Tuesday, September 11, 2007

Mike Writes about Right-Sizing

[ KP Note: The entire "Managed Services in a Month" series has been collected, collated, and indexed. Still free. You may access it now at http://www.greatlittlebook.com/Seminars/managed_service_in_a_month.htm. ]

Mike asks some great questions in response to the Sept. 8th posting.

His concerns:

1) Clients are very small (Under $1,000/year).

2) Client typical setup is under 10 seats; XP pro; peer to peer; desktop acting as a server; no backup; no RAID; no redunant power supplies; web and email hosted outside.

3) Stepping up to SBS means more headaches and more expenses. "My perception is that Managed Services is glorified babysistting."


Mike, I guess the first thing I'd say is what I say in my presentations:

It's just as easy to fall in love with a rich man as a poor man.

Which is to say: You'll work just as hard getting a technology-dependent client as a break/fix client who places no real value on technology.

Both types of clients will exist forever. They both need some level of technical support. Remember: no matter what a client looks like from a distance, there are those who spend money and those who don't. There are those who need serious technical support and those who don't.

As of December 31st of last year, our average client had Twelve employees with perhaps 14 total machines (including laptops) and one server. They had a domain with SBS, a tape backup, and at least email onsite. Perhaps a web server onsite as well.

So, you see, one can easily build a business with small clients who only have twelve or fewer seats.

Whatever group you can come up with, you'll find people who rely on technology and are willing to invest in it.
In the same group you'll find people who don't see the point of technology and are unwilling to invest in it.

This is true of any group: doctors, lawyers, accountants, associations, etc.

Here's a perfect illustration:

The first flat-fee managed service contract we signed was to a client with nine desktops and one server. $6,000/year.

Then just last friday I talked to someone who has ten desktops and a Small Biz Server. He said the he didn't care if his server was down for a day or two. He wants to make sure his documents are backed up, but if he lost a few, that would be okay.

What could I say to him? "Well, if you don't care about your company's technology, I'm sure not going to."

The first person is still a client. The second one isn't.


My assumption on this blog is always that the reader wishes to grow a business. Grow the number of clients. Grow the income per client. Grow the profit. Grow in professionalism. Grow in skill and ability. Grow to the next level, whatever that is.

I know that's not the case for every SMB consultant.

My opinions may or may not be useful to anyone else. They are intended for an audience that wants to grow a business enough to become wealthy owning a technology consulting company.


I also get a sense that you are not personally sold on the need for (and value of) managed services.

I don't over-sell clients and I don't think I've ever met a decent SMB consultant who does.

Just because someone moves from peer-to-peer to server and domain doesn't mean they've been sold more than they need.

In fact, it's far more common for consultants to under-sell: they assume the client doesn't want to spend money. So they don't sell a server when the client needs one. They let their clients hang on to old technology and under-powered machines that cost more than they save. They leave clients running to fifteen different desktops every time a password changes rather than having a simple domain controller.


So back to the question at hand: how do you get over the hump?

Start by reading the book The Dip by Seth Godin: http://sethgodin.typepad.com/the_dip/.

You're not going over a hump: you're going through a dip!

Recipe for Success
Honest to goodness, here's what I'd do.

First, define what your minimal client looks like.

Second, set your intentions. Convince yourself that you don't have to take every dollar that comes your way.

And turn down every client opportunity that doesn't fit your profile.

You won't be out any money because you'll still get all the money you're getting today.

. . .

But the day that you find a client who meets your criteria -- poof -- you've stepped up. And you have your first managed service client.

It's hard to turn away that money, but the truth is that clients like the ones you have are keeping you down. They're keeping you very busy helping people who could be served perfectly by Best Buy or Fry's.

If you want to get over the hump, simply start looking for clients who are interested and willing to get a server.

The magic question for many people is security. Sell the server as a secure place to store all their data, back it up from one location, and manage all users.

But you can't take on a bunch more clients who look just like your old clients. They're keeping you out of the game!


  1. Thanks for the reply! And your personal experiences of your average client and a potential new client. Most of the people I deal with sound like the latter group (if the server's down for a day or so, that's not so bad). That's 1 part of my hump / dip (I'll get that book, but how do you find the time to read, write and work soooo much!? I can barely keep up!)

    But another part of my thinking is - for that guy you met and for your existing clients - woudl you agree that, typically, the server will run for quite some time without problems. Once the hard drive fills up with logs or there's no UPS and there's a power blip. So you get lots of storage and a UPS. Then how much incremental value does that hundreds of $$ a month of managed services (the watching the server part) get them?

  2. On the question of getting things done, here's another book: www.relaxfocussucceed.com. Get more done in less time with less stress.

    I agree that a new server will run for about 30 days before it needs a checkup. And *managed* systems have fewer problems than unmanaged systems.

    You will see, as your clients grow, that you will find people who have never spent more than a few hundred dollars a year on tech support who become raving fans of managed services.

    Last year they spent $600. This year they spent $9,000. But this year everything in the business worked better and their business made more money.

    When technology becomes a resource to make money, rather than being a pesky expense, then the client is happy to pay for it.


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