MSP Success - Volume 1 Issue 9

MSP SUCCESS MS MAGAZINE

Determination That Won’t Quit Barbara Corcoran’s Rise To New York Realty Royalty: How MSPs Can Dominate Sales Like The Queen

Back-To-School Marketing 101: Sell SOLUTIONS, Not Products Market Your MSP As An Essential Tool Customers CAN’T Live Without

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10 Expert Tips For Generating Powerful Sales Letters

IS YOUR MSP M&A READY? Why Every MSP Needs An M&A Readiness Approach

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August/September 2020

MSPSuccessMagazine.com

Volume 1 Issue 9 CONTENTS

4 Letter From The Editor

22 Boost Revenue and Automate Operations With These 5 Hot Tech Tools 23 10 Expert Tips For Generating Powerful Sales Letters 25 Rockefeller Habits Checklist: Tried-And-True Strategies For Lasting Growth

6 Why Every

MSP Needs An M&A Readiness Approach

8 Are You Burning Money At The Door? Surge Your Profits With Expert Guidance From Allison Foelber 10 Don’t Be A Fool: The ONLY Opinion That Matters In Your Marketing Strategy 14 Back-To-School Marketing 101: Sell SOLUTIONS, Not Products

16

Barbara Corcoran On Hiring The BEST Sales Team To Innovate Your MSP

27 Go Big Or Go Home: Expert Quotes To Emulate

The paper used in the production of MSP Success Magazine includes post-con-

sumer waste and is produced using sound environmental practices, waste reduction, and energy-efficient opera - tions. Our paper has FSC certification and passes the SFI Chain-of-Custody Standard. Read more at WFPaperCo.com/sustainability.html.

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LETTER FROM THE EDI TOR

“Risk comes from not knowing what you’re doing.” –Warren Buffett

What does it mean to be entrepreneurial ?

A whole lot of answers can be attributed to that question, but there is really one true answer. Most definitions provided by academic sources associate being an entrepreneur with taking risks. The dictionary describes an entrepre- neur as “a person who organizes and operates a business, taking on greater than normal financial risk.” That’s not entirely true. Yes, entrepreneurs take risks, but they are calculated ones. The other point that’s grossly overlooked is the risk in playing things safe. When I decide to hold a five-city roadshow— an event that costs roughly $600,000 or more to market and host, not to mention hours of prep and management to pull off — I’m certainly taking a risk. The risk is that people won’t register, and even if they do register, what if they don’t show up, don’t buy, or aren’t happy with the content. There is also the risk that sponsors won’t invest, the risk that I’ll get sick or somehow be prevented from getting onstage, or the risk that something totally unforeseen and out of our control (COVID-19, anyone?) could prevent the event from happening or cause it to be a total failure. There’s the risk of doing an enormous amount of work without any profit to show for it. But it’s not as high a risk for me as it would be for someone else because I made sure I knew what I was doing (to Buffett’s point), which is why that single event generates $2.5-plus million in new sales every year, as well as helps to secure new clients, increase engagement with existing clients, and ferret out additional connections and opportunities. It brings future yield and present harvest. The bigger risk for me is to not do the event. Some people think being an entrepreneur is about owning a business. I would argue that this is also not entirely true. We tend to sloppily interchange “business owner” with “entrepreneur,” but they are two different animals. Based on our own research, roughly 45% of all MSPs and “computer” services firms generate under $250,000, and roughly 75%–80% generate less than $1 million. Most of the owners take home only $70,000–$100,000 a year for doing a job they could get paid more for if they were the IT manager of a larger company (and get PTO and other benefits). Unless they are just starting out (in their first three years), they’re a tech with helpers, not an entrepreneur. No true entrepreneur would have a “20 years to a million” plan. That’s not to say they’re bad people. Staying small may very well be exactly the right choice for them. But , they are certainly not entrepreneurs. So back to the opening question: What DOES it mean to be an “entrepreneur”? It means many things. Entrepreneurs are innovators and rule breakers. They look around at what everyone else is doing, not to copy them but to find a better way. Entrepreneurs are obsessed with growth: growing revenue, grow - ing profits, growing their client base, growing the operational stability of the company, and growing their service offering and market share. Entrepreneurs are constantly embracing chaos and making order out of it — biting off more than they can chew and chewing like hell. Entrepreneurs are constantly build- ing systems, people, and processes to do the work consistently and profitably. Entrepreneurs constantly innovate and test new ideas and approaches, price points, marketing methods, products and services, and target markets. A true

Founder and CEO, Technology Marketing Toolkit, Inc.

entrepreneur never leaves well enough alone; they’re constantly pushing the envelope and never satisfied with where they are. That’s why entrepreneurial thinking is what solves the world’s biggest problems and provides solutions and breakthroughs that make the world a better place for everyone. Years ago, there was a definition on Wikipedia that answered the question “What is an entrepreneur?” It has since been changed. The definition back then was “A person that acts as an intermediary between labor and capital for profit.” Not one who labors for capital — that’s an employee. Not someone who takes risk for profit. The bottom line is that being an entrepreneur is a MINDSET . It’s a way of approaching every problem and every opportunity — a way of thinking about money, clients, employees, and the purpose of your business. Many call themselves “entrepreneurs,” but they are timid and fearful, overly cautious about inno - vating and trying anything new, and focused on doing the work instead of growing the business. Therefore, they constantly choose to “labor for capital” instead of being the intermediary for profit. That approach is based on either a complete lack of ambition or fear, uncertainty, and self-doubt. Everyone wants to be financially free, but not too many are will - ing to do what it takes to get there. Taking huge risks is not the way. It is better to take an educated, strategic, and systematic approach, just like an entrepreneur. n

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ON THE HOR I ZON

GETTING YOUR MSP M & A READY Whether You See M&A Activity As Part Of Your Growth Plan Or Your Eventual Exit

There’s no denying the rising consolidation trend in the world of MSPs. If you follow channel news outlets, you’ll hear about a new deal happening nearly every week. In fact, in 2019, Channel Futures found that roughly half of all MSPs were at least consider - ing a merger or acquisition in the next 12–24 months. So, whether you are planning to grow your MSP by way of a merger or acqui - sition, are considering how to make your eventual exit, or simply want to ensure that you’re operating your business in a way that strategically maximizes the value of your business, now is the time

to get your MSP ready for mergers and acquisitions (M&A). “Every growing industry that’s fragmented eventually starts to consolidate,” explains Jim Lippie, senior vice president of MSP partner development at Kaseya. Lippie has an extensive history with MSP development and M&As, including time as the CEO of an MSP purchased by Staples in 2006, the first MSP acquisition in the space to a Fortune 100 company. “Take a look at the office products industry for example — once upon a time, every town had an independent office products store, but when Staples launched in 1986 and then OfficeMax in 1988, they lapped up small stationary stores around the country, and today, they’ve consolidated the market. Book - stores, hardware stores, and even pet supply stores have all gone much the same way. “At this point, there are well over 50,000 MSPs worldwide. The vast majority of those MSPs are between 5–15 employees and produce $1–$3 million in revenue, and then there are a few dozen MSPs that have demonstrated more significant benefits of scale, which creates a fertile environment for consolidation, which is one of the reasons we have seen an influx of private equity investment into the space over the last few years — and that trend will only accelerate in the coming years,” says Lippie. With that understanding, every MSP should determine how they’re going to position their business. Does an MSP acquire additional MSPs to develop scale, sell to those looking for quality businesses, merge with other MSPs to also gain the benefits of scale, or become so vertically specialized that the bigger guys can’t touch you in your area of expertise? In any case, it’s going to be critical for every MSP to select a path, develop a strategy, and execute a plan. To Buy Or To Sell? The reality is that the paths to preparedness for buying and selling look much the same. There are key foundational requirements to follow that make MSPs either desirable to acquire or put them in a position to be able to acquire other MSPs. Even though the roads look similar, size is often a good indicator of which direction you should lean. Where your MSP is right now will influence your path quite a bit, but whichever

Close More Business Offer More Services Keep More Customers HELPINGMSPS TO MORE

way you go, the road to get there doesn’t fundamentally change. Clear operational readiness will either make you attractive to someone looking to acquire or stable enough to acquire others yourself. A quality business means creating enterprise value, and the core of that value comes from knowing your numbers and having a great culture. Know Your Numbers No matter what the business is, every time you watch an episode of “Shark Tank,” what’s the first thing you always hear the Sharks ask the entrepreneurs? “What are your numbers?” If they don’t know them, the investors won’t know if it’s a business worth getting into. If you don’t know your numbers, you can’t know if you’re moving backward or forward. Opera - tional metrics, sales, marketing, and finance are what help you make decisions. They are fundamentals that need to be at the forefront of every business. There are a lot of metrics to know, and it might not be the most exciting part of the job, but it is one of the most important parts of any M&A deal. Know all the numbers, even the seemingly obscure ones, such as days outstanding, employee utilization, service capacity, customer satisfaction, number of tickets closed — these are all import - ant because you can’t manage what you don’t measure. Have A Great Culture Your management team is the biggest indicator of how healthy your company’s culture is, and culture displays the personality of your business. If you’re looking to acquire another MSP, you have to make sure it’s the right fit. Money matters, but if personality drags operations down, profits can’t fix it. You achieve great management and, subsequently, great culture by having people in positions that work on your business, not just in your business. Your team members should be thinking about how to help the company grow rather than just mindlessly putting out everyday fires. Foster a culture and personality that wants great things for the business. You’ll be a standout for any MSP looking to acquire you, and you’ll recognize kindred personality in those who you’re looking to acquire.

It All Points To Profit

Everything is a driver to profit. Every MSP wants to drive as much to the bottom line as possible, and operational readiness is what fuels that action. Ultimately, when you look at your numbers and culture, you’re looking at your valuation, and that valuation points directly to how well your MSP builds profit. “By and large, creating profit means making your employees more efficient, and you make employees more efficient with a platform that revolves around automation,” says Lippie. “Automation allows you to service a lot more customers with a lot less resources. When tech - nicians bounce around between 10 different applications to tackle 10 different activities in a day, they’re wasting time, which means they’re not maximizing profit.” Consolidating everything into one platform that allows technicians to handle all those activities in one place makes them more efficient and creates more profit. Platform Is King Having a comprehensive IT management platform in place is the entire backbone of your services, and that’s why so much recent M&A activity has centered around platform. The industry has gravitated toward comprehensive IT infrastructure platforms that offer a range of monitoring and management, automation, security, and >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28

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