Like many owners of a mature copier dealership I’ve been trying to find my way to selling managed services. Finding the shortest, most affordable path to success while not neglecting my core business is very challenging. Luckily, my competitors are still pretty much copier dealers, even though they all boast about their MPS expertise. Some even claim that they are an MSP; however, most of their deals still circle around hardware sales. I work with an outside industry specific sales consultant and he wants me to analyze my base and market to establish a target list to help identify which services I could be the most successful with. That seems smart and they want to help guide me, but they also charge for that help! Additionally, once I figure out the target, they want me to select a backend partner for implementation vs. trying to do it in-house. They say I can put my focus on sales and growing managed services revenue vs. taking on the cost burden right away.
Their experience shares that dealers who outsource the backend typically grow sooner because their focus is reduced to selling services with no worries about building and managing the backend. I’m sure they know what they’re talking about, but they just don’t know me; I can pull this off, I know I can!
I heard what he had to say but I think I have a better way to throw me right into the business! Over the years I’ve worked with two smaller I.T. companies and I have approached both of them about buying and merging our companies. They’ve shared their numbers with me and I should be able to absorb them and reduce their overhead enough to make this work! With two inbound companies each containing a very sharp I.T. leader, I’ll be able to immediately offer a redundancy in skillset and expertise.
My consultant shot up a warning flare and asked me to PLEASE slow down, as there are many things to consider! He said, “Even though you both sell technology, becoming an MSP will significantly ramp up your service and risk requirements for each client you provide services for. Also, their clients receive a higher more urgent response, not to mention they go to market a little differently. There are a lot of things we need to restructure and prepare for.”
Just about then the owners of the two I.T. companies started pounding me for answers. Why all of a sudden were they becoming so aggressive? Who knows, but I don’t want to miss this opportunity so I put the deal together. After all, both of them were generating enough revenue to make this deal happen, so I did it. I rolled them both into the fold! Watch out world, here I come!
This was a great deal for us and should put me way ahead of my competition. Overall we have six new inbound employees. I set a meeting with the new guys to let them know that their salaries and benefits are not to be shared with our current employees, as it seems they’re on a higher pay scale. That’s worrisome but their companies have been covering it so we should be OK!
Several weeks now have passed and there is a buzz all around my company like never before! Most of the new guys have adjusted well and everyone is executing fine. I did have one surprise this morning as one of the new guys turned in his resignation. His supervisor told me that we would have to find a replacement right away because he was the only one trained on a special network system that a couple of clients have. The crazy news is that replacing him is going to cost way more than he was costing us before. Wow, I didn’t expect that so soon! Next step, I want to get the two owners together with sales and get our people into those accounts right away to help them through the transition. I also want to review all of the contracts and terms for each of their contracts.
BAM! Like a kick in the gut, I just spent four hours reviewing the not so great news that these guys don’t get long-term contracts with their clients. As a matter of fact, the longest is 12 months, but most of their customers are either on a month-to-month verbal agreement or on small blocks of time agreements. Just then the dark cloud came over me and I started to sweat blood. With all of this added payroll and overhead, what if some of these month-to-month customers decided to use someone else for their I.T.? What if that employee who just left picks up some because of his special talent? OMG!
I didn’t realize it but one of the schools we have a contract with is very close to term and they’re entertaining a larger school district’s offer to cover their network with their I.T. team as they’ve done with two other smaller districts. This could be terrible.
Now one of the ex-owners just came in my office and said the property lease for his old facility has another year on it and they’re not going to release him. He wants to know how I’m going to cover that? Now the lights are going on as to what my consultant was telling me. Over the first 90 days, we lost some 20 percent of the clients for one reason or another. The school decided to leave and go that other direction and now I’m faced with an accountant who’s telling me we’re going in the red on the I.T. side and I’ll have to l
ook at cutting some of the people.
All the while this massive I.T. distraction has really injured my hardware sales. Cash is tight and the pressure is immense. What in the world was I thinking? The warnings of my consultant started hitting me every 30 seconds in my mind as I remembered all of what he had said AND now I’m in it, neck deep.
He shared the differences between our two business models, that our business model includes mostly long term financing and the I.T. companies’ typically don’t. He also shared business projections showing a positive cash flow immediately if I followed his recommendations by choosing a backend partner and not proceeding with the merge. His second projection showed almost to a “T” what I was going through today. Man I wish I had listened!
Does this story sound familiar? Why is it that we try to sell outsourcing to all of our clients without realizing its true value ourselves? MPS and Managed I.T. services greatly help your clients because they can buy expertise, talent and productivity that they don’t possess themselves. Why can’t you, at least in the early stages for the learning curve and ramping up the business, do the same? I personally am in business to provide a nice income for my team and me and I follow that path always. If outsourcing empowers that success and my growth, I’m in!
I believe that as you seek out your future that selling managed services is part of it, but do it smartly with minimal risk and don’t let anything distract your primary survival requirements to keep your business strong. Pride cometh before the fall!
