Friday, March 24, 2017

Borrowing Money to Run Your Business

A few days ago I put a note on Facebook about a new financing opportunity from PayPal. If you have a lot of income via PayPal, you can get a loan and pay it back by dedicating X% of your sales to payments.

There's a onetime up-front fee that varies with the amount you borrow. For example, when I checked, a $20,000 loan would have a $1460 fee - that's 7.3%. Not the cheapest money in the world, but way better than putting things on a credit card. The percentage rate varies depending on the amount borrowed.

Next, you choose the percentage of each sale that will be used to make loan payments. So, instead of having one big monthly payment, you make payments every time money arrives via PayPal. You also get to choose this percentage - within limits. Your interest rate above is also affected by the payent percentage you choose.

For example, you might choose to have 20% of every sale go to your payments. Thus, a $1,500 managed service payment would automatically make a $300 loan payment. It might be a little painful BUT if you manage the money you borrowed properly, you should always have the cash flow necessary so that payment doesn't hurt too much.

If you do your credit card processing through PayPal, your payments will flow out on a regular basis.

ANYWAY - I'm not necessarily advocating this program, but I think it's a very clever way to finance something if you need it.

- - - - -

Danger Will Robinson!

As soon as I posted the one-sentence note about this on Facebook, my friend Andrew posted a comment that you shouldn't be borrowing money for your business. Andrew helps figure out the value of businesses as a part of his job as a business broker. So I take his advice seriously.

But I believe there are lots of legitimate reasons to borrow money for your business. You just need to have a mini business plan that includes a specific way to pay it back.

There's one big reason NOT to borrow money. But, first, here are some very good reasons you might borrow money.

1. Buying hardware and software for resale. When you buy something from Ingram, Synnex, D&H, etc. you are borrowing money. You order a server and pay for it within 30 days on your company credit. Personally, I get paid in advance for all hardware and software orders. But if a supplier will let me pay 30 days later, I usually do that. After all, it just means I get to use that money for an extra 30 days.

2. Marketing. This is a little more dangerous. If you borrow money to do marketing, you better be darn sure it will work. You know the old saying, "Fifty percent of my marketing doesn't work. I just don't know which fifty percent." But if you've got something you know will work, then borrowing money here should result in a positive result.

3. Expanding your business. Again, also potentially dangerous. If you need to add a staff member to fulfill a contract, or you want to open a second office in another city, it may make sense to borrow money to get that done. But once again, you should have a mini business plan to make sure you really understand the cost of expansion.

Many businesses go out of business exactly at the moment of expansion. This is because they borrow a lot of money, start the expansion, and something happens. It might be that they underestimated the expense, or the economy went down, or that there were delays or problems of some kind. So, instead of staying comfortably small, they borrow to grow and the whole thing collapses.

4. Special Projects. This might include buying hardware for a HaaS (hardware as a service) offering, or prepaying for certain materials in order to get a better deal. There are lots of opportunities that require a little more cash up front than you happen to have. But have a budget for the project. Know how you'll pay it back. If you can't point to the dollars that will repay the loan, don't take it out in the first place.

Five minute video on this topic.

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The Big Danger

When should you NOT borrow money. In my opinion there is one very bad time to borrow money: To fund the daily operations of your business. In other words, if you need to borrow money one or two or three times per month just to keep things going, that's a danger sign.

Full disclosure: I've done this. It hurt. I paid the price. Some lessons are learned by paying the tuition in full.

If you have to borrow money on a regular basis just to make payroll or pay the rent, you have a cashflow problem. That is a real danger sign. It means three really important things are going on. First, and most importantly, it means that you either need to increase revenue or decrease cost.

You might say, "Duh." But 99% of the people with cash flow problems are in total denial. It will be okay, they think. We'll get another sale, they say. After all, you're a positive attitude kind of person. So you know the money will flow. But if you're in this situation again and again, you need to wake up to the dangers of cash flow.

The second thing that happens is that you borrow a little money here and a little money there. And because you have a cash flow problem, you don't always pay it back within thirty days. Because you can't. Because you have a cash flow problem. The result is that you go deeper and deeper into debt.

First it's a few dollars here and a few dollars there. But it keeps adding up. Soon it's a thousand here and a thousand there. And then you realize you owe tens of thousands of dollars and you have no way to pay it back - because you have a cash flow problem.

The third thing that happens is that you have no way to save for retirement. Why? Because you have to borrow money just to get through the month. There's nothing left over to invest in the future.

Borrowing to run the daily operations of your business is the canary in your coal mine. That's because it's hard to reverse, the longer you do it. And eventually, when you want to get out, your books will show that you have an unsustainable business. It may have a very low valuation simply because you have bad cashflow.

So the bottom line is . . . It's okay to borrow money. But be extremely clear about why you're borrowing and how you will pay it back. One of the things I like about the PayPal program is that the "paying it back" part is built into the loan agreement itself.

Take care. Go slow. Use money wisely.


Friday, March 17, 2017

Want to Be Successful? Learn IP, TCP, DHCP, and DNS!

Last year, I wrote a blog post for SolarWinds MSP entitled "If It's IP It Belongs to Me." See:

There's Danger in not learning TCP/IP !

By IP I did not mean intellectual property. I meant Internet Protocol. Like TCP/IP. That post was about the trend of all "things" to use IP as their preferred communication system. Gradually over time, all technologies are moving to IP and TCP/IP.

If you don't know the difference between IP and TCP/IP, then you need to go to school. I literally just got off the phone with my friend Robb Patterson, talking about how the phone installers all think they're going to take over YOUR business. But they won't - unless they hire a network engineer who really understands how to set up and troubleshoot all things IP.

It's much easier for you to learn about phone systems than for them to learn the intricacies of troubleshooting IP networks. More and more, IP is becoming the standard for moving data across all kinds of equipment and technology. Your competition will do well to learn more than the absolute basics of IP, TCP, and DHCP.

Troubleshooting an IP camera system? An IP security system? An IP telephone system? The most important skill you’ll need is a good thorough understanding of TCP/IP. If you have a grasp of the 7-layer OSI model, that’s even better.

I posted a related video on this today:

As always if you have any thoughts to share, feel free to leave a comment below!


Thursday, March 16, 2017

Webinar - The Most Important Rules for Running a Managed Service Business - March 28th

I'm super happy to announce a brand new webinar I'll be doing with SolarWinds MSP on Tuesday the 28th

The Most Important Rules for Running a Managed Service Business

Tuesday, March 28, 2017
8:00 am Pacific Daylight Time (11am Eastern)

Register for Free

Here's the scoop:

Over the years, I've put together a list of the definitive rules for my business(es). These are the twenty-two rules that make us successful, keep us profitable, and virtually guarantee that we will deliver excellent service.

OK - I'll be honest. We will not be able to go into detail on all twenty-two rules. But I *am* giving you a free handout that includes all twenty-two. every bulletin board in your office. And we'll cover enough so that you'll see how they all fit together.

I'm not kidding when I say that I could easily turn this into a 22-chapter book on the absolute best practices for running a successful and profitable IT business.

So please join us live on the 28th. I promise you won't be disappointed.

Register for Free

Thanks to SolarWinds MSP for making this possible.


Friday, March 10, 2017

Monkey Hooks and Marketing

99% of businesses don't need what you're selling 99% of the time. So how do you market in a way that people think they NEED you?

No one needs a monkey hook (that thing pictured here). So whey do they buy it?

Because they need to hang a picture!

You've heard it before: No one needs a 1/2" drill bit. They need a half inch hole. In other words, clients don't buy from you because they need a "server" or a NAS or a router.

They buy because they need a place to store their stuff or they need to get to the Internet. They buy solutions, not products.

In my latest video I talk about what clients are looking for and how you can position your company to provide the solutions clients need. Not Servers, Backup Systems, or Anti-Virus. Instead, they're looking for Security, Peace of Mind, Uptime, and Efficiency.

Check out the video. Subscribe to the channel. And pass it along to a friend.

More SOPs at


Wednesday, March 08, 2017

Scattered Client Doesn't Mean Scattered Data

I got a nice note from my friend Mark asking about a specific client challenge (which probably sounds familiar to many of you):

Hey Karl,

I am looking forward to the next service board class and my wife enjoyed the recent QuickBooks training. Thanks!

I have a question about your cloud setup. I just got out of a meeting with a client that has sbs2011 and is moving to D.C. Long story short we have moved them to Office 365 and disabled exchange on their server. Next step was to setup a newer smaller server to handle AD, DHCP, DNS and File Server. Problem is she is now considering working from home and having the other users (only 2 other users) work from their homes. By the way you explained your system it sounds like yours would work in this scenario. We already have her on VOIP so her phones are good. Only thing I am not sure is how they can do file sharing in a similar way they are doing now. Also do I join them to an Azure domain for authentication?

Appreciate any input.


- - - - -

My response:

Thank you for the very positive feedback.

You need to attend my cloud roadshow !!!

Seriously: We use and recommend JungleDisk with storage at Rackspace. to get started. They are re-starting their reseller program so I’m not sure if that’s an option yet. But it’s still the right solution. We put the whole thing on our credit card but use the client’s email address for the account. That way they could control it if we disappeared.

Anyway, with JungleDisk, their data appear on a mapped drive. It’s identical for everyone everywhere, just like hosted exchange mailboxes.

I don’t sell O365 direct because it’s about a hundred times easier to manage via Intermedia, Rackspace, Appriver, etc.

Once you’ve got hosted exchange mailboxes in place, setting up hosted active directory is easy. Obviously, it’s best if these are with the same service provider.

I go into a lot of detail about putting bundles like this together in the roadshow. This client sounds like a perfect fit!

If you sign up for any city, you can log on, get all the downloads, and listen to the recorded sessions from past cities.

Hope that helps. Sorry to sound like a salesman.

- Karl W. Palachuk

- - - - -

Followup: Is there a discount if I bring one of my techs?

Yes! Second (attendees pay only $299).


Thursday, March 02, 2017

Form Good Habits and Become Their Slave

One of my favorite Og Mandino quotes is:

"I will form good habits and become their slave."

I like it so much, I had post cards printed with that slogan.

In the last week, I've had several interactions that highlight how my "good" habits have served me well. On three different occasions I've been asked some version of how I get so much work done. Do I edit my own videos? Do I write all my own books? Do I write every day?

Yes, yes, yes.

And the last of these is the key. I read every day. I meditate every day. I write every day. These are the muscles of my success and I exercise them every day.

I travel a lot, and there are plenty of temptations on the road. One obvious temptation is drinking. Everyone gets together in the evening, hanging out together, and it's a great social atmosphere. But those who are successful traveling a lot have learned to limit their drinking. At some point you have to.

One of my habits of success that makes this easy is: I don't drink shots. Ever. Period. From time to time someone will show up with a round of shots and I'll just adamantly decline. Some people are very pushy. Even when I tell them I have a "rule" about this, they say I should do it just this once.

The more you do something (including declining to do something), the easier it is.

Another rule: With only a few exceptions, I don't leave the conference hotel. I don't go to clubs downtown. I don't go out to events. And even if someone starts strong-arming me at ten o'clock because they want to go party hours later, they never wear me down.

Because I have rheumatoid arthritis, I literally cannot go partying all night, even if I wanted to. And when I run out of steam, I need to go straight to the elevator and go to my room. If I'm somewhere else, that's not possible.

It becomes easier and easier to hold to these rules when I break them. Every time I wake up feeling tire and worn out, it's easier to say I'll never do that again - and mean it.

I know several people who sneak out of the evening entertainment while nobody's looking. I see these folks city after city, all across the country. They wander off as if to refresh their drink or use the bathroom, and they never return.

I never give them a bad time or ask, "Where did you go last night?" because I know that one of their habits of success is to get a good night's sleep. Or maybe it's to make a phone call to the family. Or maybe to get some reading in before bedtime.

They opt out of the fun in the moment because they're focused on the long term.

Over at, I have a "pith" page full of my favorite quotes. You'll see that a lot of them are around habits.

It can take a long time to un-do old habits and create new, good habits. But the longer you work on it, the better off you'll be. When your good habits become automatic, everything gets better. That's why i call them the muscles of success. The total combination of all these habits becomes the grand habit of being successful.

Of course your good (and bad) habits are not the same as mine. You have to figure out what they are and then work to build the good and drop the bad. And the worst excuse of all time is that you're too old to start now. If you're alive, you'e not too old to improve your life!

Start with the habit of taking some quiet time every day to think about what's working and not working in your life. Then start building your habits of success.


Friday, February 24, 2017

Politeness as Branding

If you're in the service business, you need to make sure your employees practice some very basic activities of politeness. In addition to being good customer service, this is great for your branding. Remember, your "brand" is everything you do and how you are perceived. 

Some people will know these things due to previous experience. Some through training. Some through common sense. But you cannot assume that your employees know what you consider to be the important element of politeness with clients. 

Here's a video where I talk about What Would Your Mother Do?

Many new employees simply don't have the experience of of older employees. Not knowing the little things that matter in customer service is NOT a function of age. It's a function of experience and training. If you want your technicians to spend thirty seconds chatting with the person at the front desk, you need to tell them that. If you want them to park at the far end of the client's parking lot, you need to tell them that.

This is part of your culture and your branding. As part of your culture, existing technicians will train new technicians in all these little things. As part of your branding, your clients will see that your employees are well mannered - and that helps their perception of you.

Check out the video, subscribe to the channel, and post comment here or on YouTube.


Friday, February 17, 2017

How to Approach Clients with New Ideas . . . and the Power of Being Different

Clients will never ask for "Different" - But being different is the most important thing you can be.

I posted two videos recently on the theme of being different.

The first one is about How To Approach Clients with New Ideas. After all, clients will never ask for something they have never heard of, they don't understand, and they can't describe. It's your job to take new ideas to your client.

Be The Teacher for Your Clients

Remember Henry Ford: "If I had asked people what they wanted, they would have said faster horses." Your clients can not ask for something they don't understand.

For example: You need to educate your clients about cloud services, why it's better for them, and how you are able to provide them with great services in this new environment.

The newer video (just posted today), I look at how you can Lead with Different. This is a pretty simple process. First, you need to ask clients why they love you. Is it because you're the cheapest? Probably not!
Lead with Different

Clients might love you because they trust you, you talk to them in business term, you don't make them feel stupid, etc. Next, after you know why your clients love you, do more of that! Dig in and make your business all about the things your clients love.

And don't be afraid to be different. After all, it's what makes you stand out!


Thursday, February 02, 2017

Next Cloud Roadshow: Miami - February 23rd !!

Please Join Me on the 2017 SMB Roadshow!

Next U.S. stop: Miami!

Note: The Feedback from San Antonio, Houston, and Dallas has been GREAT! Check out the comments on my YouTube Channel.

This all-day seminar will be 100% education. No vendors on site. No booths or up-selling. Just education on my very successful "Cloud Five Pack" and how we make 73% profit on our small clients. Details at

The show is $999 at the door - but there's no excuse to pay that.

For one month before each show, you can get in for only $799. 

- which is CHEAP since:

  1. You probably don't have to travel far to find a city near you.
  2. You only need to sell ONE client on this package to make your money back
  3. This really is a business model you can execute right away. One guy from the "dry run" we did of this seminar was able to create an offering and sign two clients within TWO business days of the event! 
Sessions Include:
Read More . . .
 - Cloud Services in Small Business - 2017

 - The Cloud Five-Pack

 - Cloud Migration

 - Implementation

 - and MORE!

Seminar Objectives

This is a workshop - which means you will leave with some real-world goals, and the tools to implement them.

We will cover the strategies for creating a powerful and profitable cloud service offering for the small business market. My managed services businesses have been selling these bundled cloud services since 2008. In fact, it’s one of the things that helped us thrive during the recession!

This is NOT a 30 thousand foot overview. We will discuss:
  • Specific products and services
  • How to bundle them
  • How to maximize profit
  • How to combine cloud-based and onsite options
  • The best way to integrate your onsite server
  • Managing multiple accounts
  • Specific scripts for implementing your “Cloud 5-Pack” (or whatever you end up selling)
  • How to change/upgrade the bundle
  • Tiered pricing options
  • Click-by-click setup and integration
  • Selling the cloud bundle
  • Bandwith realities - and why you do NOT need massive bandwidth for a successful cloud integration
  • ... and more!

The handouts include VERY detailed instructions for configuring your bundles, implementing services, and migrating clients to the cloud. About 150 pages - spiral bound and available for download.

Target Audience

This all-day seminar is intended for any IT service provider who wants to sell very profitable cloud-based services to small businesses. The ideal end-user client is anyone with 1 to 20 users.

You can certainly sell these services to larger companies - and this seminar will give you all the tools and strategies to do that - but larger companies tend to have slightly different requirements.

The basic cloud bundle is intended to provide all the technology a small company needs, including email, storage, backup, anti-virus, spam filtering, patch management, and remote support. You will learn how to up-sell this to include telephones, security monitoring, and other services.

The overall goal is to help you create a combination that is reasonably price for the client and hugely profitable for you.

Bonus Membership

We have created an exclusive Facebook page, open only to people who attend this seminar. It is a place to discuss the strategies presented in the seminar, share their experiences, exchange documents, and so forth.

Once you register for any city, and pay your tuition, you will have access to the Facebook group.

Another great reason to register early! 

Cities Include:

Port of Spain, Trinidad and Tobago - February 21st

Miami, FL - February 23rd

New Orleans, LA - March 21st

Tampa, FL - March 23rd

Los Angeles, CA - April 25th

San Diego, CA - April 27th

New York, NY - May 16th

Philadelphia, PA - May 18th

Seattle, WA - June 20th

Portland, OR - June 22nd

Chicago, IL - July 25th

Detroit, MI - July 27th
London, UK - August 15th

Manchester, UK - August 17th

Edinburgh, Scotland - August 22nd

Dublin, Ireland - August 24th

Nashville, TN - September 19th

Atlanta, GA - September 21st

Adelaide, Australia - October 10th

Melbourne, Australia - October 12th

Sydney, Australia - October 17th

Brisbane, Australia - October 19th

San Jose, CA - November 14th

Oakland, CA - November 16th

Las Vegas, NV - December 8th  

Sign up early and save. 

- - - - -

Special Invitation to join me at the Trinidad show:


Wednesday, February 01, 2017

Next 5-Week Course: Making the Most of QuickBooks in an I.T. Service Business

Making the Most of QuickBooks in an I.T. Service Business

- Five Tuesdays - February 7 - March 7, 2017 - Register Now
- All classes start a 9:00 AM Pacific

QuickBooks is QuickBooks, right?

Well . . .

QuickBooks has to be set up right. Then it has to be used right. Then you need to have specific processes for the kinds of things you do in YOUR business. QuickBooks has some great interview-based setup parameters that differentiate between a "service" business and a storefront.

But QuickBooks does NOT have a configuration setting tailored specifically for a technology consulting business! There is no "MSP" option when you install QuickBooks.

In this class, Rayanne walks you through several processes that are geared toward the kind of business you run.
Rayanne Buchianico

This class provides unique content from unique teacher! Rayanne is a managed service provider from Tampa, FL. She is also an accountant and an Intuit certified ProAdvisor. In addition to her MSP business, Rayanne helps I.T. consultants to take control of their finances and understand their own business at a deeper level
Topics for this class include:
  • How to track and claim a credit for sales tax paid to vendors on products for resale
  • Maintaining HAAS equipment and recording income and expense properly
  • Tracking direct labor and overhead payroll expenses
  • Creating and maintaining a purchase order system
  • Managing customer deposits, retainer payments, and unearned revenue
  • Action plans for success
. . . and More!

Delivered by Raynne Buchianico, Financial Coach and QuickBooks Advisor. Rayanne has been an MSP - managed service provider - for many years and advises MSPs on how to get the most out of their QuickBooks and PSA integrations.

Includes five weeks of webinar classes with related handouts, assignments, and "office hours" with the instructor.

This course is intended for business owners and managers. It is particularly useful for the Service Manager or Operations Manager.

Only $259

Register Now