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Voiceover:
Made in the UK for MSPs around the world. This is Paul Green’s MSP Marketing Podcast.
Paul Green:
Well I can’t quite believe it. We’ve been doing this podcast for half a year now. It feels both longer and shorter in so many different ways. Here’s what we’ve got coming up on today’s show.
Heather Johnson:
And then everything’s different. You’re in a new reality and it is scary. It is very easy to get in the mindset of I’m just kind of going down with the ship, but you don’t need to do that.
Paul Green:
We’re also going to be talking about something which on the surface doesn’t seem cool, but as business owners, we all know how important it is and why we’ve got to keep a grip on this because it keeps us up at night. It’s cash flow management. And I’m going to be answering a question from a listener about is there any way that we can make tech cool for the prospects that we want to engage with on social media.
Voiceover:
Paul Green’s MSP Marketing Podcast.
Paul Green:
One of the fastest ways to grow your business is actually not to try and do it organically by adding new clients, but instead to go out and acquire a competitor and I’m a big fan of acquisitions. One of my best friends is Jonathan Jay, who if you few listened to episode 10 of the podcast, he was on then talking about acquiring businesses. It’s what he teaches people to do, to buy and sell businesses. And I myself are looking at acquiring some businesses this year in my town where I live of Milton Keynes. I’m not interested in MSPs, but I tell you what is interesting. Right now with the way that things are right now, I think this is potentially some opportunities coming up for you to acquire something and I know there’s going to be opportunities for me to acquire something in the next six months ahead.
Paul Green:
Now going to start right from the start by saying with everything that’s happening right now and the impact it’s had on businesses, is unfortunate that some businesses are just simply not going to do well out of this. They’re going to really struggle. They’re going to struggle to get back on their feet. And I realise I risk criticism of people saying you’re profiteering on this Paul, you’re cashing in on other people’s misery. You’ve got to understand that a business which gets into trouble really quickly off the back of what we’re talking about here of the current situation, they were already struggling before we went into the current situation. All this has done is this has accelerated, I mean at some scale, but it has accelerated the business problems of those businesses that were going to fall over. They were always going to fall over anyway.
Paul Green:
And I think you actually owe it to the staff and the clients of these businesses that were going to fall over to pick up those businesses and to fix them and to integrate them with your existing operations so that the staff continue to have a job and the clients continue to have IT support. And that’s certainly the way that I’m viewing it. Whatever it is that I go and buy this year and I’m looking to buy one or two businesses, see if I can even put them together in some way, I will be aware that a business owner somewhere has suffered in some way. Or has put their business up for sale and perhaps they’re not able to sell it for as much as they had hoped for when they thought they would sell their business.
Paul Green:
And I will handle this in the most sensitive way that I can and I will try to make sure that that person gets a great deal, but also that I get a great deal because I’ve got the hard work of turning that business around and fixing that business and of course the cash impact as well. I’m going to be taking on the risk of looking after that business.
Paul Green:
So maybe that’s the opportunity for you over the next 6 to 12 months is to say, right, some of my competitors are struggling, they’re going to struggle more. They’ve got a client base, they’re probably not servicing that client base as well as I can service them. How can I acquire that business? And I think the very first step for you is to actually contact all of your competitors. Literally just write them a letter. Hi, this is me. I’m based just down the road from you. I just wanted to say, if ever you’re thinking of selling your business, I’d love to have a chat with you. The first step would be a confidential coffee or beer. Let’s just go and have a chat. See if we think we can work together and we can always take things from there. And what you’re looking for is you might send that to 50 competitors in your town, in neighbouring towns and you might get one or two people responding off the back of that.
Paul Green:
And what we’re looking for is those people who are at that point in their mind where actually yes, they’re ready to have a conversation. They’re starting to think, oh my goodness, business has been impacted so badly by what’s been happening over the last few weeks and months. Or they’ve just had enough. Essentially what you’re kind of looking for, you’re either looking for distressed businesses or better still, you’re looking for good businesses with distressed owners. And these are people who for whatever reason, maybe it’s illness, maybe it’s just tiredness, maybe is the impact of what’s been happening and they just haven’t got the energy to build it all up again. And believe me, we all feel like that sometimes, but these people feel like that over a longer period of time. You’re looking for those people and if you can find those people and if they are at that point where they just can’t and don’t want to do it anymore, you actually potentially are a knight in white armour swooping in to go and help those people.
Paul Green:
A few weeks ago, back in episode 21, we know that the average MSP is valued at one times recurring revenue or annual recurring revenue. To add up all the recurring revenue, the monthly recurring revenue and the annual recurring revenue and whatever that comes to, that’s what the business is typically worth. That seems to be becoming the standard valuation for an MSP. So you can say this to your competitor and you can say, look, this is what your business is worth. This is what I’ll be willing to pay for it. And actually you’re a hell of a lot closer to a deal if you’ve got a valuation that you can both agree on. Now you don’t need to pay cash up front because no one pays cash up front for a business. You can agree a deferred deal where you’re paying for the business over one, two or three years.
Paul Green:
So essentially you’re paying for the business out of cashflow and there’s massive, massive advantages for you of doing this because you’re integrating it into your existing operations. You can take their best techs and integrate them into your operations. You can take their clients and integrate them into your existing account management. You can take their technology stack and know that over two to three years, you can transition their clients from their technology stack into your technology stack. But this is the advantage that you would have over say someone like me, whatever kind of B2B business I’m going to acquire, I’ve got to start from scratch. I’ve got to learn that business. I’ve got to learn how it operates and I’ve got to work with the resources that I’ve bought. You’ve got a massive advantage in that you’re just buying clients and you can service them with your existing operations. And so long as you can do a better job of that than the business that you’ve bought, the chances of you keeping most of those clients are very high.
Paul Green:
Now, acquisition is not for everyone. It’s a time consuming thing to do. It’s incredibly energy consuming and it’s very, very difficult work in the first couple of years, but for some people listening to this, acquisition is absolutely a very smart route forward and you can grow your business dramatically, hundreds of percents worth of growth every year instead of 10 or 20% worth of growth because it is a hell of a lot faster than growing organically.
Voiceover:
Here’s this week’s clever idea.
Paul Green:
I really do try my hardest only to talk about interesting subjects on this podcast and the next one is potentially a slightly dull subject, but my goodness, it’s important and the subject is cashflow. Now we all know as business owners that cashflow is the thing that’s most likely to have us awake at four in the morning. You know how it works. You get up, you go to the bathroom and you go back to bed and you can’t sleep because things are whirring through your head and cashflow is such a destructive, worrying thing if the cashflow is negative. Because businesses don’t go under because they’re not profitable, they go under because they don’t have great cashflow. And just talking there as we were about acquisition, one of the reasons that a competitor might be up for sale or you might be able to acquire them is because their cashflow is in trouble.
Paul Green:
They could be unprofitable for years and that’s not really a massive issue. I mean it’s an issue for the owner in terms of personal income, but when the cashflow is wrong, that’s when things go badly very, very quickly and it’s why businesses get into trouble and it’s why businesses go under.
Paul Green:
Now I’ve got a number of things that I recommend that you do to monitor your own cash flow just to keep on track of it. The first of those is to make sure you know your figures. So you need to know what’s the cash that’s in the bank. If you take credit card payments and the card companies holding onto a chunk of that in case of chargebacks, what are they holding onto? You should be doing some regular cashflow reports. I mean weekly, I would say as a minimum and cashflow reports and forecasting literally what’s coming in and what’s coming out. In the next week is more money coming in than is going out?
Paul Green:
Because if it’s not, then you need to be aware that there needs to be some funds in the bank account to absorb that. You should perhaps ask your bookkeeper or your accountant for management reports so you can see what’s happening with the P&L on a monthly basis. It amazes me how many MSPs try and run their business without management reports. You’ve got to know what’s happening not just 12 months ago from your actual P&L, profit and loss, but you need to know what’s happened within the last month.
Paul Green:
Second thing I suggest that you do is you regularly review your overheads. So your utilities, your rent, your phones, your insurance, anything that’s a fixed cost and that’s a fairly commoditised one way you can switch to another supplier and it’s more or less exactly the same. In fact, anything like utilities or insurance, as long as you’re comparing, like for like if you can get better terms elsewhere, then do go and do that. And talking in better terms. You should also be talking to your suppliers. Now, some of the big vendors, they’re not going to be interested in talking to you about this but some of your smaller suppliers will, you might be able to ask for better terms. For example, if they normally offer you 30 days, why not just ask for 60 days? You never know.
Paul Green:
They might come back and say, well look, we can’t do 60 but maybe we’ll do 45 days and we can do that for the next year. Often, particularly if you have someone who’s account managing you, there will be an accounts department somewhere that rubber stamps their decisions, their job, they’re bonused on keeping you as a client. So you come back and you say, look, we’re willing to pay. We’re okay with cashflow. We’re just trying to improve our credit terms right now. Can we have 60 days please? And they’re not going to judge you on this. They’re not going to think that your business is failing. They’ll just trot off to accounts, ask accounts to see if that’s okay. And suddenly you’ve got yourself 60 days to pay. Now what that does is that just gives you another 30 days or another 15 days or whatever it is that your cash is sat in your bank account instead of their bank account. And good cashflow says that it’s always better that your cash is sat in your bank account rather than someone else’s bank account.
Paul Green:
Something else that you should be focusing on is making sure you’re getting cash upfront so your clients should be paying upfront for everything. And I hope that you’ve either got them on direct debit if you’re in the UK or authorised to take colour payments from the few in other parts of the world. And when clients order something, well you should be taking money from them upfront regardless. So their monthly recurring payment, that should come out early on in the month and that should be automatic. And then when they order something new like a new piece of hardware, you should be taking the cash for that up front. That’s really important because if you spend say £500 on a new laptop for someone and you have to pay for that fairly quickly, but your client isn’t paying for 30 days, you know there’s a gap, isn’t there? There’s a gap between the point at which the money has left your bank account and the money from your client has turned up to replace that money in your bank account.
Paul Green:
And if there’s a gap there of 10 days, that’s 10 where you have subsidised your client’s purchase from a cash point of view. Well you’re not a bank, you’re not a credit card company. They should be paying upfront for this technology because if they walked into any other store, they’d have to pay for that upfront before they got it.
Paul Green:
Now these are some very, very simple things, but when you put them into place and you systemise them within the business, they can have a fairly dramatic effect over the long term and I don’t believe that any business owners should ever have to worry about cashflow because bad cashflow often, not always, but often it comes because of a lack of design because there’s a lack of systems, a lack of thinking through how do we get that cash in quicker than it’s going out? How do we keep more of that cash in our bank account for longer? When you approach this from a systematic point of view and it’s done by design, it makes the cashflow so much less stressful.
Voiceover:
Paul’s blatant plug.
Paul Green:
Tell me you’ve got a copy of my book. I mean a physical paperback copy because nearly 2,000 MSPs worldwide now have a copy. It’s called Updating Servers Doesn’t Grow Your Business and paperback copies are available in the UK and the USA. This is about how to target and win higher quality clients who stay longer, spend more and whinge less. We talk about how most people who buy from you are uneducated buyers so they’re not picking a new IT support company with their brain. They’re not making a cognitive decision. They’re making an emotional decision with their heart and we talk about all sorts of other stuff in there including some of the marketing that you really shouldn’t be doing.
Paul Green:
Now if you want to get a free copy of this and it’s completely free, there’s no catch. We’ll post a paperback copy to you at my cost. If you’re in the UK or if you’re in the US, everywhere else in the world, we will send you a copy of that on PDF. All you’ve got to do is go to my website. It’s paulgreensmspmarketing.com and then in the navigation, just click on the bit that says free book.
Voiceover:
The big interview.
Heather Johnson:
Hi, my name is Heather Johnson and I’m here with Brian Johnson. We’re both from Gozynta. We are a software development company that helps support MSPs, make their life easier and we’re going to talk about some of our business experiences in making pivots in a time of chaos.
Paul Green:
And we are in a time of chaos right now and we recorded this interview a few weeks before it was broadcast, so we’re at time of recording, much of the world is in lockdown. Corona is still very much a fast changing situation at the time of broadcast. Obviously we have no idea what’s going to be happening, but we do know that from an economical point of view, everything’s going to change. Even though we may come back to some kind of normality, perhaps by the end of the year, and it’s going to be a new kind of normal and no one really knows where that’s going to go. So Heather you have an MBA and you’ve been mentoring lots of startups, you talked about finding opportunities amongst the chaos. Do you see lots of opportunity in the uncertain way ahead.
Heather Johnson:
The big thing is picking your head up and seeing what’s around you. It’s always hard when you get that list of things that you want to accomplish to take a moment and listen, just kind of breathe it all in and see what are the needs out there. Is there something that you can do to support that? Is there something that you can do to adjust? There’s a alcohol distillery in our area that now is making hand sanitiser. So very quickly we’re able to retool and be able to provide something like that. So lift your head up, take a breath and look for what’s around you.
Paul Green:
So I’ve been talking to a lot of my MSPs that I work with, in fact quite intensely over the last few weeks. And the vast majority of them have a great mindset for that. And are looking at the opportunities such as the short term opportunities to generate more break fix work. Maybe even take on some domestic customers in the short term. No one really wants those longterm, but in the short term, that can work. Brian, from your point of view, is that the kind of thing that you think MSPs should be doing and looking for those kinds of opportunities?
Brian Johnson:
We’ve been having a lot of conversations with MSPs lately as well as I’m sure you can imagine. I was on a Zoom call with a bunch of small MSPs yesterday. I’ve seen some of it where they seem to be taking a very good approach and it’s like, okay, how can we make ourselves stronger through this? How can we grow through this? And then some are a lot more protectionary. All right, how do I defend what I have and stop the bleeding? And not to say you don’t need to take actions to stop the bleeding, but I really love the ones that are able to take this and look for where are my new opportunities coming out of this so I can try to grow my way through this and outgrow the losses?
Brian Johnson:
I was part of a small MSP during the last recession in 2008 and 2009. Obviously this is looking like it’s going to shape up to be a lot worse than that, but I think the same principles apply and we did manage to grow our MSP through that time and ended up coming out of it quite successfully and you just need to be looking at it and the way to make that happen.
Paul Green:
So what did you do specifically to grow the MSP during that last recession? Was it just focusing on the basics?
Brian Johnson:
Yeah, focusing on what our customers needed. And if you’re a small MSP, there’s a big market. Right now what we’re seeing, the way I’m looking at it is the need for IT support is growing in what’s happening now. More people are working from home, they need more support than usual. So the opportunity should be growing for MSPs. Certain market segments are taking a nose dive, but there are a lot of market segments that are doing okay and there are some that are booming. So let’s focus on those market segments and figure out how we can serve them in the best way.
Paul Green:
Heather, from the work that you do mentoring other businesses, what do you think are the things that stop people from being able to see those opportunities? Is it simply a case of having the wrong mindset or is it just a case of mentally being in the wrong place and panicking a little bit more than actually you’re seeing the opportunities?
Heather Johnson:
Well, I think it’s a combination of both. You have your list and you have your goals and then everything’s different. You’re in a new reality and it is scary. It is very easy to get in the mindset of, well, I’m just kind of going down with the ship, but you don’t need to do that. There’s going to be a new look to the workforce now that people are working from home. There will be companies that think, well this is a good opportunity. This will cut some costs, but there are obstacles in a remote workforce and focusing on that more the MSPs can provide and support. Not everybody is built to work at home and just because they’re quiet doesn’t mean they’re happy. So helping MSPs customers to be able to have a successful work environment is a great way to pivot in this kind of environment.
Paul Green:
If you owned an MSP again tomorrow, what would you be doing right now to absolutely make the most of the situation? So you’ve talked about listening to your customers. Can you give us some specific things that you would do if you were in that situation?
Heather Johnson:
I think that communication is extremely important and building that relationship. Not just what do you need, but sometimes your customer doesn’t know what they need. So having a conversation of just what’s going on in general, there might be something that the MSP can provide that the customer doesn’t even know is available to them. I worked at a graduate school in HR. I was the director of HR. I was looking for a database software because I was really struggling with keeping track of attendance and timekeeping. I had no idea who our MSP was, but also that that was something that they provided. They, to me, were the people I called if my printer wasn’t working. So those conversations, when you start having those and can see, oh, you’re having a hard time with time keeping, I can be there for that. You’re having a hard time knowing if your remote worker’s functioning well in their environment. I can provide some assistance and support to you there as well.
Paul Green:
That’s such a good idea, that whole thing of we assume that people know everything that we can offer because it’s there on the website, even though we know that people don’t read the website. But that’s such a good point … In fact, it’s the reason why you should be constantly be doing strategic reviews with your clients.
Brian Johnson:
It boils down into being that trusted adviser. The whole point of the strategic review and the virtual CIO stuff, you’re their IT lead. You are their trusted adviser for everything related to IT and it doesn’t even have to be directly related to IT. It can be about sharing things that you’ve learned from your other clients and from the wider internet about how to manage a virtual and work from home workforce when you haven’t done that before. But it’s being in there, having those conversations with the business owners that are your clients and being their trusted adviser because that’s where you find the opportunities. Our MSP in 2008, 2009, my former business partner was great at communicating with our MSP clients and he ended up doing all of that communication, tripping on an opportunity with another business owner in town who was starting a consulting business for manufacturing companies. That ended up developing into another half of our business and we did custom software development for ERP systems, but it came out of those conversations and building those relationships.
Paul Green:
This is great. Tell us a little bit about Gozynta and what you do with MSPs.
Brian Johnson:
Gozynta formed out of that custom software business that I talked about and when our MSP was implementing ConnectWise, we ended up building accounting integrations and some other integrations between Manage and these accounting systems. One of those integrations is our Mobius Connect for QuickBooks Online product, which over 800 MSPs use to keep their accounting data in sync between Manage and QuickBooks Online. Since then we’ve also developed a product that we call Tixt, which is a text messaging version of the Manage email connector, which people are finding very useful right now with all of the work from home. Because now their customers can text from their cell phone, which has become their second screen since they often just have a laptop screen at home and they can text their MSP. But it’s going onto their ticket in Manage and so it’s trackable.
Paul Green:
That’s great. Heather, can you give us your website’s address please?
Heather Johnson:
www.gozynta.com. Gozynta is G-O-Z-Y-N-T-A. “We make your accounting data ‘goes in to’ the places it needs to go”.
Paul Green:
That’s very clever.
Voiceover:
Paul Green’s MSP Marketing Podcast. Ask Paul Anything.
Jason:
Hey Paul. As an IT company, we have nerdy products and services to sell. How can I get my social media following excited and talking or interacting with our page when typically IT products and services and not very cool for non-tech heads like us?
Paul Green:
That was Jason Watts from Neveco. Thank you so much for your question Jason, and it really is a great question to ask. How do we get people who don’t really care about technology to care about it? To think that it’s cool? And I don’t think that we can to be honest, because everyone’s got technology embedded in their life. Their phone is in their hand 27 hours a day. They use their laptops. Technology now is so cool and there are so many cool things that you can do with it that it’s kind of become routine hasn’t it? It’s not like it was in the good old, late nineties or early noughties when we got so excited because you could actually rename something just by clicking 17 buttons instead of clicking 25 buttons. Technology’s so, so adaptable and advanced and cool and any problem you’ve got these days you can just Google it because you don’t even need to use your fingers. You can just tell your smart speaker to Google something and there’s a solution out there for it.
Paul Green:
And I think the net effect of this is that it’s no longer cool and for you it is. For me, it is. Everything’s cool because technology’s wonderful. But for ordinary people, the prospects and the decision makers that we want to influence, it’s not cool. And I don’t think they get excited by it in the way that we do. Jason, I don’t think to be honest, that we can make them excited about it because if they’re just a bit blase about it, then we’re not going to change their state of mind. So instead what we have to focus on is not the technology itself, but what it can do for them. And you’ve got to pick up every single solution that you’re trying to talk about, every single new gadget or piece of tech and ask yourself, what can this do for them? How is this going to influence them? What’s this going to do to improve their lives?
Paul Green:
In fact, with all marketing, we’ve got to look at things not from our point of view, but we’ve got to look at it from the point of view of the people that we’re trying to influence and constantly asking ourselves what’s in it for them? Why is this important to them? Why do they care about this? You do this on your website, you do this on your social media, you do this with your email marketing, you do it with any interactions you have with prospects, what’s in it for them? And I think that’s the only way you can make it interesting for these ordinary people, is by looking at it from their point of view.
Voiceover:
How to contribute to the show.
Paul Green:
Now you could probably hear from Jason’s question there that he literally sat down, recorded me a bit of audio and sent it over to me and I thank you so much for doing that Jason and everyone else who’s done that. Now I’d love to feature your question on a future episode. All you have to do is grab your phone, fire up the audio recorder and then just email that through to me and I’ll answer it in a future episode. I will tell you when I’m answering it as well so you can make sure to listen to your voice on the podcast. The email address is [email protected].
Voiceover:
Coming up next week.
Alex Permenter:
We’re trying to figure out a way to make it very easy for end users to put in tickets.
Paul Green:
That’s Alex Permenter from Help Desk Buttons. Now this is something we mentioned back in episode 19. They’re physical buttons that your users can press when they need to summon support. A very clever idea and we’re going to be talking to Alex and his colleague, Elizabeth Copeland next week about how they invented the idea and how you can use it to market your MSP. We’re also going to be talking about the immense impact of price increases, and while you should be constantly nudging your prices up and we’ll be talking as well about the wheel of life. Business is so important and so consuming, but you have to remember all the other things that you need to have for a healthy balance. See you in next week’s episode.
Voiceover:
Made in the UK for MSPs around the world. Paul Green’s MSP Marketing Podcast.
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