How to Grow from a One Man Operation to Two
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Based on my own personal experience, I don't agree with a few points here. I've grown my own MSP business without debt beyond just myself. As a one man shop there are a lot of tasks you can find for an entry level person. Your contract rates don't change, but you don't have to stop what you're doing for the easy tasks.
I also don't think partnerships are a good way to go for businesses of any type. Read about all the case studies and you'll find that a 51% to 49% split is way better than 50/50. At the end of the day there are some decisions that have to be made, and there needs to be a final authority.
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@mike-davis said in How to Grow from a One Man Operation to Two:
Based on my own personal experience, I don't agree with a few points here. I've grown my own MSP business without debt beyond just myself. As a one man shop there are a lot of tasks you can find for an entry level person. Your contract rates don't change, but you don't have to stop what you're doing for the easy tasks.
I also don't think partnerships are a good way to go for businesses of any type. Read about all the case studies and you'll find that a 51% to 49% split is way better than 50/50. At the end of the day there are some decisions that have to be made, and there needs to be a final authority.
The problem with the 51/49 split is that everyone wants to be the 51%.
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@scottalanmiller said in How to Grow from a One Man Operation to Two:
The problem with the 51/49 split is that everyone wants to be the 51%.
Right. If you own 100% because you are a one man shop, I would argue that you don't need someone at your level, you need someone entry level at first. Even years down the line, you may need someone at your technical level or higher, but as the business owner, you need to work on the business, not in the business.
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@mike-davis said in How to Grow from a One Man Operation to Two:
@scottalanmiller said in How to Grow from a One Man Operation to Two:
The problem with the 51/49 split is that everyone wants to be the 51%.
Right. If you own 100% because you are a one man shop, I would argue that you don't need someone at your level, you need someone entry level at first. Even years down the line, you may need someone at your technical level or higher, but as the business owner, you need to work on the business, not in the business.
Right, I was thinking more of the "merging with someone else at your level" which is a handy option as they can bring their own customers and work with them. But you get the conflict of everyone wanting to be the boss.
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A small "MSP" has the chances a rock band has of both sustainability let alone large scale success.
Its got me thinking, and maybe a good topic for another thread, what is the "hot business" now that is accessible for a small startup. Something where customers are actually seeking out solutions the way small offices needed a server, email and netowrk help in the late 90's and early 2000's?
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@bigbear said in How to Grow from a One Man Operation to Two:
A small "MSP" has the chances a rock band has of both sustainability let alone large scale success.
Its got me thinking, and maybe a good topic for another thread, what is the "hot business" now that is accessible for a small startup. Something where customers are actually seeking out solutions the way small offices needed a server, email and netowrk help in the late 90's and early 2000's?
If we only knew.
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@bigbear said in How to Grow from a One Man Operation to Two:
Something where customers are actually seeking out solutions the way small offices needed a server, email and netowrk help in the late 90's and early 2000's?
Small businesses still need help with networking, wireless setups, and email. (mostly in the form of o365 migrations.)
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Yeah but I was around at the beginning of this, when we were teaching people what email was and replacing banyan vines with PC's and token ring or ethernet.
The money onboarding a new customer just isn't there. In fact, the cost to acquire an IT customer on a consistent basis is enormous compared to the good ol days.
It is difficult for veterans of the industry to accept, but with the passing of one thing there must be something on the horizon that is accessible to a small business owner.
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@mike-davis said in How to Grow from a One Man Operation to Two:
@bigbear said in How to Grow from a One Man Operation to Two:
Something where customers are actually seeking out solutions the way small offices needed a server, email and netowrk help in the late 90's and early 2000's?
Small businesses still need help with networking, wireless setups, and email. (mostly in the form of o365 migrations.)
And to your point, I know there is revenue and opportunity but it is a trickle compared to the early days of internet and private networks, SMB particularly.
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Curious on everyone's thoughts on how skilled this first employee should be, and how much they should get paid. Are you cheap like the typical SMB and get someone for $40k? or do you pay for actual talent at $70-100K?
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@irj said in How to Grow from a One Man Operation to Two:
Curious on everyone's thoughts on how skilled this first employee should be, and how much they should get paid. Are you cheap like the typical SMB and get someone for $40k? or do you pay for actual talent at $70-100K?
I would say that if you don't want a rotten apple, you don't go to the barrel, you go to the tree. I've hired high school and college students. I'll pay them minimum wage and give them raises as they earn it.
As part of the hiring process, I explain that I can pay them what they are worth as they can do more advanced tasks. One reason I left corporate IT is that in a small company you can hit the ceiling pretty fast. As an MSP if you master the daily task, you have an incentive to automate things.
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With that said, if a skilled employee left, you wouldn't have much of a choice but to look for a skilled employee.
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@bigbear said in How to Grow from a One Man Operation to Two:
Yeah but I was around at the beginning of this, when we were teaching people what email was and replacing banyan vines with PC's and token ring or ethernet.
The money onboarding a new customer just isn't there. In fact, the cost to acquire an IT customer on a consistent basis is enormous compared to the good ol days.
It is difficult for veterans of the industry to accept, but with the passing of one thing there must be something on the horizon that is accessible to a small business owner.
It's true. Acquisition used to be trivial and the amount of work needed was high. Today, cost of acquisition is enormous and customers need almost zero work.
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@mike-davis said in How to Grow from a One Man Operation to Two:
@irj said in How to Grow from a One Man Operation to Two:
Curious on everyone's thoughts on how skilled this first employee should be, and how much they should get paid. Are you cheap like the typical SMB and get someone for $40k? or do you pay for actual talent at $70-100K?
I would say that if you don't want a rotten apple, you don't go to the barrel, you go to the tree. I've hired high school and college students. I'll pay them minimum wage and give them raises as they earn it.
As part of the hiring process, I explain that I can pay them what they are worth as they can do more advanced tasks. One reason I left corporate IT is that in a small company you can hit the ceiling pretty fast. As an MSP if you master the daily task, you have an incentive to automate things.
I'm 100% with Mike here. It's rare that I want to hire someone mature in the field. It happens, the right person is the right person. But especially when looking for someone that will change roles over time, getting students or pre-pro level staff means that they grow with you, grow specifically with your needs, grow up in your culture, etc.
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@mike-davis said in How to Grow from a One Man Operation to Two:
With that said, if a skilled employee left, you wouldn't have much of a choice but to look for a skilled employee.
Until you get big enough to absorb staff changes.
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I would think first hire to be low end, entry level looking to make his way. 30 hours per week and someone who is flexible to work less hours or more.
No big salary guys until you have revenue to pay you, them, and everything else.
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@bigbear said in How to Grow from a One Man Operation to Two:
I would think first hire to be low end, entry level looking to make his way. 30 hours per week and someone who is flexible to work less hours or more.
No big salary guys until you have revenue to pay you, them, and everything else.
I would not hire a tech at all as my first employee. I'd be hiring back office before that. Make sure that I (assuming I'm an IT tech owner) was doing zero non-tech work before bringing on tech skills. The tech skills are expensive and risky (because you can take on work that they can then hold you hostage to provide) whereas backend skills are cookie cutter and non-critical. Can't bill for a week, customers don't get mad. Can't fix their networking for a week, they go with the staff that just quit on you.
You want a solid support organization for yourself before you start offloading the tech work and keep paying yourself the big bucks to do low value paper pushing.
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@scottalanmiller said in How to Grow from a One Man Operation to Two:
There is no organic path from one to two people in the MSP game
I would never do it. 50/50 ownership structures or 49/51% tend to implode poorly.
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@bigbear said in How to Grow from a One Man Operation to Two:
I would think first hire to be low end, entry level looking to make his way. 30 hours per week and someone who is flexible to work less hours or more.
The problem is it's a VERY narrow spectrum between "So low cost, and so low skilled that he generates more clean up work, and bill credits than he is worth" and "valuable enough that he takes clients and runs, or get someone to pay him 40 hours and a proper salary" You are danging on a knife edge, and given you lack proper hiring process's, back ground checks, and other procedures the odds are you'll screw up somewhere...
I never hired guys with zero experience, because they cost me more than they made me vs. the premium to pay someone for 40 hours and benefits who was... useful and I could bill at $120-140 an hour.
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@storageninja said in How to Grow from a One Man Operation to Two:
I never hired guys with zero experience, because they cost me more than they made me vs. the premium to pay someone for 40 hours and benefits who was... useful and I could bill at $120-140 an hour.
Zero experience means you have to ask about the home lab. If they really have an interest in something they will probably be doing it in their free time. If they have zero professional experience and no lab experience, I wouldn't be interested either.
