. - a great idea!  I can vouch for Service Leadership.  This company is run by Paul Dippell, who is probably the smartest guy I’ve met in our industry.  I’m pretty sure I learned some stuff just by sitting near him at a conference once!

MRC

As I was thinking about having not posted last night, because it was Friday and I wanted to go out, it got me thinking about how nice it is to run a business that is not dependent on billing my time.

When many IT providers first start their hourly business they are enamored by the idea that they can go out and bill $150 per hour for their expertise and that people will gladly pay this and more. It can feel as if there is no limit to the amount of money that can be made by running this play.

Then one day they look up and want to go on vacation, spend more time with their family, or just simply want to stop running around from job to job taking care of customers – they become trapped.

Becoming an MSP is a way out, a way to get paid while you are on vacation for a month, a way to have predictable revenues to pay your team with before the month even starts.

If you are just thinking about getting into managed services let me tell you it was nice to get paid not to work last night!! Stick with us and hopefully we will soon be on the beach together someplace talking about the old days of hourly billing!

JC

Welcome to smbitpros.com everyone! We hope you find the content on this site insightful and beneficial to your business whether you are a mature MSP or just starting down the path.

It is amazing to me when I think back on our start, there was no industry called managed services – no one knew what to call us - and we were told the business we were starting would never work. Well let me assure you that the business model did work and a whole industry has grown up around us in the meantime.

This is an exciting time for providers around the world and we hope that by sharing our experiences with you, both good and bad, we can educate the market on the benefits of managed services and create healthy profitable businesses together.

Great service is a mindset

JC

Welcome to smbitpros.com! If you are reading this, you are probably an entrepreneur in the SMB IT services space. Congratulations!

As you know, this is an exciting time to be in our industry.  Things are happening and changing fast, and it seems like a full time job to keep up with managed services-this and managed services-that.  We agree.

Our hope is that by posting the things that we have learned (and are still learning) about our foray into the world of managed services, we can help ourselves and others build healthy businesses that take advantage of the opportunities that are currently available in this industry.

We are passionate about entrepreneurship and business; we hope it rubs off on  you and you get some good value from our content!

Check back soon, or better yet, subscribe to our RSS feed so you don’t miss anything!