Throughout our lives, we’ve been cautioned against trying to reinvent the wheel. Obviously, when it comes to business, there’s never a one-size-fits-all approach to yielding optimal results. But in the case of managed IT, a nuanced discipline that can entail a substantial investment in time and resources (not to mention a long runway leading to profit), taking the word of high-performing organizations who have been there and done that can go a long way toward avoiding the most common, and costly, missteps.
We asked our crackerjack panel of experts—Patrick Layton, vice president, managed IT services for Impact Networking of Lake Forest, Illinois; Casey Lowery, chief operating officer for Applied Imaging of Grand Rapids, Michigan; and Trevor Akervik, COO for Marco of St. Cloud, Minnesota—to offer up their advice to newer managed IT providers or those struggling to attain profitability. Their responses are candid, funny and, best of all, insightful.
Layton: Raise your prices and don’t chase every client. People are afraid that they’re too expensive, but based on what? When we look at a particular deal, how much money is that business currently spending on IT, and is it even in the realm of reality for where that business should be? That will tell you a lot about what your relationship is going to look like if you take them on. If they’re really willing to spend what they should be spending, you can charge what you want to charge and be profitable, and they’ll still be happy. Then you can deliver that higher level of service. With the security issue, you have to. You can’t half-ass IT like all of us used to do. It’s got to be dialed in because if it’s not, you’re getting breached.
I think finding a good security partner or really understanding what security-first means; when a client doesn’t want to have KnowBe4 in their offering or they want antivirus and not next-gen antivirus, you have to educate them. And if you educate them and they still don’t get it, you’re still having a price conversation…that’s not the client you want. Raise your prices and don’t be in a race to the bottom. Know your worth and learn how to look at the business side of who you’re talking to instead of selling IT support and being the IT guy. We sell technology for gain. I want to get you to this level so that I can talk to you about how you can use technology to improve your bottom line, reduce or remove menial data entry-type tasks, or automate or give you some kind of competition against your core competitors. If you’re not using technology at that level, then you’re really behind, and your competition is. You need the foundation to get to that next level. That’s where our differentiators lie, and that’s when you get to have a good effect on clients’ business. So figure out what your ideal client looks like, and why, then cater to that. That’s what we do and we’ve found a lot of success in that.
Akervik: Resist the temptation to undervalue your services. Instead of trying to differentiate your business through cost, focus on providing an excellent value. There are customers who will prefer a good value over a reduced cost; those are the customers you want. Also, resist the temptation to customize a solution for every single client. To quote a TLC lyric, don’t go chasing waterfalls. Stay focused on the core offerings you’ve perfected to give your customers the best overall experience.
Lowery: For a new managed IT provider – it would be to “just start.” It feels like a risk, but you’ve been in business, utilize the culture and everything that your brand offers. Focus on what your brand is built on. Go out and create a different space.
For those that are struggling for profitability, my best advice is to make it feel like it’s one company versus making it feel like separate entities. Build team unity upfront – that’s a big deal. It boils down to bridging the gap and creating trust between the teams. There’s no way to fake that. You can’t do that without working together and working as a team. The smaller you start, the better off you are for profitability. It feels easy to jump in and try to offer everything to everyone. But in that respect, there are too many opportunities to stumble. There are many passive-income opportunities that could be a great starting point – such as fiber or partnering with other companies to offer what they offer. It can be a great point to dip your toe into the world of IT without an expensive undertaking.
I do think you need to be particular about your customers, even more so than you are in the hardware space. If you look at the cost per seat, there are definitely customers that are more expensive to service, because what they’re looking for isn’t an exact match with what we’re seeking. In the copier world, I don’t think there’s quite a disparity between the customers, but there can be on the IT side.
