By Dave Cava and Shawn P. Walsh

TLDR Preview: Many MSP owners failed to recognize that they are not really building a business that can stand on its’ own and have significant value to someone else when they exit. We need to ask ourselves “Am I building a business, or am I the business?” MSPs are very scalable, but the owner needs to have the right mindset and focus on the right things for it to happen. The great news is that anyone can do it!

Full Blog:
When we’re out on the speaking circuit talking to MSP owners about how to scale their MSPs, we often start with an opening line that goes something like this: “We all got into the MSP business the same way; we got an MBA from Wharton or Harvard Business School and after lots of contemplation and long talks with wise advisors, we decide ‘I think I’m going to start an MSP’.”

Everyone laughs.

Because almost none of us get into the business that way. Most of us come from technical backgrounds and enter the business knowing very little about… business. We’re engineers who like building, troubleshooting, and fixing things. We get sick of a bad boss or a dead-end job, and just decided to strike out on our own. We have little idea what “success” looks like, much less how to achieve it. For most of us success is “making as much or more than I was making at that crappy job.”

Most MSP owners are accidental entrepreneurs who are striking out into the world with little business training and not much of a plan. It’s a pretty common scenario that many of us can relate to – the anxious, hopeful, terrifying, exciting beginning. The next part of the story is where the road diverges. As Robert Frost told us, there are two paths, and we cannot travel both. Some of us take “the road less traveled” and it makes all the difference.

The Road Most Traveled
The well-worn road most traveled is the path of self-employment.

Many professionals fall into this category. They are highly trained experts who excel in their chosen field. They are people we trust with some of the most important details of our lives, and we often turn to them for advice on critical matters. If you ask them what they do, they will most likely respond: doctor, lawyer, accountant. They run businesses, but they will typically not refer to themselves as businesspeople.

Skilled tradespeople also fall into the self-employed category—folks like carpenters, plumbers, and electricians. Again, if you ask most of these people what they do for a living, their response will usually be a description of their trade. They know who they are and what their core competency is. They typically don’t tell you that they “own a business,” even though many of them have employees and an office and must manage all aspects of a business. They see those things as an extension of what they need to do to practice their profession or craft.

Self-employment is a great choice for many people. It provides independence and the ability to put their name on a skill they worked damn hard to master. This is a noble thing!

But there is another road.

The Road Less Traveled
The road less traveled is building a business.

Building a business means developing something that can live beyond you and without you. Something that has real value on its own, value you can eventually benefit from, because it is worth something substantial to someone else.

Years ago, Shawn was interviewed by a business magazine for an article about how CEOs describe success. He defined success in business the same way he defined success as a parent.

When we first have children, they are completely dependent on us. In the early stages, if you leave them alone for too long, they’ll die! After a few years, maybe they’ll survive you going out for a while, as long as there is a good babysitter.

At some point, hopefully before they turn 40, your child eventually grows into a fully functional adult. They have gotten some education and life experience. They make reasonably good decisions without the need for your constant advice or input. They stand on their own. And they make enough money to support themselves, ideally enough to put some away. As the parent, you are no longer needed in the same way. (Hopefully, you are wanted…but not needed.)

The same goes for your business.

Your business needs you in the beginning. When you start it, you always need to be around. Chances are, if you’re not, it too will die. Later, hopefully you get some dependable team members, and you get to go away now and then on a vacation or to a conference. Sure, you need to leave behind some money and instructions, and you check in occasionally, but your business is beginning to show the first signs of independence. Eventually, if you are truly successful in building a business, it can stand on its own. It makes enough money to survive and you can even put some away. Once again, you are not needed. Hopefully wanted…but not needed.

The Fork In The Road
The first key to successfully arriving at your desired destination is to identify which road you are currently on. We have known many people who say they “own a business,” but in fact, they are self-employed.

Many MSP founders will tell you they are business owners, but when you ask them about their businesses, you find that their time is spent working on the day-to-day details. They are doing IT work, project management, and account management, and they are usually the entire sales team. When you ask them about strategy, they mention something about getting certified to do something new, deploying a different software product, or trying a new marketing company.

They aren’t talking about a plan to scale. They aren’t talking about intentionally creating value.

This type of business is heavily dependent upon the owner. Some haven’t taken a vacation in years, and there isn’t one coming anytime soon. Even worse, some of these owners spend money on a vacation, tell their family they are taking time off, but then they spend the entire trip squeezing in work. They are not really on vacation; they’re just working in a nicer (and more expensive) place. They are not being present with the ones they love. They are not getting the decompression time that they really need to go back and make an impact when they return.

Been there. Done it. Bought the shirt (literally).

Shawn’s Family Goes To Disney World
I feel bad for those guys because I was that guy. I was in that place early on my entrepreneurial journey. I took my family to Disney World for the first time back in 2000. Our kids were still very young, and they were taking in everything that the Mouse had to offer.

But do you know what I remember most about that trip? I spent almost every day walking around with a cell phone affixed to my ear, trying to find a spot with a good enough cell signal that I could walk clients through tech-support issues.

The fact is, I wasn’t really on vacation. I was just providing help desk services with “It’s a Small World (After All)” playing over and over (and over) in the background. I spent more time holding up my finger to signal to my family that I’d just be one more minute than I did being a part of that fleeting moment of my children’s awe of the Magic Kingdom.

I was self-employed and didn’t realize it.

And many MSP owners, including some who’ve spent decades thinking they were building a business, are in fact self-employed.

We should ask ourselves: “Do I own a business, or am I the business?”

Dave’s Startup: A Little Too Much Sweat Equity
My partner and I used a lot of elbow grease to get Proactive Technologies off the ground. It was great having a highly intelligent, personable, hard-working partner who wasn’t hands-on technical. He was whiteboard brilliant, but keyboard useless. He could design the perfect network, but he couldn’t actually build out a three-piece Lego set. This was helpful in terms of him not getting too into the weeds on day-to-day technical issues. He was never going to configure a server or troubleshoot a firewall or start taking help desk call overflow.

But eventually, he got bogged down doing other non-strategic work: account management, project management, and compliance consulting.

He did most of the sales, and whenever he sold something, he had no one to hand the relationship over to. He became the bridge between most of our clients and the rest of the team. And whenever there was a major issue, he would usually get the call. Everyone had his number, and they didn’t shy away from using it.

Me? My strength/weakness was that I was competent-to-good at just about everything a newer MSP had to do. I was hands-on technical and had a background as a systems administrator. (Now I can’t even work an iPhone or a TV remote, but that’s another story.) I had done bookkeeping and basic business taxes. I had been a service manager with direct reports. I had set up and shut down data centers. I had managed office moves. I had been on a lot of sales calls. I did procurement. Needless to say, my fingers were in EVERYTHING.

Both of us stunk at delegating. It would be an exaggeration to say we built the company solely on our own backs. We had some skilled engineers who did the technical heavy lifting, and everybody worked hard. But in terms of sales, operations, and client management, the two of us did it all for much longer than we should have.

We were business owners, but for a long time we did a really bad job of standing atop the business, developing real strategies, and getting day-to-day business functions off our plates.

It’s Never Too Late
Here’s the great news. If you are not content with being self-employed and want to build an MSP with significant market value, you can do it! There might be some short-term messiness involved as you restructure, but with time and the right mindset, anyone can do it. The first step is to decide you want to, and that you want it badly enough that you are willing for things to change – starting with yourself. 

To scale an MSP successfully, owners must:

1. Develop a Strategic Vision
Define what success looks like for your MSP and create a roadmap to get there. This involves setting long-term goals and identifying the steps needed to achieve them.

2. Implement Systems and Processes
Establish efficient workflows, automate where possible, and create procedures that ensure consistency and quality in service delivery.

3. Build a Strong Team
Hire competent staff, invest in their development, and delegate responsibilities. Having great people is essential to scaling and allows the owner to focus on high-level strategic activities.

4. Focus on Sales and Marketing
Develop a robust sales and marketing strategy to attract new clients and retain existing ones. This includes understanding the target market, positioning the MSP effectively, and building a sales process that can be scaled.

5. Monitor Financial Health
Keep a close eye on the financial metrics of the business. Understand cash flow, profit margins, and other key financial indicators that will inform strategic decisions.

6. Cultivate a Business Mindset
Shift from thinking like an engineer to thinking like a CEO. This involves making decisions that prioritize the health and growth of your MSP. The hardest of these decisions can be resolving to focus on the business, and not just on the things you like doing the most.

7. Plan for the Future
Consider the exit strategy or succession plan for the business. Building a business with value means thinking about its’ future beyond the owner’s direct involvement.

Have you not been approaching your MSP first and foremost as a businessperson? You can change that today. There will be a lot of learning to do and you’ll need discipline and courage, but the only thing that can really hold you back is… you.

Adapted from Chapter 2 of The Pumpkin Plan for Managed Service Providers by Dave Cava and Shawn P. Walsh. Read a chapter for free here: https://encorestrategic.io/#form