If you’re not in business to make a lot of money, build wealth, and secure financial freedom for yourself and your family, why even bother? Think about it. With the current talent shortage, you could easily land a high-paying job, enjoy paid vacations, and avoid half the headaches you face as a business owner. So why stick it out? Because there’s a fortune to be made in running your MSP the right way.
Subscribe to the TMT YouTube channel here
The Real Cost Of Running An MSP
Running a Managed Service Provider (MSP) business is far from a walk in the park. While the allure of being your own boss and the potential for significant financial rewards are enticing, the reality often involves substantial costs—both monetary and personal. When I talk to MSP owners, I always stress the importance of understanding these costs fully. If not managed correctly, they can quickly erode the very freedoms and financial benefits that drew you to starting your own business in the first place.
Financial Investments: Starting and scaling an MSP requires significant capital. From purchasing the right tools and technologies to investing in a robust cybersecurity framework, the financial outlay can be considerable. Additionally, as the talent shortage continues to bite, the cost of hiring and retaining skilled technicians is rising. The salary expectations are higher than ever, and as I’ve seen with clients like Will Nobles, sometimes you just can’t match what the big players offer.
Operational Overheads: Beyond initial investments, the day-to-day costs of running an MSP can stack up. From licensing fees for various technologies to overheads like office space or insurance, these recurring costs demand consistent revenue generation. Without a solid customer base and efficient service delivery, these overheads can become a financial drain.
Time And Effort: The non-financial costs are just as impactful. The time commitment required to manage client needs, resolve issues, and stay ahead of technology trends is enormous. This often means long hours and sacrificed personal time—something many business owners underestimate.
Risk And Stress: Finally, there’s the inherent risk involved. Whether it’s financial risk from business loans, operational risks from data breaches, or the personal risk of burnout, running an MSP involves navigating a constant stream of challenges that can take a toll on your mental and physical health.
From Pain To Gain
Despite these challenges, there are effective strategies to ensure your MSP not only survives but thrives, transforming pain points into gains. One method I often discuss is what I humorously call the “pain-in-the-ass tax.” This strategy involves charging difficult clients a premium to compensate for the extra hassle they generate. It’s not just about making extra money—it’s about asserting the value of your services and your time.
Value Your Time: Every MSP owner needs to recognize the value of their time. If a client is particularly demanding, requires more support than agreed upon, or is consistently difficult, adjusting your pricing model to reflect this ensures that your engagement remains profitable. This strategy also helps in setting clear boundaries with clients.
Set Clear Expectations: It’s crucial to communicate clearly and assertively with clients from the outset. Set expectations about what your services cover and what constitutes additional work that will be charged extra. This clarity helps in managing client relationships effectively and ensures that they value your work.
Choose Your Clients Wisely: Not every potential client is worth taking on. Evaluating clients based on not only their potential profitability but also how they fit with your business model and culture can save you many headaches. Sometimes, saying no to a bad fit is more profitable in the long run.
Implement Scalable Solutions: To handle growth without proportional increases in stress and overhead, implement scalable solutions and automate processes wherever possible. This not only improves efficiency but also allows you to handle more clients with the same resources.
Transforming these pain points into gains isn’t just about making more money—it’s about creating a sustainable business model that allows you to enjoy the freedoms and financial rewards of being an MSP owner. By strategically navigating these challenges, you position your MSP not just to survive, but to prosper.
What Does A R.E.A.L Business Look Like?
A R.E.A.L business is Rewarding, Easy, Attractive, and Lucrative. Contrast that with a TECH business, which is Tedious, Exhausting, Chaotic, and Hard. When I first went independent in 2002, it took me two years to carve out my niche and develop a product that would serve it. Initially, MSPs were still evolving from VARs (Value-Added Resellers), and many relied solely on referrals with hardly any marketing systems in place. My goal? To create a marketing system that was so effective it would turn my clients into lifelong partners.
The Entrepreneur vs. The Tech With Helpers
The transformation from a tech-focused provider to a market-driven entrepreneur is not automatic. It requires a shift in mindset. Most of the industry consists of techs with helpers—the first helper often being a spouse handling the admin tasks unpaid. This model might start as a necessity but can become a trap, stalling the business’s growth and profitability.
An entrepreneur, on the other hand, acts as an intermediary between capital and labor for profit. This is about designing and growing a business, not just running one. Embracing this role means developing skills that go beyond technical expertise; it involves strategic thinking, market understanding, and the pursuit of profit.
Mindset And Behavior: The Keys To Success
At our rapid implementation workshops, I emphasize transformation. It’s about turning behaviors that focus solely on technical tasks to those that drive business growth. Recognize the Pareto Principle: 80% of your outcomes come from 20% of your inputs. This isn’t just about effort; it’s about strategic effort.
We are living in an era where starting a business is easier than ever, thanks to technology. Yet, the disparity in success remains vast. It’s not enough to be technically proficient; you need to be strategically astute.
Wake Up To Your Potential
Decide today: Will you continue as a tech with helpers, or will you evolve into a true entrepreneur? It’s your life, your business. I’m not here to sugarcoat the truth—I’m here to challenge you to aspire for more.
Are you ready to transform your business? If you want to not just survive but thrive, then it’s time to embrace a real entrepreneurial mindset. Make the decision to grow, not just go through the motions. Let’s get richer, not just busier. Remember, the path to wealth and freedom in your business starts with you.
