Thriving as a Solo MSP (EP 896)

Hello friends, Uncle Marv here with another episode of the IIT Business Podcast. Today's show is basically going to be me answering questions and let me establish what I mean by that. So for about the last month or so, ever since I did the show with Paco and we talked about the MSP Owners Group, I started that show off by talking about a couple of situations of me, the summer of Marv, and how I was dealing with some prospect opportunities and how the business was going, and I have received probably five or six different versions of the same question as well as discussions with some texts over the phone, peer group discussions, and it all boiled around the subject of something to the effect of, Marv, I've heard you mention running your business solo at times and even comparing yourself to larger teams.

Can you share your insights on how you manage not just to survive but actually profit as a one-person shop? Questions about when a prospect mentions they're paying less with another IT company, how do you respond? How do you justify your rates? Do you ever match the lower rates that other providers charge? We had discussions on our stack and, you know, how much would you spend to save time doing this or how much would you spend to save time doing that? All these discussions and questions have kind of come up since then, and I was thinking over the years I've probably made several comments and several different attempts to answer that question, and I probably haven't ever done it in a full and comprehensive way, so I'm going to start to try to do that here. But I'm not going to do it all in this one show because as I sit down to, you know, kind of jot together notes of what I'm going to say, jots about how I do my billing and all of that, I started to realize the details when it comes to the numbers and stuff, yes, that matters to a point, but there's something that has to start before then. There's something that has to, you know, be taken care of before you even look at the numbers.

And so today's show, I want to give a little bit of a history as to how I got to where I am, why I do the things that I do, and hopefully that will help at least lay the groundwork to my philosophy and how I bill and stuff, because there were a couple of comments that I was talking with people. One of the conversations was about, well, you know, we want to buy this tool and it's going to cost me 150 bucks or 200 bucks or whatever, and they asked me, you know, why I wasn't using that. And I said, well, once I get past the initial setup, it probably takes me 15 minutes a month to do this because of, I'm trying not to tell you the process because I don't want to get into that discussion.

But the bottom line is the tasks that they were talking about doing, I probably do once a month maybe. And in my mind, I'm like, why am I going to spend 150 or 200 bucks to save 15 minutes and then go through a hassle of the onboarding and the learning and the changing of processes and stuff. You know, by the time I go through all that, I will have spent more time converting to this tool than I would have spent all year just doing what I do.

So that got me to thinking about how do I get to where I am in my philosophy. And of course, the one thing I should probably say is this philosophy works for me, where I am in my business, the size of my business. So I'm not saying that this is going to work for you.

If you've got a shop with 10 to 15 techs, you probably shouldn't even listen to what I'm saying. If you're a solo tech in a different part of the country that is able to afford certain rates, yeah, my stuff probably won't apply. If you're in a place where you can't charge what I'm charging, again, probably not going to apply.

But I'm hoping that I can talk about my philosophy in a way that you can translate it to work for you. Now, I should probably start off by saying that one of the things that made me appreciate where I am is last week when I was sitting with a client. And I'm going to be a little bit careful here because I do know now that my clients listen to the show.

So I have to be a little bit careful, but I'm still going to talk about my clients. I'm still going to talk about Junior. But in this case, I want to be respectful because this is a client that I actually met back in 2008.

And when I met with them, I actually didn't get the first job with them. I actually got turned away. And I found out that the person that got the job was a salesperson at Staples.

And I did not know that until last week. So it was interesting hearing that. But what really grabbed me was we were talking about this attorney leaving the firm after all this time.

He's retiring. And his last day is this week. And he made the comment to me.

It was me. It was me, his office manager in an office. And he made the comment of saying that, Marv, one of the things that I told them with my leaving, one of the worst things they can do is get rid of you.

And he had a couple of other things that, you know, he had a list of things of, you know, in order for this firm to keep operating and functioning, you know, you need to do this. You need to keep this. You need to do that.

And the fact that he mentioned keeping me was something that I thought after all this time, from the first time of meeting them, thinking that, yeah, I'm not getting them as a client, to now them telling me, yeah, you need to ride with us for as long as you can. I had just finished an efficiency meeting, that's the best way I could probably describe it, where they're looking at all of their in-house, you know, processes. They're looking at, you know, possibly changing software or not.

They're looking at growing the business. They're looking at a lot of different things. And they thought it was important that I be there to sit with them through this process.

And it's, I don't know how to describe it without sounding mushier or whatever. All the cliché stuff that you hear, you know, oh, it humbled me. I don't know.

I don't know which phrase works, but you insert your phrase, and I'm sure that you'll understand the, when he said that, it really meant something to me. But it was weird going through that process, this journey with them since 2008. And I've mentioned that my clients, most of my clients have stayed with me for years.

I still have one of my original clients from, I shouldn't say original, because my clients in 1997 were all ones that I took from the store. But 1998 was probably the first year that I took on, you know, new businesses as clients. And I still have a client from 1998.

He's about to retire, but still with me. And anytime we have had a major discussion about stuff, you know, he looks at me and says, Marv, what am I going to do? I trust you. Do what you think.

Those are discussions that, when I started doing this, I didn't think I would ever be in that position. But when it comes to talking about, you know, how do you thrive? How do you survive? How do you make money and profit? I think a lot of it has to do with the way that I wanted them to perceive me. And this is where I'm going to go ahead and take the first left turn.

I think we have an image problem in our industry to a degree where there are some techs and some parts of the tech sector that get a lot of praise, a lot of respect. And then there are those of us that are in the service industry that are perceived as just another technician. You're just an IT guy or gal.

You do the same things. My kid can do that. Or, you know, IT is just a business expense.

It doesn't make me money. And we struggle with that professionalism. We struggle with being respected by business owners who never have time to sit with us in a meeting.

We're always being handed off to their office manager or to their HR person. Or they have to go get advice from the tech that works at another company that they respect. And it's almost as if we have to be validated by somebody else before they will accept what we do.

And that was something where I didn't want to feel like that. And I know that a lot of it for me started with presenting myself as a business owner talking to another business owner. And I don't want to get anybody upset here, but, you know, establishing myself as a business, making myself an S-Corp, registering my business license with my city and county, getting my state, you know, resale license, getting insurance.

All of those things, to some degree, helps legitimize me when I talk to business owners. And I even just had one the other day where they were talking to me about a previous tech and talking about, you know, the way that they presented themselves. And, you know, they were like, oh, this person probably doesn't have insurance.

You have insurance, right? And I'm like, yeah. And they're like, oh, you do. And they were surprised in this day and age that a tech would have insurance.

I think a lot of us, and again, I try not to upset people here, but there are a lot of people that obviously don't need insurance. You don't have to have that, you know, general liability, errors and omissions, you know, cyber insurance. But a lot of us do.

And we don't. I guess is the best way to describe it. We should have things that we don't.

We don't want to register as a business. We don't want to look like a business. We don't want to act like a business.

But then we want business owners to respect us. You can't have it both ways. Probably the one fault that I have in my argument is that, you know, I've got this office here that I'm overspending, bottom line.

But I have always wanted to have a space separate from my home that when people needed to come see me, they saw me in an office and not in a home. That was something that was important to me. I think that started my philosophy on how I'm presenting myself to my clients.

Now, granted, that probably didn't get me more jobs than if I had not done that. But the ones that I did get, I think it made a big difference. Now the second part to that image issue that I think we have as an industry is something that there are groups in our industry that are really working to change that.

We have groups that are trying to, you know, standardize proper certifications. We have groups that are trying to make us more professional when it comes to standards and how, you know, IT professionals and managed service providers are supposed to act and be. You know, we've talked in this industry about best practices over the years, but yet there's not really a standard set of best practices.

Best practices, a lot of times, basically comes down to which vendor says they're the best. Okay, let me shift gears here. I should edit that, but I'm not.

We have this perception. We have this problem with a non-unified look to the rest of the world. Managed service providers still get basically lumped into just your regular IT guy, and as much as managed service providers try to separate themselves from trunk slammers and pizza techs and stuff, in a lot of ways it hasn't seemed to work.

In a lot of ways it has. There are businesses that are understanding of that and are very legit, and they want to have a person that is, you know, certified. They want to partner with somebody that, you know, works with, you know, the regular vendors and the channels that they know and recognize.

They want to know that there's somebody standing behind them when it comes to their business. One of the things that I don't think we talk about enough is the fact that, yes, we're trying to create this professional image of the industry, and I just heard somebody the other day talking about, you know, why your pricing sucks, and they talked about the fact that the, you know, MSP isn't an industry, but then that was it. And it's one of these things where, listen, and I'm not trying to put myself in a position where I'm going to help anybody do this, but when we look at some of the other professions or even blue-collar jobs that business owners do respect, they respect electricians.

They respect plumbers. And why is that? Well, they do it because there is a level of professionalism that they know that they have. Electricians and plumbers are licensed.

They have to go through training to get to a certain level. There is a thing called a master electrician. Contractors have to be licensed.

Now, you can also say, Marv, there are a lot of crappy contractors. There are a lot of ridiculously crappy plumbers. Yes, there are.

But the bottom line is business owners understand what they're supposed to get, and they expect it, and they are willing to pay for it. Now, they may complain if they get a crappy one, but you know what? They're going to go right back to the well and go to Thumbtack or Angie's List or find who are you using for electronics, and they're going to ask those questions. Are you licensed? Are you certified? All of that stuff.

And they don't complain about the prices like they do with us. Now, a lot of that has to do with the fact of when you get to those types of levels in an industry, auto mechanics, auto mechanics make a lot of money because they all have this ASE certified thing on their wall. They have the rates up there, and the rates are $180 an hour, and people don't complain about that.

But a tech tries to charge $100 an hour for 15 minutes of work, and they balk at us. So many of us don't fight back, and we're like, okay, okay. That's what's hurting us as an industry.

And that's one of the reasons why when I started to learn from some people about how to bill and how to charge, a lot of it came from attorney friends who said, Marv, know your worth, publish your rate, and don't back down. If they value you and they value your work, they'll pay it. And I got that information, that piece of advice, I think it was 2009, somewhere around there, when I was afraid to raise my rates of my largest client because they actually told me, we can't afford to pay you more.

Now, I know what they were making. And those guys were spending more money on a weekend dinner than they were paying me. And it wasn't that they couldn't afford it, it's that they didn't value what I was bringing to the table.

And it took that attorney giving me that advice where I just literally wrote down on a piece of paper a letter to the managing partner, walked it into him, and said, this is what we're going to be doing going forward. Expecting him to throw me out or say that he'll find somebody cheaper, but actually he didn't. He did, of course, make a comment about, Marv, I gotta eat.

And I replied back, I do too. And that relationship went on for many, many years. So it took those types of things to get me to where we are.

So valuing your worth. And now granted, you have to know what others are charging in your area that are comparable to the work that you do. You just simply can't raise your rate just because somebody down the street is unless you're doing the same type of work.

I got away with raising rates a lot of times because I had tools that other companies and other techs didn't have. I had the Flutes and the Net Allies before a lot of people did here. And people understood that those tools cost a lot of money.

Well, Marv must be doing something right if he can afford those tools. Having all of that stuff was a big part of it. The other part of that where I mentioned that they only see IT as an expense and doesn't make them money.

It took me flipping that phrase around to get them to understand that. And I'm like, yeah, it does cost you money. It is a line item.

You just don't like spending more than you want. But is it saving you time? Is it saving you money? And it took a little time to understand how to say that in a way that they understood. So the first time that I came across that situation was a law firm that they were running a peer network of about 40 workstations.

And before I came along, they had a tech working with them part time. And they were down almost every day. And this was a law firm with, I think it was three offices.

Two were, no, none of them were connected. Yeah, it was three offices, but they weren't connected yet. And the main office here in Fort Lauderdale had about 40 stations to it in a peer-to-peer network.

And the tech was supposed to be driving to Orlando to go visit that office. But yet, halfway to Orlando, he'd have to come back because something wasn't working in the main office. And when I got referred to this, I came and evaluated their network, said they needed a server.

And I don't know what happened because they never got a server. They called me back a few months later to bring me in. And they still hadn't got the server.

And I said, well, you're down every day. How much is that costing you? And the attorney did the math, and I don't know how he did the math. I don't know how many people he had total in the firm because in that office, it was only 40.

But between the three offices, it basically came down to 10 grand an hour that they would lose when they were down. And it was pretty much, maybe not an hour, but maybe a day because everything would go down. And if it was before lunch, he'd have to send everybody to lunch.

And then they'd come back. And if they still weren't up, they still had to wait. So it was probably two hours that they were down.

And he realized that was costing him 10 grand. And I was like, so how often are you down? Several, a few days a week. So I said, a server costs less than that 10 grand, and you'll be up the rest of the day.

And that's how I was able to give him that perceived value because it basically came down to, and I remember this calculation, I said, if it's costing you 10 grand a day to be down, that's 50 grand a week. And if you extrapolate that out, that's 2 million a year, and you don't want to spend 7 grand. So he took that, and he used that over my head any time there was an issue.

If the mail server was down, my, it cost me 10 grand. But I was able to flip the script when it came to understanding the value of IT. It's not about, you know, how much is it on that line item.

It's what can it do for your operational efficiency. You know, people hate downtime, but I'm telling you, downtime is worse than spending the money to make sure you don't go down. I hope I said that right.

Spending money in the proper ways, you know, reduces that risk. You know, if you keep your stuff maintained, you just stop using old computers. That was another thing that we figured out, you know, people with a computer over X number of years, and it was taking them, you know, half an hour to do a task that should have taken them five minutes, when they can see, you know, the effectiveness of one secretary who's, you know, blowing through her stuff.

And if the only difference is a computer, you get them the newer computer because they can save time, which means they can bill more, which means they can do all of that stuff. So it changed the thinking of their IT to where, yeah, IT may have cost 2% of their line item, but yet it probably saved them 10% somewhere else. Those are the types of things that I went through with trying to establish myself as a sole proprietor, as a solo tech, you know, being able to put myself in a position where I could come in after another professional, another company, you know, claiming that they were Microsoft certified and I am too.

But knowing what you're doing, knowing your worth, and being able to stand firm with your client and not backing down is probably the starting place, you know, of where I'm at. Okay, I went much longer with that than I thought I would. So let me do this.

That was, that was supposed to be like 10 minutes. Already here. I do want to get more into, because there was another part of all of those questions which basically came down to, can you break down how your billing method of per person and per device compares to other IT providers? So I want to do that, but I'm going to have to do that in another show here.

I want to go back and answer the questions that, you know, when a prospect mentions they're paying less, how do you respond or justify your rates? Do you ever match the lower rates? So the short answer is I do not match lower rates. I got away from that a long time ago when I realized that, you know, lowering rates to get the job does two things. One is it incentivizes the customer to always pay the cheapest price.

That was a mistake that I did many times, and I think we do all the time. But I think the other part to that is that I don't lower my rates because I know how much it's going to cost for me to do the job. That's where you knowing your cost, and it doesn't always boil down to a, you know, per hour cost, you know, to support somebody, or even a per end point cost to support somebody.

Each client has a different rate, and you've got to be able to either have a rate that covers all clients, all scenarios, or devise your billing in a plan that you can do a base rate that works well for everybody, but then either add on or modify based on the clients that fall outside of what your standard stack is. I think that's one of the other things that we've had a problem with in the industry is we're too busy trying to standardize our stack, and we can't because we can't standardize our clients. All clients are different.

Even law firms that I've worked with, you know, are different. Even if they're doing the same sort of work, whether it's, you know, plaintiff's work, insurance events, corporate law, property law, closings, real estate, they're all different. And there's some things we can standardize.

We can standardize a line of products, whether it's Dell or HP or firewalls. I mean, yeah, we can kind of standardize that, but we've got to be able to bend when it comes up. Now, the person asked me specifically about the fact that I had the opportunity for the eight-person office that was in Miami, and we had a discovery phone call, and she, you know, didn't want to hear, you know, me asking questions about, you know, tell me about your network, tell me what you want.

All she was about is, yeah, our guy's not taking care of us, and we're spending about $340 a month. And I said, well, are you willing to spend more? And she said, no. So I wasn't going to argue with her because I already knew that if she told me that, that was not going to be enough.

So I knew that $340 for eight people in terms of support wasn't going to work. In fact, the reason I know that is because I know how much it is for me just to get my stuff in the door. And just my, all right, I'll go ahead and say this part, and then I'll explain it more later.

So I basically have four parts to my invoice, or actually five. And I know that I've, over the year, the last year or so, I've just been narrowing it down. I charge per device and per user.

That's not exactly true. So here's how I bill. I bill per site.

That's one line item. I bill per server. I charge per device, per computer or laptop.

And I charge per Active Directory user because all my clients don't have Active Directory servers. So those are the four cores. And then basically everything outside of that is an add-on, whether it's, you know, the actual backup storage, whether it's, you know, Activetrak, whether it's TruGrid, in some cases, all of that stuff is considered an add-on.

But my four cores are per site, per server, per user, and per computer. And I know what my rates are for each of those. And my rate for that client that was eight users and 340, what was that? So that's just 40-something bucks, you know, per person.

Can't even do it. My per computer cost alone is more than that, let alone adding on the per user, the site license, and all of that. So I'll get into that more when I do this next episode.

I'm not going to do it tonight. I will do this probably in a few days. Between now and then, I've got the live show that is coming up with Matt Mulcahy.

We're going to talk about starting in MSP in 2025, which he has done. It's not from scratch. He's not a rookie at this, but he is starting an MSP in this year, which is, I think, a weird time to start it with all the things that we have going on in our industry, in AI, in cybersecurity, and all of that.

So he and I are going to get into that. I will finish my thoughts on this and talk about my actual billing, breaking down this a little bit more and explaining to you how I got to my numbers and all of that. But sorry for rambling, but I wanted to answer this.

This is probably the most questions that I've gotten out of one show in as long as I can remember, at least before the year of our COVID. Five or six questions. And actually, I've got another set of questions that also came from that show.

So I can't have Paco on for a while because we generate a lot of questions. But that's it, folks. Thank you for tuning in and listening.

Thank you for sitting through this and babbling. If you have any thoughts that you want to give me on this, be sure to do a couple of things. I actually got a couple of questions through my Buy Me a Coffee link.

I got a question through the Kofi and I forget the other one. Oh, LinkedIn. Listen, keep sending me questions however you want to send them.

But the easiest thing to do is if you're able to go to the website and click on the Contact Me page, just put your question there. If you just want to send me an email, marvin at itbusinesspodcast.com. If we're connected on any of the socials, the LinkedIn, the Facebook, you can message me there and I will respond. But please, if you have questions or comments about what I've started here, if you have some questions that you want to ask me ahead of time when it comes to the actual numbers and the way that I build, go ahead and send those.

I probably will do this show either, I don't know, Thursday night, Friday night. We'll figure it out. But by the weekend, I will do part two of this pricing show.

So that's it, folks. We'll see you soon. And until next time, holla.