Learning to Quote Profitable Jobs - and Three Mistakes to Avoid

Today's topic:   Learning to Quote Profitable Jobs - Lessons Learned

When I first started, I had lots of experience being the buyer of technologies. Of course, I bought lots of supplies, and the occasional small equipment. But I had also designed entire new office setups in remote offices and bought everything technology-related that went into the office, from telephones and servers to desktops and surge protectors.

Selling all that stuff was another story. As the buyer, I was sometimes given a budget. But most of the time, I had to develop the budget, which meant that I had to fish around and figure out what needed to be included, then get some idea of pricing, and THEN develop a realistic budget.

As a seller, I normally designed the whole operation, and then had to figure out where to get everything. Then I had to figure out how to get a decent price. And, most importantly, I had to find the balance that would both sell the job and be profitable.

If I could go back and start over, this learning process would be a lot faster and a lot more profitable. 

Here are the three biggest mistakes I made:

One: The quote must have an expiration date. 

While sales people think this increases urgency (I don't believe it does), I learned that people will come back to you six or eight months later and want the old pricing. That's great if something dropped in price, but bad if it increased. Most often, however, the old equipment was no longer sold because it was based on last year's processor or memory.

Two: Volatile pricing needs an asterisk.

Around the turn of the century, memory chips fluctuated like a volatile stock market. Prices generally went up, but often went down. And something could double in price in a day or two. I remember a very big job that went from profitable to unprofitable because of the timing of when I had to buy chips.

You've been to restaurants where the price of some seasonal food depends on availability. You need to do the same thing if you can't guarantee the price of what you're acquiring. Just put an asterisk. "*Price not guaranteed until date of payment. To lock in this, price, prepayment is required." THAT creates urgency.

Three: Ignore what everyone else is charging. 

This is one of the most important lessons I've learned over the years. It applies to labor, contracts, managed service plans, hardware, software, projects, and anything else you can think of.

I mentioned this in an earlier episode, but we started out trying to charge no more than what the client would pay at a big box store. This was a futile and frustrating experience. As a new reseller, unknown to the distributor, and with no volume to speak of, my wholesale price was often higher than what I would pay at retail.

We finally settled on a simple formula:

Wholesale cost x 1.25 (for example, $100 x 1.25 = $125)

Thus, my profit is twenty percent of the final price (for example, $125 x .2 = $25)

Note: Some people just double their cost. So they pay $100 for an item and sell for $200. Good for them. That seemed a bit extreme to me, but it reinforced the lesson that you can totally ignore what anyone else is doing.

I set up my system so I get a decent profit and guarantee that I never lose money.

Some IT consultants argue that they can't sell for more than retail, suggested retail, or what the client would pay at Staples. That is a false belief and a self-imposed limitation! Ignore this belief! Tell yourself and your client these two truths:

1) We will only sell the right thing. We will do the research, find the right products and services, and create a combination that maximizes performance and lifetime value.

2) We warranty everything for at least a year, and our preference is to only sell business class equipment that's warrantied for at least three years.

In other words, you might be more expensive, but they definitely get value from it. If you sent the client to get something, they'd go to Costco and buy the wrong thing - guaranteed.  I'll never forget when I quoted a new desktop setup for a client and he said no. He went out and bought something that looked the same to him. It was the slowest new machine I'd ever seen. He said, "This is the same machine you were going to sell me." 

I said, no. The machine he bought had ZERO level two cache. I didn't even know that was possible. But it was half the price of what I quoted. It was junk. He was too arrogant to learn a lesson, but I got a story I can tell to demonstrate this point.

Bottom Line: If you sell the wrong thing, you might lose money up front. If you price it wrong, you will lose money up front. And if you sell the wrong thing, you will gobble up your profit down the road as you have to fix and repair something again and again.

Luckily, losing money is painful enough that I figured it out with just a few bad experiences. The lessons here are simple, but extremely important.

Bonus Tip: In your financial tool (QuickBooks, Xero, etc.) you should have categories/accounts for hardware, software, and services AND these should align with COGS - Cost of Goods Sold - categories/accounts for hardware, software, and services. Then, no matter what adjustments or weirdness happens, you have a clear set of numbers to compare. For example, Hardware sales should be about 20% higher than Hardware COGS.

What lessons have you learned when it comes to creating profitable quotes?

-----

This is Episode 17 of the ongoing Lessons Learned series. For all the information, and an index of Lessons Learned episodes, go to the Lessons Learned Page. 

Leave comments and questions below. And join me next week, right here.

Subscribe to the blog so you don't miss a thing.

:-)

The Two Biggest Challenges for MSPs - Solved!

I'm completing a course I teach on Customer Service for IT Professionals, and refreshing one of my most important slides - Facing your biggest challenges. In early 2025, your largest challenges remain unchanged. Luckily, the solution to both is the same. First the challenges.

#1 challenge for the next ten years: Losing market share to well-funded large-and-growing regional and national MSPs. Whether you like it or not, the era of large MSPs is growing. Many, but not all, are funded by private equity. All of them have the goal of growing as much as they can. By any means necessary.

#2 challenge for the next five years: Artificial Intelligence. As Dave Sobel pointed out in his Business of Tech podcast, we are entering an era where you can ask your favorite AI chat tool to solve simple technology problems (See https://www.businessof.tech/podcast/debunking-the-myth-are-msps-really-bad-at-sales-with-ryan-morris/, timestamp 22:00-24:00 and after). 

Both of these are continuing trends. No one should be surprised. Now let's talk about the reality of these challenges.

Larger MSPs provide worse service. Period.

One of my fundamental beliefs about service is that larger organizations struggle to maintain quality service as they grow. There are many reasons for this. First, most business are not well run, and larger businesses spend a great deal of time focusing on the wrong things. 

Second, layers of management come silos of knowledge and fiefdoms of control. Every additional top-down command separates technicians and other employees from taking price in their work. People always work within a system, so when they build a system focused on something other than high quality service, they end us with a system that puts service lower on the priority list - by default.

Most of these companies are obsessed with KPIs that do not promote quality service or quality workmanship. For example, a metric based on how fast you can close a service request can only have a negative effect on quality of service. It can - and does - result in alienated technicians who hate their jobs, are stressed out, and couldn't care less about actual client-facing service.

These larger companies also tend to be highly focused on ever-increasing profit. Profit is more important than clients. Profit is more important than employees. Profit is more important than service. Profit is more important than doing the job right the first time. The only possible result is lower client satisfaction, lower employees satisfaction, lower quality service, and more rework.

The never-ending search for higher margins also means that these companies charge less and less. Because they cannot compete on service quality, they compete on price. That's bad IF you try to compete with them. You don't have to make that choice. 

Lowering their price means lowering their profits per job, so they have to force their over-worked managers and employees to work harder and accomplish more with fewer resources. Nothing about that equation results in an enjoyable company to do work for or with. Quality continues going downhill and job satisfaction goes with it.

If you could design a company to compete with, it would look like a regional or national MSP. 

Artificial Intelligence is your best friend.

As Dave pointed out on The Business of Tech, we are already seeing ChatGPT and other AI tools solving basic problems. This will happen more and more. Again, this is 100% predictable.

Today, if you want to learn something totally new, you go to YouTube and watch a video. "How do I remove the rear speaker covers on a 2003 Toyota Camry?" Boom. Not one video. Lots of videos. And down the rabbit hole you go.

Very soon, you'll ask your questions of AI. "How do I serve DHCP on a third VLAN with an old HP switch?" A few follow-up questions and you're good to go.

The next step - coming in 2025 - is for dentists and accountants and their office managers to ask the same questions. This gets to the most important truth you need to remember about AI:

AI will not take your job. Someone using AI might take your job.

And the very, very good news is: You already know how to stay ahead of the game. You just have to be willing to do it. If you haven't read The Greatest Secret in the World by Og Mandino, today's a good day to start. (See https://amzn.to/3ExqxBB)

The greatest secret? It only takes a small, consistent effort to be better than everyone else. Why? Because most people will not make the effort. They will not be consistent. They will not do the only thing they have to do to be excellent and separate themselves from the pack. You can.

The solution to both problems is the same. This is very good news.

How do you win in an environment that is dominated by growing MSPs trying to steal your clients and artificial intelligence making tech support easy for everyone? It's a simple two-step process.

1. Be supremely competent

2. Deliver extraordinary service

Competence will always win the day. The greatest challenge medical doctors faced in the last fifty years is the democratization of knowledge. I can Google my symptoms and self diagnose a lot. Most of the arcane knowledge "owned" by physicians is now widely available on the Internet. 

I still have to figure out when and how to use it. But doctors are no longer considered god-like beings with special knowledge. No job is more threatened by AI that doctors. But when *I* need surgery, I don't look for the first available quack with a parchment on the wall. I want the best doctor I can find. I want someone who has "seen it all" and is recognized in their profession.

You must be the same way. Basic problem solving has always been the lowest level of IT consulting. When no one knew how to build a network, those who did thrived. When no one knew how to set up remote services, those who did survived. Slowly, our specialized knowledge became easier and more widely available.

This will never end. This is our industry. This is the life you've chosen.

Soon, much of the "Level One" support you offer will be available to nine-year-olds on their smart phones. Being really good at that will be essentially useless. You need to focus on all the really hard stuff that AI won't figure out for a long time - or maybe ever.

Those who've been in any industry for a while know the advantage of having seen a wide variety of problems and rare issues. At least for the foreseeable future, AI sucks at integrating all that. Be supremely competent and you will always have work.

Let other companies turn over their first tier support to chatbots that are already the alternative to your lowest-level challenges. Focus on things they can't do.

And deliver great service along the way. Remember: Service is Everything You Do. If your entire business is built around giving amazing service, you will find clients who want that and are willing to pay for it. You will also hire the right people, offer the right combination of products and services, execute perfectly, and build a business you want to work in.

Five years from now, almost no one will pay good money for level one tech support. But almost everyone will pay top dollar for supreme service and piece of mind. Your client never asked for technology. They don't care about it. It's not why they went into business. They do care about offering supreme service to their clients. Helping them do that will keep you very profitable and busy for a long time to come.

Supreme competence + supreme service = A Very Successful IT Business!

:-)

Quality Service is Never a Mystery or a Mistake

One of the unfortunate results of cutting my technology teeth in academic and enterprise businesses is that I often approached technology from a purely technical perspective. For example, what color should the network cables be? Answer: Whatever fits the technical specs and is available in bulk at a reasonable price. 

For example, when a company like HP is wiring a building the size of a warehouse, no one cares what color the wires are.

... and then I started working in small business. I'll never forget the day that we were one office into setting up the network for a twelve-office organization. The owner came in and asked, "Do the wires have to be blue? Everything else in our office is beige, off-white, or earth tones. 

I grew up poor. We only had the box of eight crayons. My brain understand blue and red and green. So there was no chance that I would even consider looking for beige network cables. But I did know that we could get white. I offered up white cables instead.

The client told me that's fine. Then she added, "Don't you think white cables would look better at all of your clients than blue - unless they have a blue office?"

This fall deep into the territory labeled, I would never have thought about that. But it made perfect sense. As with so many checklists in our business, I simply added the question, "Do you have a preference for the color of the cables?" to job specifications.

“The essence of sustainable competitive advantage is:

1) The obvious;

2) The little things;

3) The accumulation of little things over the years.”

— Tom Peters

Too often, MSPs take the approach that technicians either are good, or are not good, with the details. When it comes to a new laptop setup, we give them a detailed checklist. Did you remove all the junk software? Did you apply all the patches? and so forth.

That list grows and gets fine-tuned over time. The goal is to make sure that every little thing is perfect, to the extent it can be. You never want to be driving away from a client's office and get an email asking why Adobe Acrobat wasn't installed. 

ALL technicians are good, if they work inside a system that's good. All technicians are haphazard when they work inside a system that's haphazard.

Most of the time, it's appropriate for us to focus on the technical. Do we have the right hardware, the right software, the right services for the job? Are things configured correctly? Did we do everything well, in order, and document it? Check. Check. Check.

But from the client's perspective, there are lots of non-technical considerations. Back in the day, selling big, clunky, ugly desktop computers was fine. It made people feel that they actually bought something worth the exorbitant price. Today, people want technology to be more elegant or even invisible. Part of your job is to make sure the job is esthetically pleasing as well as technically awesome.

How do you train tech-first employees to ask where a machine should go, how the wires should be managed, or the color of the cables? Give them a checklist! They are certainly capable of having those conversations. It's up to you to make sure they do have the conversation (or you do, or the sales person does).

As with everything else in your business, quality never just happens. You need to make it happen. And being consistently better at "the accumulation of little things over the years" is part of your brand. Are you the company that does sloppy work, always forgets one thing, and is plagued by re-work? Or are you the company that does awesome work the first time and makes the client glad they made the investment? Neither of those happens by accident.

Quality control is not a mystical art. Anyone can be good at it. You just need to make it part of your checklists from the beginning.

:-)

I Learn the Beauty of Perpetual Contracts - Lessons Learned

I Learn the Beauty of Perpetual Contracts 

This is Episode 16 of the ongoing Lessons Learned series. For all the information, and an index of Lessons Learned episodes, go to the Lessons Learned Page. 

-- -- -- 

Today's topic:   I Learn the Beauty of Perpetual Contracts

When I started my independent consulting, I had one client at a time. Which is to say, I signed a contract for a fulltime gig. And for several years, this worked well. See Episodes 5 and 6. As I eased into having multiple clients, I wasn't sure what kind of contract they should have.

I probably should have sought out another IT consultant, but I wisely contacted an attorney who would trade two of my hours for one of his hours. I didn't need a lot of time, but I did need advice.

He set me up with a standard contract that could be used two ways: 1) Sell labor per hour, or 2) Sell labor in blocks of time. At the time (late 1990's), he got the boilerplate from a service he subscribed to. Boilerplate language was either delivered on CD-ROM or by dialing into a service with a modem. Today, of course, a much better collection of verbiage is available over the Internet.

The contract had one additional feature I didn't pay attention to at the time: It was good for one year (twelve months) from the day we signed it. This seemed normal enough. After all, I had come from the world of "one client at a time," and my contracts were generally for twelve months.

But a year later, as contracts came up for renewal, I discovered the weakness in these expirations. I thought I would simply slide a new contract across the desk and say, "sign here." After all, the contract was unchanged except the dates and maybe a small increase in the hourly rate.

But to the client, this was a bigger deal - and an opportunity to bring up every little thing that might get them a lower rate or easier terms. What is really revealed to me was: 1) I need to have these conversations all the time (without the contract), and 2) the contract needs to not expire.

Back to the lawyer.

The lawyer's reaction was along the lines of, "Oh. You need a perpetual contract." So, I laid out all the little things I thought could be improved, and he re-wrote the contract to be good for one year, at which point it renewed every thirty days until cancelled.

I know people go on and on about two- and three-year contracts. But even today, I believe in NOT holding your clients hostage with long-term contracts. You don't like vendors doing this to you; you should do this to your clients. I ran my IT businesses very successfully for two decades on thirty-day renewals.

-- -- -- 

This incident also taught me that there are lawyers who are good as business advisors, and those who are merely good at law. Because of my corporate upbringing, I had only worked with lawyers who were good with business conversations. Now I had an attorney who basically said, "You didn't say you wanted a perpetual contract." 

Remember that in your business. Don't sell the client just what they ask for. Be a true advisor - on both the technical and the business front. Say, "What you really need is ...."

Very much related to the lesson above, I started making a big deal of holding regular conversations with clients. In this way, there was no annual get-together to discuss their problems and how service was going. I had monthly and quarterly get-togethers. I took people to lunch on a regular basis. With every job, we also talked about where this fits in their bigger picture.

The non-technical side of my service business was coming together. But I still had a big challenge. From time to time there were unprofitable jobs. I knew that could not be the norm. And, in fact, it should never happen.

We'll talk about that next time: How I learned to quote profitable jobs.

-----

Leave comments and questions below. 

Subscribe to the blog so you don't miss a thing.

:-)

So Long, DEI. We'll see you again real soon.

Please do not post a reply to this article based on the title or your stereotype of what you think I believe. Take three minutes and read the article.

One of the big fads right now is eliminating programs that increase diversity. 

The saddest part of the current move away from DEI is that many companies are showing their hand as opportunistic servants of their PR departments and don't actually care about diversity at all. They rushed to the DEI movement when it was hot. Now they are running away from it. As the pendulum swings, they will rush toward it again when it is back in favor.

The question is: Were they hypocrites when they rushed toward diversity or when they rushed away from it? We won't know when they embrace it again. What we DO know is that there are companies continuing to embrace diversity. Whether or not you agree with opening opportunities to everyone, it's clear that these companies are not run by hypocrites.

As a business owner and manager who has hired maybe a thousand people in the last thirty years, and interviewed several times that, here's what I know about work places that welcome and include a variety of people.

1. The more "different" kind of people you have, the more creative your team will be. Think about your own experience with pub trivia. You'll get more answers right if your team includes someone younger, someone older, someone who likes music, someone who likes sports, someone who's black, someone who's gay, someone who has served in the military, etc. 

Different perspectives come from different backgrounds, different cultures, different family norms, different education levels, and all kinds of other factors. If you have any diversity on your team, you've probably experienced this. Of course, you have to let people relax and be who they are, from their background, with their personal experiences and biases. 

If people feel they have to hide the stuff that makes them different, then your team is deprived of this creativity.

2. More diverse organizations perform better financially. I'm not going to get into a citation war. But I trust research from the Harvard Business School and from MIT. They are joined by many organizations and universities in affirming that increased diversity is related to increased innovation and a willingness to try new things and recognize new markets.

3. Workplaces where everyone on the team can show up as themselves, without hiding pieces of their culture, background, or self, are workplaces filled with people who look forward to going to work. They are more likely to relax, contribute more of their uniqueness, and be willing to join the team as a true team member. They are more likely to love their jobs.

I know this from extensive experience. I try to welcome as many different kinds of people as I can. I need my company to be creative. I need my company to be innovative. I need my team to see themselves as part of a team. And I need them to bring their uniqueness to our entire enterprise. 

The DEI programs and "movement" of the last ten years might have been sold wrong. They might have allowed their opposition to control the conversation. The training might have been poorly designed and implemented. But here's what we know: Diversity will win. Diversity will be back. And the more diverse teams will win. 

It will take some time. But time is on the side of diversity. If you want fresh new ideas, you want diversity. If you want innovation and profit, you want diversity. If you want market share and an influence on the future, you want diversity. And if you want a great team with a great culture, you definitely want diversity. 

Accepting "different-ness" is inevitable.

As Victor Hugo remarked, "Nothing else in the world . . . is so powerful as an idea whose time has come." 

So long for now, DEI. We'll see you again real soon.

-- -- -- 

Full disclosure: I have worked on and for "diversity" programs for a long time. I spent a few years working with the industry association formerly known as CompTIA on various councils and communities, including the original AWIT - Advancing Women in Technology. Most recently, I service a few years on the Advancing Tech Talent and Diversity Council before it was disbanded. 

And the reason I support these programs: It's good for my business, both short-term and long-term.

:-)

Mergers and Acquisitions for MSPs - All New 5-Week Course Starts Feb. 11th

Mergers and Acquisitions for MSPs

Thinking of buying or selling you IT business in the next five years? Start planning now!

All new course from M&A coach James Kernan.

Course 5W31

Mergers & Acquisitions for MSPs

Five Tuesdays

Feb. 11  -  Mar. 11

9:00 AM Pacific

All classes are recorded

Register Now at 

www.itspu.com

This course provides a comprehensive overview of the Mergers and Acquisitions (M&A) process, covering strategic planning, valuation, legal frameworks, due diligence, and post-merger integration. It equips participants with the skills and knowledge needed to navigate and execute successful M&A transactions in a dynamic business environment.

Check out the super-quick intro video.

Description

The MSP Mergers and Acquisitions (M&A) course is designed to provide a deep understanding of the strategies, processes, and tools essential for successfully navigating M&A transactions. Whether you’re interested in buying or selling, this course will equip you with the knowledge and skills to approach M&A deals with confidence and precision.

This course offers a comprehensive exploration of the entire deal process, from identifying strategic opportunities to executing and integrating transactions. Designed with a practical focus, the course includes real-world case studies, financial analysis exercises, and tools to help participants gain hands-on experience. By the end of the course, you will not only understand the theory behind M&A but also have the practical skills to contribute effectively to deal-making teams or corporate growth strategies.

Whether you aim to buy or sell your business one day, this course is your gateway to mastering the art and science of M&A.

What You Will Learn

1. Strategic Insights into M&A

Participants will explore the strategic rationale behind M&A, understanding why companies pursue mergers or acquisitions to achieve growth, diversification, or market expansion. You will learn to identify value-creating opportunities while recognizing the risks and pitfalls that can lead to unsuccessful deals. Through real-world examples, you’ll gain insights into how successful transactions are structured and executed to align with corporate objectives.

2. Mastery of Financial Valuation Techniques

The course emphasizes the financial foundation of M&A, teaching you how to apply key valuation methods to see what your business is worth. Additionally, you will learn how to identify and quantify synergies—both cost and revenue-based—that drive deal value. This knowledge will enable you to assess whether a deal is financially sound and sustainable.

3. Understanding Legal, Regulatory Frameworks and the Process

M&A transactions often involve complex legal and regulatory considerations. This course provides an understanding of critical aspects such as antitrust laws, international compliance, and the documentation required for transactions, including letters of intent (LOIs), sale and purchase agreements (SPAs), and non-disclosure agreements (NDAs). You’ll also learn how to manage ethical challenges and ensure transparency throughout the deal process.

4. Conducting Due Diligence and Negotiating Deals

One of the most crucial components of M&A is due diligence. You will learn how to conduct comprehensive financial, operational, and legal analyses to identify potential red flags and mitigate risks. The course also covers negotiation strategies, exploring how deals are structured, priced, and finalized to meet the interests of all stakeholders.

5. Post-Merger Integration and Value Creation

The ultimate success of an M&A deal depends on effective integration. This course provides practical guidance on how to merge operations, align cultures, and realize synergies while managing risks and resistance to change. You will also learn to evaluate post-merger performance, track key metrics, and ensure long-term value creation for all parties involved.

Bonus Information: Here’s a recording interview with Coach James Kernan on the topic of Mergers and Acquisitions for IT Service Providers: https://smbcommunitypodcast.com/2024/12/mergers-acquisitions-when-is-the-best-time-to-buy-sell/.

Specialist Certification Pathways

This course meets one of the core requirements for all of the ITSPU certification pathways:

• Management

This class will be recorded. Each unit is generally posted within 24 hours of the live class. These recorded units will become the On-Demand class and you’ll have lifetime access to it.

Five hours of live education, lifetime access, lots of handouts. Satisfaction guaranteed.

Only $399 per student.*

Get all the juicy details and register today at 

https://www.itspu.com/all-classes/classes/mergers-and-acquisitions-for-msps/

-- -- -- 

* Members of the Small Biz Thoughts Technology Community can register for free. See site for details.

:-)

My Most Regretted Decision - Lessons Learned

My Most Regretted Decision - Lessons Learned

This is Episode 15 of the ongoing Lessons Learned series. For all the information, and an index of Lessons Learned episodes, go to the Lessons Learned Page. 

-- -- -- 

Today's topic:  My Most Regretted Decision

We all have regrets. To be honest, we all regret that we didn't learn our hard lessons sooner. That's one of the advantages of reading books and blogs, and taking classes. If you can learn from others, you can skip a lot of mistakes.

When I started my IT consulting business (1995), two trends were in full force: 

1) The "Dot Com Bubble" was growing fast. You usually don't recognize a bubble when you're in it - especially if you're heavily invested.

2) The mad rush to get on the Internet. This was directly related to all that .com activity.

When people tell you that the rush to AI feels a lot like the .com bubble, it's true. People rushed to the Internet even though they had absolutely no idea what they were doing. It was irrational for most of them.

In my last real job (see the early episodes of this series), I worked in company that put information onto computer systems and sold that information to dial-up subscribers for a fee. We went through a long, complicated process to get connected to the government-funded Internet in 1993, before "anyone" could be on it.

In 1994, the Internet was opened to public and commercial use. Those who had a good reason to be on it (those with lots of data to share/sell) rushed in. Those who had no idea what it was jumped on the bandwagon.

I knew early on that I could make money connecting companies to the Internet. After all, a tiny fraction of one percent were connected. That left basically every company on earth who would be connected as soon as they could! Talk about a "blue ocean" strategy. Everyone on earth needed what I knew how to do. Sounds like a business plan!

Early on in my business (circa 1995), I made two big decisions. Sometimes you have to clearly define what you will NOT DO as well as who you will do.

First, I decided that I would not work free or cheap in exchange for ownership in other peoples' companies. The big deal at the time was to promise stock options in exchange for a piece of the pie when the big money hit. The trade magazines and emerging web sites were filled with stories of tiny companies making millions of dollars - and all their employees getting rich.

Instead, I got paid to sit at the table and have those discussions about buying and selling. And it was crystal clear that the early hard workers' share were being watered down again and again with every round of funding. You might have ten thousand mythical shares. But when the next round of funding comes, the total number of shares will go from one million to ten million. And your ten thousand will be a tiny piece of the eventual pie.

So I made my money in the C-suite and in selling labor to connect companies to the Internet - at full price. You want investors? Talk to someone else.

I think, overall, that was a great decision on my part. And I don't regret it.

What I DO regret is my second early decision:

Second, I decided that I was not going to be in the business of selling connectivity. I didn't want to selling telephone lines. I didn't want to sell Internet connections. I didn't want to sell the ever-emerging technologies of T-1, Fiber, and cable Internet.

Eventually, I did end up selling some telephony and connectivity. And I still get checks every month for the lines I sold. I just had a conversation with a woman I sold a telephone system to in 2011. She still pays here bill. And I still get a check for my commission every month.

We did eventually sell several phone systems and collects some good commissions. But I never went all-in and sold connectivity as a significant part of my business.

I regret that. I regret that I didn't jump in when a 56K line went for $3,000/month. Or $1,000/month. Or $150/month. 

I regret that we didn't build an entire business unit selling and supporting the phone and connectivity of our clients. We had many opportunities. And we dabbled it in. But we committed to it. And yet, after all these years, the Channel Partners conference (very telecom-focused) is the one annual conference I have attended more consistently than any other. Connectivity is literally everywhere and never stops evolving.

I was always doing something else, trying something else, and perfecting the already-profitable business we had. And, to be honest, my early bias held me back a little. I wish it had not.

All businesses have regrets. There's always the path not taken.

In the big picture, I can't complain about my journey. Making big early decisions - right or wrong - put me on the path to regular monthly maintenance and managed services. So it turned out just fine.

One of the best things about telephony and connectivity is the never-ending nature of the service. In the next episode, I tell how I learned about the beauty of perpetual contracts.

-----

Leave comments and questions below. And join me next week, right here.

Subscribe to the blog so you don't miss a thing.

:-)

All the Pieces Come Together - Lessons Learned

All the Pieces Come Together - Lessons Learned

This is Episode 14 of the ongoing Lessons Learned series. For all the information, and an index of Lessons Learned episodes, go to the Lessons Learned Page. 

-- -- -- 

Today's topic:  All the Pieces Come Together

No matter what business you're in, and no matter how long it takes, things eventually come together. In other words, they "click." And when the right ingredients come together in just the right way, they become something different and wonderful.

It's a bit like baking a cake. You need some flour, some eggs, some sugar, maybe a splash of milk and some butter. But you need more than that. You need the right quantity of each. But even if you had all the right measurements and dumped them into a pan to bake, you'd just have a horrible mess.

You also need a process! An integral part of the recipe is the step by step instructions on how to actually turn ingredients into a cake. You need to add ingredients together in a certain order, and in a certain way. You need to mix enough but not too much. And you need to cook it at the right temperature for the right amount of time.

Running a business is a bit like figuring out how to bake a cake without a recipe, a cookbook, or Google. You can more-or-less reverse engineer the ingredients, but you're going to go through a lot of trial and error before you figure out the best way to make something that others will agree is a cake.

For me, all the ingredients were in place in the fall of 1999. And with the release of Windows 2000 at the very end of that year, the year 2000 brought everything together - the ingredients AND the step by step process.

We've already discussed the basic ingredients:

• Skills/knowledge
• Regular scheduled (monthly) maintenance
• ... including testing backups
• Signed contracts
• Documentation for all clients, all systems, and all processes

The year 1999 was dominated by preparation (and worry) for the Y2K rollover. I was lucky to have left the world of mainframes, Cobol, and patch-filled operating systems. Small businesses were hungry to either update their systems or buy their first systems. Everyone who didn't upgrade in 1999 wanted to do so in 2000. 

I was also lucky to have managed Unix servers, Exchange servers, and Novell servers, all of which relied on either x.500 directory services or something very similar. So the Windows 2000 operating system just plane made sense.

At the time, I didn't realized that I had almost every ingredient for the next stage in the evolution of my company. The missing ingredient was recurring revenue. But I had the next best thing: Regular, scheduled, predictable income.

Signed contracts were oddly uncommon in the SMB IT space at the time. I had always signed them because that's the world I came from. Monthly maintenance was the same why. How could you not provide regular maintenance, and test backups?

Once all these ingredients were in place, my company began to grow in a big way. We had a system, and all we had to do was repeat the successful process again and again and again. I have a presentation entitled, "Seven Stages of Wealth and the Economy" that describes this condition (You can view it at: https://mspwebinar.com/the-seven-stages-of-wealth-and-the-economy/).

I call this stage simply "Work it!" When you get to the point in your business where you have figured out the right combination of clients, tools, processes, services, and money. When you get it right, you only have one job: Work it! Repeat it. Execute again and again and again. 

It's critically important that you recognize when you're in this stage - because it will not last! If you're super lucky, this stage will last three or four or five years. I've never stayed at this stage longer than five years in any business I've owned or run. Especially in IT, change just keeps coming. So you have to keep updating and changing your business.

In year 2000, we entered the "Work it" stage, and we worked it for just over three years. Not only do you need to recognize when you're in this stage, you also need to set up some early indicators so you don't stay there too long. Re-tooling and restructuring will lay the groundwork to get to a new "Work it" stage.

Best of all: Your cake will be different from my cake. Even if the basic ingredients are the same, you'll put your twist on it make make it your own.

If you're still re-tooling and tweaking and figuring out the right combination for your business, don't worry about it. That's natural. That "figuring it out" stage can take years. It took me more than four years from "launch" to entering the "Work it" stage. As we'll see, the transition to the next "Work it" stage came a lot faster and easier.

But before that . . . I made the most regrettable decision of my career. We'll talk about that next time. 

-----

Leave comments and questions below. And join me next week, when I reveal

My Most Regretted Decision

Subscribe to the blog so you don't miss a thing.

:-)

Free Informational Webinar – The First Year MSP

There are many challenges – and a thousand questions – that need to be addressed when you start a new business. If your business it IT consulting, you’re in luck! There are also many resources and a great community ready to support you and help you do it all better.

Join us for a free webinar on making the most of the first few years running your new IT business.

Introduction to the First Year MSP

January 22nd

9:00 AM

Register now!

In my annual address, I introduced the First Year MSP program. My team and I are looking forward to working with you and a small group of other highly motivated business owners.

Let’s be honest: All business involves some struggle. But that doesn’t mean you have to go it alone. You can ask for help and get through the tough parts a lot faster.

All of us with a gray hair or two (ahem) can tell you lots and lots of stories about the mistakes we’ve made. Of course, mistakes are part of learning and growing. You start out making mistakes with technology. You know you’re a business owner when you find yourself making mistakes with clients, finance, and employee! You will make mistakes. That’s not the variable.

But you can make a lot fewer mistakes by learning from the experience of others! That’s what communities, training, coaching, and education are all about. You really can speed up the process by learning from others. You just have to commit and execute!

Join us for an educational seminar about the best ways to maximize success in the first few years of running your IT business. Free and open to all.

... and if you just can't wait for a peek at the First Year MSP Program, browse to https://www.smallbizthoughts.org/first-year-msp/ - and sign up for the webinar.

– Karlp

:-)

Helping Consultants in the LA Area - This is What Communities Do

 Time for the IT Community to Step Up!

I'm sorry to interrupt your cheery new year with this, but there are times when you just have to do something.

In the LA area, as of this writing, more than ten thousand people have lost their homes. And many thousands of businesses have been burnt to the ground.

My heart goes out to everyone who lost all of their belongings, all of their family photos, and the homes their children grew up in. I'm a little sad about all the media attention on lists of famous people who lost their homes. We should have compassion for them. But we need to remember the tens of thousands of others who lost their houses and businesses.

Disasters happen all the time. But every once in a while, there's one so big that our individual efforts just aren't enough. That's when community really matters. I am grateful to be a member of many communities that have the ability - and the heart - to help in a very special way at times like this. YOU are probably a member of some or all of these organizations:

• Small Biz Thoughts
• The Tech Tribe
• The ASCII Group
• The National Society of IT Service Providers

And, of course, you probably know of many others.

How can you help? It's easy. ASK what's needed. Offer what you can.

All of those groups have forums. Post something. Ask how you can help. IT organizations are uniquely positioned to help each other. We share a lot of common knowledge and skill sets. Consider a few ways you can help IT consultants in the LA area who have lost their offices and perhaps their homes. Most of their clients are going through the same thing.

• Offer to let an LA area IT company forward their phones to your number for a week or two.

• Offer to ship emergency hardware, if it's useful.

• Offer to work X hours worth of tickets, especially urgent needs.

• Or take some low-priority tickets so they can focus on the emergencies.

• See if you can get a login to their ticketing system and help them out free of charge.

• What else can you think of?

If you need help and you're not sure who might be able to help:

• Contact me. I will try to match you with someone who can help.

• Post on one of those forums above. If you're a member, you have the info you need. If you're not a member, today's a good day to join.

• Inside Small Biz Thoughts, I started an item in the main "Community Forum." See https://www.smallbizthoughts.org/forums/discussion/disaster-assistance-l-a-area-ask-for-help-offer-assistance/

One of the first true, massive disasters where I remember the community stepping up was the aftermath of Hurricane Katrina. Today, we can do so much more to help each other. Just do it.

Let compassion be the word of the day.

Thank you all. Take care. And take care of others. That's what communities do.

:-)