Make 2026 the Year Your Business Gives You the Life You Deserve

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Your Business Exists for One Reason: To Help You Fulfill Your Dreams and Desires, and to Build the Life You Deserve

How can I made such a brash statement? Because you're running a small business (by which I mean there are only a few stakeholders and you don't tell shares on the open market). If you work at a big company with shareholders, your job exists to make money for the company, directly or indirectly. Ultimately, it is to provide profit and increased value for the shareholders.

But as a small business owner, you're the stockholder. And, yes, you want to earn money. But you can earn money doing anything, especially in tech. You don't have to deal with clients, employees, vendors, payroll, and all the other chores that come with business ownership.

So, yeah, make money. But that's not why you're self-employed. It's not why your business exists.

Sadly most people cannot tell you what their dreams and desires are. And even those who can are often at a loss to tell you how their business advances that dream.

Way back in 2011, I committed to rebuilding my life and my business so they support each other to help me do three things: write more, speak more, and travel more. And I think those who know me would agree that I did just that. 

I'm not saying it was easy - or that retooling your business to support your dreams will be easy, but it's sure worth a try! Here's something I'd like you to try in 2026: Sit down for fifteen minutes once a month and write down why your business exists and how it helps you fulfill your personal goals.

You can't say you don't have time! I'm talking about fifteen minutes per month. Make it a priority and do it. 

It's actually a trick question. In order to answer that question, you need to know what you want in your personal life. YOU. Not what society says you should want. Not what your parents or your spouse or your friends want. When you dig deep and finally figure out the goals for your life, then you can start figuring out how that can drive the mission of your business.

If you really do this, you'll find that the answer is different every month. It will take some time to dig down deep enough to find out your ultimate goals. But once you do, a whole lot of other things will begin to fall into place. 

You also need to be prepared for two things. First, you might not finish this task in twelve months. More quiet time always helps. And it's okay if you don't have "the" answer twelve months from now. You literally have the rest of your life.

Second, you might come to some startling conclusions. You might decide that some big things in your life don't really fit with the future you want to build. The same is true for operations inside your business. When you view the world from the lens of, "How does this help me fulfill my goals?" you have to be prepared to conclude that it doesn't.

For some things, you will be quite resistant to give up because they're part of who you are. Or who you were. But if they don't move you closer to personal happiness and fulfillment, then it might really be time to change your habits. 

You've probably heard the saying, the best time to fire someone is the first time the thought crosses your mind. The say is true with habits that don't contribute to your personal goals, dreams, and desires.

The best time to drop a bad habit is the first time the thought crosses your mind.

Again, this is not easy. Giving up pieces of how you see yourself - and have seen yourself for decades - is hard work. But it is absolutely worth it.

If you haven't subscribed to my monthly RFS Newsletter, please do. And if you want some guidance on how to accomplish this transformation step by step, I recommend you add Relax Focus Succeed to your reading (or listening) list today.

Have a wonderful 2026. And if you think you could use some help retooling your business to support the life you want to live, email me at karl@karlpalachuk.com.

Best of luck and Happy New Year!

:-) 

Good Owners are Not Necessarily Good Managers (or Employees)

Good Owners are Not Necessarily Good Managers (or Employees)

- Lessons Learned Episode 56

Over the years, I’ve witnessed or been involved in several incidents in which one company bought another and the seller became an employee (usually a manger of some kind) within the purchasing company. One of the most important lessons I’ve learned from this is that someone can be good at owning, managing, and growing a company and not good at managing inside someone else's business. In fact, this is pretty common.

From time to time, you hear people say, “I don’t think I’d be a good employee.” I’ve said it. You may have as well. What we mean is generally that we’re used to being the ultimate decision maker and policy maker. So working on someone else’s goals and following their wishes is something we’re not used to.

In my case, I left my last real job in October of 1995 – just over thirty years ago. And maybe it’s arrogance, but I think I know how to run a business. I barely remember what it’s like to take instructions from someone else. I think that’s pretty common to people who move from owner to employee.

Here are a few more things I’ve learned from experience.

First, somehow, I believe that people who run businesses must be good at certain key activities, such as providing excellent service, managing employees, and making sure all the details are taken care of (even if that just means delegating to the right person).

Unfortunately, I’ve discovered that someone can make good money and grow a business without doing any of those things well. Many people just muddle along, somehow making it work. I think of this as a tradesman’s approach to business. By that I mean that they really love the details of actually doing the work, but they don't enjoy all the details that make a business objectively successful in others' eyes.

Second, it took me a long time (more than ten years) to separate my internal stereotypes of owners and managers. I used to think that managers were on their way up to being owners and owners were focused on all the details that would actually make a good manager. In other words. the Venn diagram had a great deal of overlap.

Over time, I began to draw some very big distinctions. Ultimately, even the greatest, most loyal manager must put the business second. They have to take care of their income, their family, and their careers. And when push comes to shove, they can leave to take another job.

Of course the owner also has to take care of their income, their family, and their career. But the owner does this through the business. In small business, the business exists to fulfill the dreams, desires, and needs of the owner. And “leaving” the business is never a straight forward thing.

All of that simply comes down to: There are certain attitudes and behaviors that will always separate the owner from the manager. Ultimately, the owner has more at stake inside the business.

And that leads us to the third point: Many owners got there without paying attention to all the details. They were never good with the books, with managing people, with being organized, or even with good service. They got by focusing on the job to be done until they grew to the point where they could have over the “details” to someone else.

In other words, they never developed the skills and behaviors you’d expect from a good manager because they didn’t need to. So when they move from owner to employee, they don’t have those skillsets to bring to the new company.

I’ve seen former-owners who had absolutely no attention to detail, no organizational skills, and no good daily habits that would make them a good manager. The result, of course, is that they are not good employees and the new owner is very frustrated with trying to manage someone who just ought to be able to manage themselves.

Oddly enough, the fix is surprisingly easy and almost never undertaken. The former-owner-now-employee needs a thorough onboarding process just the same as any employee. They need to be educated on the vision and culture of the new company. They need to know all the details of “how we do things around” here. And they need to go through a bit of the awkwardness of being the newest hire.

The one thing a former owner should understand very easily is the branding piece. That’s the “how we do things around” bit. After all, they had their way of doing business, and may even have been an attractive purchase based on their processes and procedures. So even though the new company will be different, they bring a certain understanding of why newbie employees just need to “do it our way.”

Action step: If you’re acquiring a former owner as a new employee, you need to plan for it with a serious onboarding process and some training in the skills of a manager. If you have an onboarding process for other employees, start there. If not, build a plan from scratch (and use that as a place to start building onboarding processes for other employees). And then go find some good management training.

Sink or swim is not an effective onboarding process.

Feedback always welcome.

-- -- --

 

Episode 56

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

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

 :-)

2000-2025: The Internet Era and the Dominance of Managed Services

A Look at the First Quarter of This Century in Technology Consulting

Lots of people are talking about the year in review. We’re closing in on the end of the first quarter of the century! Let’s look at that. Of course, in the world of IT consulting there are two clear tracks to look at: The evolution of technology and the evolution of Managed services.

Let’s look at the tech first.

The change has been astonishing. “Millennials” became adults around the turn of the century and now they’re in their 30s and bringing up the next generation. Here are some key changes that affected our industry (and the whole world, really).

In 2000, we had big cell phones but no smart phones. Tablets were just a thing on Star Trek: Next Generation re-runs. And, along those lines, “screens” were monstrous, heavy CRTs that were closer to a television than anything else. Today I have so many screens I don’t know if I can count them. They’re in my car, in my hand, on my picture frame, and on all those tablets and devices lying all over the place.

In 2000, Data storage consisted primarily of 3.5” floppies and CDs or DVDs. There was no “cloud” (although data centers did exist). Today SSD (solid state drives) are standard. We still have spinning discs, but they tend to be the second drive, not the primary. Cloud storage and cloud-based services did not really take off until the 2009-2011 recession when people didn’t want to invest in hardware. Now you have to defend your choice to put a server onsite.

In 2000, desktop computers were running Pentium III processors. With one core, of course, that topped out around 1100 MHz (1.1 GHz). Today you can buy an Intel Core 9 Ultra that has 8 cores at 3.7 GHZ – for about the same price.

Wi-Fi existed but was not common in 2000. Of course it’s everywhere today.

In the early 2000s, we ran Windows XP and Mac OS X, although a lot of people refused to give up their Windows 98 machines!

And while web browsing evolved in the 1990s, it didn’t take off as we know it today until after the dust settled from Internet Bubble Burst.

Quantum Computing – always twenty years from being feasible – started to become a reality in the 2010s, but for specialized purposes only. General purpose QC is . . . just around the corner I’m told.

IOT: In 2000, connecting “things” to the Internet was not a thing. Today, everything is Internet-enabled even if there’s no point to it (I’m thinking about washing machines and household refrigerators). My house is lit by lightbulbs controlled over the Internet so I can read my thermostat connected to the Internet.

AI: In some form, AI has been around since the turn of the 20^th century (and was the result of an evolutionary path that goes back to automated mechanical men in China about 1000 BC). Machine learning took off in the mid 2000’s and came into its own in the 2010s. Virtual assistants (Alexa, Siri, etc.) went from toys to a part of everyday life in the 2010s. AI finally got to the point where it could consistently beat humans at games in the 2010s.

We’re now it what will come to be known as the early years of Generative AI. OpenAI’s GPT3 was announced in 2020 and kept us entertained plagiarizing everything we could think of while stuck at home in the pandemic.

Robots did become a thing! The Roomba started driving around the living room in 2002 and is just now beginning its death throes. Today we can risk our lives by getting into an “autonomous vehicle” almost everywhere in the world. And many people forget: The largest robot you can interact with on a regular basis is an airplane. While they don’t take off on autopilot, they fly around the world on it and, if necessary, land on autopilot.

For IT consultants, this century began with big monitors, “small” floppy discs, and heavy desktop machines. We made a lot of money getting people connected to the Internet, selling businesses their first server, and figuring out how to make money after the installation project was complete.

 

And THAT’s where Managed Services entered the scene.

In 2000, big (enterprise) businesses were used to doing regular maintenance, but it was primarily done in-house. Outsourced maintenance was pricey. (Trust me. I approved the invoices.) For small businesses, there was essentially no maintenance for most companies.

At the time, the small business world was dominated by projects. And, most commonly, projects consisted of installing some really cool system, cashing the check, and walking away. If something broke, and the IT consultant wasn’t in the middle of another project, they fixed it. Looking back, we call this break/fix. At the time it was just computer consulting.

But many companies, including mine, started doing regular monthly maintenance for clients in the 1990’s. So in the 2000s, it was very natural to think about how we could turn that into a flat-fee service and then a recurring revenue model. “Managed Services” evolved as the natural next step. There was a kind of simultaneous invention of the managed service business model.

By the end of the 2010s, Managed Services had become the nearly universal model for service delivery. Even people who claim to only provide service “on demand” tend to sell subscription licenses for RMM, office software, cloud services, backup, and so forth. They provide regular monthly services, billed on a flat fee basis, which includes some level of support. They just don’t call it Managed Service.

Now, in the middle of the 2020’s, as we finish the first quarter of this century, we can see the dawning of the next age. AI is already being used for simple IT “fix-it” jobs. By 2030, an entire layer of client support will simply disappear as it becomes easier and easier to simply ask AI how – followed by asking an agent to DO.

Please don’t spend one second worrying about your future. You won’t lose work unless you insist on doing a job that no longer exists. If you built an entire business on getting people connected to the internet, you would have been out of business a long time ago. The same is true if you refused to put anything in the cloud. AI will happen. It will change your clients and it will change your business. The question is not if, it’s how fast.

You can literally redefine your business right now to grab onto the opportunities brought by the emerging AI. The formula is very simple: 1) Educate yourself. Learn AI. Learn how it can be applied in your client’s businesses. 2) Educate your clients so they see a bright future, not a scary dystopia. 3) Become an AI strategist – a true provider of solutions for your clients.

The AI Solution Provider will spend time learning about the client’s business and figuring out where the problems and holes are. Then that consultant will help the client craft a solution and implement it. And, I assume, collect a monthly fee for maintaining it.

As the next quarter-century arrives, your future is as bright and positive as you are willing to work for.

You need to invest in training, educating yourself, your employees, and your clients. And you need to consciously create a business as an AI Solution Provider. As with everything that takes commitment and effort, no one else can do this for you. Because . . .

Nothing Happens by Itself!

How bright will you make your future?

Local Partners - User Groups Everywhere - Lessons Learned

Local Partners - User Groups Everywhere

Lessons Learned - Episode 55

 

One of the turning points in my career was attending SMB Nation, a conference run by author and community builder Harry Brelsford. I got introduced to a huge group of great people from around the world. They were there to learn about technology (centered on Microsoft’s Small Business Server family) and how to improve their IT business.

At that event, I learned that there were “SBS user groups” all over the world, and that they kept in touch via an online chat-type forum called Yahoo Groups. There was an subset of those folks who were part of a user group leaders forum. It wasn’t exclusive to group leaders, but the conversations were about group management, organizing, getting speakers, and all the details of running a group.

Due to those groups, I started the Sacramento SBS User Group. The first people I collected as members were local consultants who happen to be at Harry’s conference or inside the Yahoo groups. Almost immediately, my friend Bob Nitrio became one of the group leaders. (After about ten years, I stepped aside and Bob became the group president.)

Most of those groups faded away over the years as they did not evolve from SBS to other SMB technologies. Australia had a particularly successful collection of groups in all of their major cities. It was called the SMB IT Professionals. Bob and I asked them if we could use their name for the Sacramento group. They said yes – and said we could use their logo as well. And so the Sacramento SMB IT Professionals group was born. And it still exists today, though much smaller.

The important thing was that all of these groups serendipitously grew up and grew connected to each other very quickly all over the world at the perfect time. By 2005-2006, there were IT user groups in almost every city and county in North America, Europe, and the APAC countries. Why does this matter? For many reasons, some of which were:

This community began a worldwide norm of cooperating with one another and sharing information. In many cases, people from across the country and around the world helped each other solve issues.

These groups became a natural audience for educators and vendors who wanted to reach the emerging “managed service providers.” There was a time when the best, fastest, cheapest way for a vendor to become known in the space was to speak at these groups and become known in the community.

Members of the community became an extended workforce for one another. I have lost count of the number of times we hired, or were hired by, members of the IT user groups.

Eventually, of course, larger gatherings grew up. First it was with specific vendors such as ConnectWise and Autotask (now Kaseya). Then groups formed for specific purposes, such as marketing or “buying” groups that offered members discounted purchasing from vendors. Today there are hundreds of evens per year in this community – fragmented into hundreds of groups rarely defined by geography.

Why are these local groups no longer as successful (with some big exceptions)? Well, here’s my theory. As vendors emerged as a growing force in the industry, they built and supported each other in creating larger events simply so they could meet more partners all at once. At the same time, a large segment of the industry realized that they could meet all the vendors and gain access to all the information by attending only the free events. In this case, “free” means the vendors are paying for it.

Free is a very addictive price. But it makes it very difficult to provide real value to consultants without backing from vendors. These vendors expect stage time and Lucite awards in exchange for their largess. So event organizers get addicted to the vendor sponsorships and attendees become less and less willing to pay for content. With a few exceptions.

The result of all that brings us to where we are today: It is very difficult to find an event that is not dominated by vendors pitching their products instead of providing value. I can’t think of any vendor in our industry who evaluates their sales people on helping IT consultants to be successful. All of them are evaluated on how many partners they signed up and how many licenses they sold.

Fun fact: Back in the days of newspapers, the advertising was laid out first. That determined the number of pages that would be printed and the space left over for news. That space was referred to as the “news hole.”

Events in the IT space have exactly the same thing going on. First, an organizer has to give vendors the speaking slots they paid for, large and small. And what’s left over for truly valuable content that improves consultants’ business processes shrinks each year. Some events have as little as one or two hours of actual educational content in a one or two day event!

As you can guess, I am nostalgic for the local user groups. That’s one reason I’ve taken more than a dozen trips to Australia. But my nostalgia is not just nostalgia for the good old days. It is more about community in which a sincere effort was made to educate partners and help each other to be successful.

In my opinion, vendors should do more to support actual content (rather than sales pitches) and IT Service Providers should be more willing to pay for good information that will actually help their businesses.

Unfortunately, I’m not sure how we get there from here.

 

Feedback always welcome.

-- -- --

 

Episode 55

This Episode is part 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.

 

:-)

Just Released! The Absolutely Unbreakable Rules of IT Service Delivery

The Absolutely Unbreakable Rules of IT Service Delivery -

Free to Community Members

Small Biz Thoughts Technology Community Members - It's finally here! Download your free copy of The Absolutely Unbreakable Rules of IT Service Delivery right now in the community. No charge.

Non-members, join at any level and you get this plus ALL of my other books, checklists, SOPs, training, etc. Or wait until 2026 and buy at fine bookshops everywhere.

Members can grab the book and the downloads here: 

https://www.smallbizthoughts.org/member-content/the-absolutely-unbreakable-rules-of-it-service-delivery/

Everyone else should head to our store and save $5 if you buy before January 1st. https://store.smallbizthoughts.com/product/the-absolutely-unbreakable-rules-of-it-service-delivery/

Why You Should Buy The Absolutely Unbreakable Rules of IT Service Delivery

• Build a culture of success based on helping your whole team to prioritize tasks with a clear understanding the company's mission.

• Learn practical ways to manage your business from the holistic perspective that everything you do is part of your branding. 

• Manage Clients more effectively by acquiring the right clients in the first place and then setting clear boundaries and establish rules for your ongoing relationships.

• Improve cash flow by getting your billing straightened out and practicing financial discipline. 

• Help your employees and client understand why you only sell the right hardware, software, and services, so clients get maximum value and it doesn't cost you an arm and a leg to support it.

• Define your rules for personal growth through continuous learning, daily habits, and building a business that provides personal fulfillment as well as profit.

-- -- -- 

Invest in your company today - or wait until January and pay $5 more.

https://store.smallbizthoughts.com/product/the-absolutely-unbreakable-rules-of-it-service-delivery/

:-)

Building Machines vs. Buying Them

Building Machines vs. Buying Them

 - Lessons Learned, Episode 54

 

When I started my first IT business in 1995, enterprise businesses (really big companies) bought pre-built machines, primarily from big companies like HP and IBM while small companies built their own machines or hired consultants who built machines. So, at the time, it was very easy to move into the business of making machines. These “IBM Clones” were everywhere and really were the standard.

This affected my business in two primary ways. First, I had to buy parts and keep an inventory. Back in the day, motherboards did not include integrated video cards, sound cards, or even network cards. So there were lots of peripherals that had to be bought, kept in inventory, and sold before the prices dropped again and we lost money on our investment.

The second affect was that almost every business we went into was filled with “homemade” machines, including the servers. Every one was unique. Very often, we came across brands we’d never heard of for all the components: Motherboards, SCSI cards, hard drives, and so forth. In many cases, this meant that we did not have drivers, instructions, warranty information, etc. In other words, if anything went wrong, it was likely that we had to sell the client a new one – the brand we carried.

Clients had every right to like something was wrong with this business model. Every tech they talked to wanted to get rid of “the other guy’s stuff” and install their own. That just felt like an unnecessary expense to the client. And in some sense it was unnecessary, except that there really weren’t a lot of options, given the way things worked.

There was a massive, worldwide industry of making and selling IBM clones. So much so that Microsoft included questions about OEM installation of their operating systems in their certification exams. In addition to the parts, you could also buy customized tags so you could easily create your brand of machines.

This model had a few big disadvantages. Inventory was one. Another was that we had to maintain a place to build and test all these machines. We frequently had tens of thousands of dollars’ worth of machines and equipment in our office, which always made me nervous. It also meant that we had to train technicians to build machines properly, which is pretty far from the calling of being a consultant.

Worst of all, the margins on these machines were quite thin and the prices were changing every day. It was extremely common for advertisements to list “CALL” as the price for many components. It was like trading Frozen Concentrated Orange Juice Futures. And if you bought the right components on the wrong day, you were guaranteed to lose money. The worst was memory modules – a circumstance that’s repeating itself today.

Finally, the big problem with these clones was that we might lose all of our profit for a machine if one component (such as a fan) went out and we had to pay a technician by the hour to replace it. Not only were we out for that job, but that tech was not doing something else that did bring in money.

Even at the beginning, I wanted to sell pre-built brand name machines. I had come from a shop full of Compaq/HP machines and that brand was extremely reliable at the time, with spectacular support. But I wasn’t an authorized reseller and they required huge quarterly sales to even consider becoming one.

Eventually, HP brought out a series of pre-configured but customizable machines that we could buy if our distributor was willing to work with us on that relationship. So we started offering these pre-built machines. Yes, they cost more. But nothing ever went wrong. Nothing. When we bought and sold business class computers with a three-year warranty, nothing ever broke. It was like a whole new world.

We made up for the increased cost by not having to carry inventory, not having to train technicians to build machines, and not paying technicians to build machines. And the “nothing ever broke” piece of the equation really allowed us to focus our business back where it belonged: solving client problems rather than selling them stuff.

From time to time, I also sold Lenovo, Toshiba, and other brands. But we really had great experiences with HP and stuck to that, especially for servers.

I honestly believe that the decision to buy rather than build helped us take on bigger clients and bigger projects because we could put a strong focus on client problems and solutions. Our technicians had to learn to dig a little an find the “real” problem when I client said they had a problem. Our technicians became better consultants because they could focus on the problems and the solutions rather than on replacing parts.

Other people have had other experiences, but that was ours.

One time, I had a big (for us) installation of about fifty machines. I certainly didn’t have the staff to do this in a reasonable time frame, so I engaged members of my local SMB IT Professionals group. I gave them machines and checklists and they helped us install dozens of computers. One of these IT Pros was a good friend of mine who had always built his own machines. But that day he saw that installing lots of high quality pre-built machines was incredibly fast and straight forward – primarily because the experience was predictably identical from desktop to desktop.

When that job was over, he told me he’d decided to sell prebuilt machines from then on.

Today, almost no one builds their own machines. The parts are still often a hassle to buy, store, and try to make a profit on. Parts makers (including big names like Intel and Western Digital) change their policies, promotions, and partner programs on a regular basis. Some of them actually swing back and forth between wanting to engage partners and not wanting to engage them. The result is that finding good quality parts that are consistently available at a reasonable prices is just plain difficult. It’s a layer of expense most consultants don’t want to deal with.

Advocates of building their own machines always go on in great detail about how easy it is and how much money they make. But this always sounds like when people start talking about their gambling. Gamblers often tell you that they never lose (an actual impossibility) or that they are ahead for life (a virtual impossibility). In other words, they remember and report the wins. They don’t remember and don’t report the downside.

I’m glad we made the switch pretty early on and I firmly believe that it made our technicians better consultants.

 

What’s your experience?

 

Feedback always welcome.

-- -- --

 

Episode 54

This Episode is part 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.

:-)

M&A plus Strategic Exit Planning - Register for Both and Save $100 right now

Over at IT Service Provider University, we have a GREAT year-end special right now.

Our newest and hottest courses for 2025 are

Mergers & Acquisitions for MSPs - taught by James Kernan

and

Strategic Exit Planning for MSPs - taught by Rayanne Buchianico

Now through the end of the year, you save $100 instantly when you register for both.

That's Ten Hours of education for business owners! Whether you're ready to sell (or buy) now, or you think you might in the next few years, these classes are 100% focused on helping you understand the process - and what you need to do to prepare.

Mergers and Acquisitions for MSPs provides a comprehensive overview of the 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.

Strategic Exit Planning for MSPs is designed to help you build a business buyers want to acquire! Whether you’re looking to sell your MSP in the next year or just want to prepare for long-term options, this five-hour course will walk you through a proven framework to assess, strengthen, and position your business for a high-value exit.

All the details at https://itspu.com

No Coupon Needed

To grab your discount, just head to IT Service Provider University - https://itspu.com - and add both courses to your cart. Then view the cart and you'll see that the discount has been applied. It's that easy.

Register today and save.

OR join the Small Biz Thoughts Technology Community to find out how you can get these courses at no additional charge. Check out the details at https://smallbizthoughts.org. (Community members can log into the Community now to get your discount codes.)

Your Instructors

James Kernan - Instructor, Consultant, Author

For the past 12 years, James has served as a Principal Consultant for Kernan Consulting and provides Coaching, Advising and Mentoring programs to entrepreneurs and leaders. Kernan Consulting offers One on One Coaching, CEO Peer Groups, M&A Consulting and online training programs.

Rayanne Buchianico - Accountant & MSP Business Consultant

Rayanne is a managed service provider and 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.

Don't Miss Out! Offer Ends December 31st - end of day.

:-)

The Absolute Best of My Free Stuff for IT Consultants!

The Best Free Stuff for MSPs and ITSPs – from Small Biz Thoughts

Over the years, we’ve done a number of promotions. Only a few were sales, but lots of them have been free giveaways.

From a marketing perspective, why do we give things away? After all, one of my pieces of advice for successful business owners is, “Never discount or give away you primary product.” So, for example, I don’t think you should give away free months or free hours of service.

For promotional purposes, the best use of promotional giveaways is to gather leads and gain new customers. The second-best use is to reward current clients. These giveaways are good for both of those purposes.

Between Small Biz Thoughts and IT Service Provider University, we have LOTS of giveaways. Feel free to try them all. No matter what’s going on in your business, I am sure you’ll find something useful in these.

Here are the places you can find our freebies right now.

Let’s start with my newsletters:

The Small Biz Thoughts newsletter is a weekly industry resource that is read by over 10,000 MSPs, consultants, ITSPs, VARs, etc. https://smallbizthoughts.com/newsletter/

The Relax Focus Succeed newsletter is a monthly communique focusing on business and personal success based on my RFS philosophy of success without stress. https://relaxfocussucceed.com/newsletter

 

MSPWebinar.com – https://mspwebinar.com is a site dedicated to webinars (live and recorded) that are 100% focused on IT Service Consulting.

• End of Year checklist webinar. Includes a three-page checklist of EOY tasks along with some notes on what to shred and what to keep.

• Client-Facing Training: Introduction to Artificial Intelligence. This is a presentation that you can give to clients and prospects on AI. Includes the slide deck in PPTX format so you can edit for your company.

• Client-Facing Sample Security Training. Another presentation you can give to clients and prospects, this one on security and avoiding ransomware. Includes PPTX file to customize.

… While you’re there, be sure to sign up for my 17^th annual State of the Nation Address for SMB IT Consultants – https://mspwebinar.com.

 

IT Service Provider University

• The Free One-Hour Foundations course is perfect for introducing your entire staff to the Managed Services business model. It’s also a great introduction to the ITSPU site. Free to everyone. https://itspu.com

 

The Small Biz Thoughts Store – https://store.smallbizthoughts.com

– We even have a whole category call “Free” on the main menu. Here are the highlights.

• Karl's FAMOUS 68-Point Checklist - Version 3.0. (simpler version worth keeping)

• Karl’s FAMOUS 68-Point Checklist – Version 4.0. (newer, more robust version with a LOT more detail)

• Business Plan Worksheets

• Karl's Cloud Readiness Checklist - v3.0

• Audio Program: Process Control for the IT Industry. By Manuel Palachuk.

• Audio Program: Taking Your Business to Version 3.0 and Beyond. By Manuel Palachuk.

• Audio Program: Relax Focus Succeed. An Audio Introduction.

• Relax Focus Succeed Sample Chapter – Workaholism.

… and more!

 

And of course all the regular channels of information:

• I will schedule a 20 minute zoom call with any business owner who asks. Just ping me and we’ll set it up.

• The Small Biz Thoughts Blog is just a couple months short of its 20^th Anniversary. It’s chock full of information and opinions. The original blog posts that became Managed Services in a Month are here along with our current series, Lessons Learned.

• YouTube/smallbizthoughts includes over 1,000 videos for IT Service Providers and business owners of all kinds.

• YouTube/RelaxFocusSucceed is the channel for all things “Relax Focus Succeed,” my approach to personal and professional success. After all: a business can’t flourish if the leader is broken.

Of course there’s more free stuff throughout our various web sites. But these resources should keep you busy from now to 2026!

If you want to discuss any of these, or anything else, just contact me at karlpalachuk.com.

 :-)

The Harsh Reality of Hardware Margins

 The Harsh Reality of Hardware Margins - Lessons Learned

Episode 53

As odd as it sounds, hardware markup and margins are a never-ending discussion for IT consultants. Like many, I started out with no idea how to source hardware and software. At least with software, I could find a way to buy it and get it to the client.

I think the two big questions on hardware are 1) Where do you get it, and 2) How do you make money with it?

 

Where Do You Get Hardware?

Like many others, I started out by going to the places I shopped and asking if they had a wholesale program so that I could buy from them, mark it up, and still provide a decent price to the client. But that quickly became a very limiting strategy. *I* shopped at normal stores. They don’t sell high-end printers, real servers, or bulk deliveries of hard drives.

I found out about distributors two ways. First, I asked other consultants. Most were very open and I soon discovered that there weren’t many distributor to choose from. So I just had to set up an account and figure out how to get the products I needed.

Second, I looked at the machines I came across. Back in the old days, a lot of people built their own machines (myself included. See the “Side Note” below). Inside those machines, a lot of parts had stickers on them from regional distributors. This made it easy for a distributor to identify that a questionable piece of equipment came from them. It also let me know who those distributors were.

Bottom line, finding hardware wasn’t hard. The hard part was making money on it!

 

How Do You Make Money on Hardware Sales?

One of the most common statements you’ll hear in the channel is some variation of, “You can’t make money on hardware” or “There’s no margin in hardware.”

That’s simply not true. If you price things so you don’t make a profit, that’s on you.

When I first started with a distributor, it became obvious that I wasn’t going to sell enough to get a good price. My wholesale cost for a printer was more than what the client would pay at Staples or Best Buy. So I asked around.

The majority of consultants I talked to worked hard to make 1% - 3% on hardware. That didn’t seem worth doing to me. A handful claimed to simply double their cost so 50% of the sales price was profit. I never discovered if that was true, but I suspect you wouldn’t sell much at that price. So what’s reasonable?

After much trial and error, I came up with a hardware approach that I still use and recommend. It has three basic elements.

1. Mark up your actual cost for hardware by 25%. This means 20% of the sales price is profit. For example, if your cost is $100, you charge $125. Thus $25 or 20% of the sale price is profit.

In response to your question, yes, this means I often sold hardware for more than the MSRP and more than the client could find elsewhere. There’s nothing wrong with this. In fact, it’s pretty common. If you buy wiper blades or brake pads from the dealership, you’ll pay more than at Autozone or O’Reilly. And the dealership sells lots of parts for one simple reason:

2. We sell the right thing and stand behind it. Clients never have to worry that I’m selling them  the wrong firewall, the wrong workgroup printer, or the wrong desktop PC. You know what happens when clients go out and buy their own stuff. You get a mish-mash of assorted junk, often not business class, and frequently loaded with all kinds of sampleware you have to remove. It’s not the right equipment and it takes more time to install and maintain.

We are also committed to only quoting and selling business class equipment with a three-year warranty (or better). We never sold a single machine with a Celeron processor or an eMachine. Clients could rely on us to only sell the right solution, and that includes the hardware.

Finally,

3. If clients don’t want to buy from us, we don’t worry about it. We highly recommend that they allow us to share a screen and make sure they buy the right equipment out on the open market. No Windows Home edition. No machines with zero level two cache. No routers intended for a home network with very little traffic.

We also have a note in our service agreement that all work has to be done by us. So if the client buys something, messes up the install, and asks us to fix it, they pay full price. We also charge for adds, moves, and changes, even if the client’s on managed service. So the cost of installing junk always costs them money.

 

We all have horror stories about hardware. From not making money to fixing clients’ Frankenstein configurations. These are never low-margin events. And clients either stop asking us to maintain their thrift store collection of junk or they learn that they pay less in the long run and get better equipment if they buy what we ask them to buy, and they buy from us.

 

Side note: Life is much better today that it was fifteen or twenty years ago. Back then, most businesses you went into had collections of home-built machines. When you opened the case (and we used to open cases a LOT), you never knew what you’d find. Brand names you’ve never heard of or no brand name at all, so service and support were impossible.

Yes, I learned brand names of all kings of equipment, but it was obvious that maintaining brand name business class equipment was easier, more profitable for me, and less expensive for the client in the long run.

Ultimately, I wanted us to be consultants, not box-pushers.

 

Feedback always welcome.

-- -- --

 

Episode 53

This Episode is part 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.

 :-)

 

ChannelPro's 2025 Partners in Excellence - A Roundup

I was honored to receive one of ChannelPro's Partner in Excellence awards for 2025. And I'm happy to be in such good company!

ChannelPro put together a great round-up article about the eight honorees for 2025, with information on why they were honored. You can find that here: https://www.channelpronetwork.com/2025/11/25/msp-leadership-awards-2025-partner-in-excellence-honorees/

And if you want to connect on LinkedIn, you can request those connections here:

Annette Taber
Founder and CEO, BoardSWAP
https://www.linkedin.com/in/annettetaber/

Wayne Hunter
CEO, AvTek Solutions
https://www.linkedin.com/in/waynehunteravtek/

MJ Shoer
Chief community officer, GTIA (Global Technology Industry Association)
https://www.linkedin.com/in/mshoer/

Marissa Maldonado
Founder and CEO, Proda Technology
https://www.linkedin.com/in/marissamaldonadoproda/

Lori Tisinai
Founder, Computer Concepts USA/founder, IT Owner’s Compass
https://www.linkedin.com/in/loritisinai/

Dave Cava
Founder, PeopleSharp/co-author, The Pumpkin Plan for MSPs
https://www.linkedin.com/in/dave-cava-peoplesharp/

Dawn Sizer
CEO, 3rd Element Consulting
https://www.linkedin.com/in/dawn-sizer/

Karl W. Palachuk
Founder, Small Biz Thoughts. Founder, National Society of IT Service Providers (NSITSP)
https://www.linkedin.com/in/karlpalachuk/

:-)

We Love Helping People - How Can I Help You?

We Love Helping People. Really.

One of the primary motivations for founding the Small BizThoughts Technology Community is to help people – really help them, not just sell them something.

I got two notes today that really highlight this. One was from an MSP who is a long-time member with just over 100 staff members. He’s grown to the point that the people he hired to watch his company finances are asking him some “next level” questions about pricing and overall cost to deliver services promised.

We are setting up a time to meet. In the meantime, I’m reviewing his offerings and the tool sets that make up a good part of his COGS (cost of goods sold).

Charge for this? Nothing. This is a member and members can grab an hour with me for this kind of help just by asking.

The other note was from someone who just dropped a line to say:

Your model has worked beautifully. We now offer an SDX, NoC and SoC 24/7, could grow by 50% next month, and still only have 3 full-time employees in our support business.

Thanks for all your help!

-- Dan M.

 

When I asked our newest members why they joined, the answers were pretty common. The most recent member just bought an MSP and wants a deep dive into the business model and how services are delivered. She’s happy to dig into the free 5-week courses and explore all the 500+ SOPs inside the community.

The next newest member has been buying a book here and a class there and finally decided to just join because “It’s about time.” He also has some specific challenges and we’re helping him find the resources he needs to address those immediate issues as well as his long-term plan.

 One of my measures of success is that I get more than one of these kinds of messages every week. It’s a wonderful indicator that we’re fulfilling our mission (see screen cap below from https://www.smallbizthoughts.org/about/.

 

With the largest collection of resources of any Community, plus a deep commitment to help you be as successful as possible, I’ll bet YOU could benefit form the Small Biz Thoughts Technology Community. Why not check it out today and begin working right now to make 2026 as successful as possible?

Details at https://www.smallbizthoughts.org/ (scroll down to compare memberships).

 

I hope to see you in the Community!

 :-)

All Hail the Service Manager

All Hail the Service Manager - Lessons Learned, Episode 52

Perhaps the most important person you’ll ever hire in your business is the service manager. And please note that “most important” can mean for the good or for the bad. A good service manager will make the owner’s life and business dramatically better. A bad service manager can destroy the business and make the owner’s life hell.

I don’t think any of that’s a secret. One of the most popular blog posts I’ve ever had is “SOP Friday: Service Manager Roles and Responsibilities.” 

And one of the most popular videos I’ve ever posted (50,000+ views) has the same title. Same title for the video - Service Manager Roles and Responsibilities. Clearly, that search term hits home.

But those are primarily just lists of duties. I learned the real important elements of service management after years of stubbing my toes and making mistakes. I saw horrible managers and a few good ones. The best I ever met was my brother Manuel.

When I founded my consulting company, I brought about fifteen years  of experience managing teams of 20-30 people in various jobs, culminating in management of service delivery across three states and grooming a few bright stars to become managers in their own right. I think my best performance as a service manager was as a contractor at HP. I managed a team of about twenty-five who supported software across 5,000 users and about 7,000 machines.

So when my business grew to the point that I needed someone to step up and take a layer of management off my shoulders, I was lucky to have Manuel working for me. He’s a natural leader and, to be honest, a natural team leader. So he stood out as someone who naturally took on more and more responsibility without being asked.

I have to say: This was not always my impression. It grew on me. The first few years he worked for me he was … shall we say … rough around the edges. But over time, as he elevated himself from technician to the most reliable and dependable technician I had. So as I put a good deal of attention on another company I own, Manuel was officially elevated to the role of service manager (and later would become president of the company). And I promise you, this was not nepotism. 

What makes a great service manager? Well, it’s a combination of many individual roles all bundled into one person. These include

• Leader who inspires
• Disciplinarian
• Parent figure
• Teacher
• Trainer
• Mentor
• Coach
• Customer relationship manager
• Department penny pincher
• Guide
• Counselor 
• Brand ambassador and protector
• Evangelist
• Public relations director
• Friend
• Organizer/Coordinator
• Communications director
• Coordinator of all internal (inter-departmental) communication
• Thought leader
• Executive advisor

... And more

More than anything, the service manager has to balance all these roles and make sure that each of them gets the attention it deserves. This is the greatest juggling act you’ll ever see. And if you have a great service manager, you’ll see it every day.

Note: What you don’t see on this list is Best Technician in the Company. The service manager might be that, but they absolutely do not have to be.

And yet, what do we find? Overwhelmingly, in IT and pretty much every other industry, it’s the best “guru” who gets elevated to the role of service manager. This is due in part to the fact that we put so much emphasis on technical prowess. But being the greatest technical advisor is not necessarily the best person to train new recruits, enforce guidelines around standard operating procedures, or give personal advice to an employee who is struggling with problems outside work.

Over time, the service manager will be completely trusted by the owner to make decisions without consultation and approval from above. They will also be trusted by employees and clients as the authoritative voice of the business. 

Don’t dismiss the importance of this branding and authority piece. As I've mentioned several times over the years, the best managers I had in my IT company were Manuel and Michael. Manuel moved to another coast to help a friend straighten out his business. Michael eventually bought my business. When they worked for me, they were spectacular advocates of my values, vision, and processes. In both cases, they made some big changes when they were in charge of other businesses and drove the vision.

My point is, a truly great manager will be your biggest cheerleader, even if they don’t completely buy your vision. I’ll never forget Manuel’s words when I announced a big change in the business at one point. He said, “I think this is the dumbest idea you’ve ever had, but I’m your brother and I will make it happen if you want me to.” And he did.

Obviously, this means that the service manager also has to be someone who will disagree and discuss things in detail. You can’t have someone who’s afraid of the boss or never willing to challenge decisions.

So with all that, here are the three greatest lessons I've learned about service managers:

1) They are a rare breed. Almost no one will have all the skills needed. That means you have to figure out how to find someone who can take on a very big challenge and grow into that role.

2) Do not elevate someone to service manager based on technical prowess or seniority. Your greatest technician may not have the “soft skills” or commitment to learn all the duties that are required. Because this is a rare breed, there’s an excellent chance that your first or next service manager is not on your team today. Be prepared to find someone who can grow into the role and then help them to do so.

3) Delegate real authority. Even a potentially great manager will be stymied by a boss who gives them a title but no authority. Internally and externally, the service manager has to be the unquestionable decision maker when the owner is not around (and often when he is). And, eventually, the service manager may grow to know more about the operations of the business than the owner. That takes faith and commitment.

Will they make mistakes? Yes. Will you make mistakes? Yes. But fear of mistakes should never be a deterrent. You make mistakes all the time without a service manager.

Feedback welcome.

-- -- -- 

Episode 52

This Episode is part 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 time, right here.

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

:-)

Trying and Loving Outsource Technical Assistance

Outsource Technical Assistance

- Lessons Learned, Episode 51

 

As our business grew and we evolved from a first-generation remote managing system to a newer hosted service, we found ourselves gradually doing something we had not anticipated: Outsourcing a good deal of our tech support! Here’s how it happened and what we learned.

Our first RMM was the now-old school first generation of Kaseya. It required a dedicated onsite server with SQL licenses. It was expensive to buy and expensive to run. Eventually, that server got old. And since the industry had evolved, we decided to look for a hosted alternative. Even if the RMM was going to cost about the same, we’d save the $10K investment in a server. ($10K at the time, not today’s dollars.)

After doing some research and trying several things, we settled on Zenith Infotech (now Continuum). But Kaseya was stable and we were pleased with it’s performance if not the total cost of ownership/investment. So we decided to deploy Zenith agents on all of our servers along with the Kaseya agents. Our goal was to verify that Zenith caught everything Kaseya did.

In last week’s blog post, I talked about peer groups. I walked through my strategy of trying both products side by side before deploying to all the desktops and discovered that several people I respected and trusted were doing the exact same thing. That helped me feel better, and several of us started checking in with one another on a regular basis to verify that our experiences were similar.

And then something happened. I was talking to my Zenith rep and mentioned that we see very few “blue screens” on our servers, so our techs didn’t have much experience dealing with them. That meant that either Manny or I had to address every blue screen. My rep said, “Assign those to us. I promised we’ll find the problem fast. And, if you want, we can fix it fast too.” This was intriguing because Zenith had a lot of engineers who deal with blue screens all the time. They would obviously be faster and analyzing them.

We agreed to try this. We set up a separate “Back office” board in Connectwise where we sent tickets for Zenith. We tried a few things, like sending them blue screens, and they did a good job. Fast and efficient on both the analysis and the fix (unless the fix required hardware, then we threw the ticket back to our primary board).

Gradually, we tried other things. Updating drivers. Verifying updates or scheduled tasks. I think we paid $39 per month preserver, which covered pretty much anything that falls into the category of maintenance. So we added more and more. We do a very thorough monthly maintenance for all clients. (See https://blog.smallbizthoughts.com/2025/01/regular-monthly-maintenance-lessons.html.) We started assigning many of these tasks to Zenith.

We assigned more and more maintenance tasks to Zenith (we called the service “back office”). Eventually, they were able to follow our process and complete everything on the monthly maintenance except change the tape or disc drive for the backup testing. We got a lot of labor for our $39!

We pushed Zenith to the limit. We assigned them service pack installations, which required a few reboots in the early 2000’s. They took a while to complete and needed to be monitored. They also required patience as some servers (such as SBS) might take 45 minutes to reboot with upgrades like this.

The worst thing we assigned to them was a major service pack update an SBS 2003 server, which included major updates to the server itself, SQL, and Exchange. Many, many reboots were required. And here’s the “worst” part: This client was way outside of town on a sod farm and the only Internet they could get at the time was a bonded DSL line rated at about 192Kbps. It was a bit like building a ship in a bottle from halfway around the globe.

We replace all desktop and server RMM agents with just Zenith.

Eventually, we turned over as much as we could to Zenith. We did not let them work directly with clients, but we gave them all the jobs that could be done without talking directly to clients. Above, I talked about how much we use relied on administrative assistants to help us with support (see https://blog.smallbizthoughts.com/2025/10/front-office-staff-and-admins-rule.html). Now we adopted two rules to guide us:

1. If it can be done by an admin instead of a tech, assign it to the admin. Else …

2. If it can be done by Zenith, assign it to Zenith.

 

Great Results, But Enough is Enough – Lessons Learned

Lesson One: Your outsourced tech support is part of your team. Treat them that way. We had to work with Zenith and various technicians for some time to make sure that their processes and documentation were consistent with our requirements. For our part, we committed to providing very detailed requests, with checklists if possible. We treated them with respect and made sure that their technicians liked working with us.

Lesson Two: There are limitations. Unexpectedly, we pushed Zenith so hard that we helped them learn the limits of their service. Eventually, we all agreed on some lines to define what is maintenance and what is not. Their original plan covered “everything.” Well, you know how I feel about all you can eat. It turns out we ate all the profit on our account and more. Then we helped them set reasonable, maintenance-focused limitations.

Lesson Three: Outsourced tech support should be embraced. We treated the Zenith team like an employee. We set standards and expectations, helped them to be successful, and evaluated their performance. More importantly, this “one” employee could do a great deal more work than any other employee.

This was a higher level of leverage than we expected, and it allowed us to take on more clients without hiring as many tech. And our in-house techs were freed from mundane chores so they could focus on interesting work.

That’s just our experience. Your mileage may vary. But don’t write off outsourced help until you’ve tried it.

-- -- --

 

Notes on monthly maintenance:

Here’s my sample Monthly Maintenance Checklist: (less than $5)

https://store.smallbizthoughts.com/product/sop-monthly-maintenance-checklist/

 

… Which is based in part on my FREE 68-point checklists. You should probably look at both version 3 and version 4. Three is very much the core “68-point checklist.” Version Four is much expanded and detailed, and is a thorough checklist, not just the basics.

https://store.smallbizthoughts.com/product/karls-famous-68-point-checklist-version-4/

https://store.smallbizthoughts.com/product/karls-famous-68-point-checklist-version-3-0/

 

-- -- --

 

Episode 51

 This Episode is part of the ongoing Lessons Learned series. For all the information, and an index of Lessons Learned episodes, go to the Lessons Learned Page. https://blog.smallbizthoughts.com/p/lessons-learned-blog-series.html

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

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

 :-)