Karl Palachuk is an author, blogger, former managed services provider, and current managed services authority. His brother and fellow ex-MSP Manuel Palachuk is president and head coach at Manuel Palachuk International, a consulting organization for channel pros looking to take their business to the next level.
Collectively, they’re two of the SMB channel’s most experienced and respected experts on what it takes to build and run a profitable MSP business. Follow along as the two of them join ChannelPro Executive Editor Rich Freeman for a deep dive into a topic both know extremely well: How to tune your finance, personnel, service delivery, and other operational processes for peak efficiency.
ChannelPro: What advice do you have for MSPs who say they keep providing more products and services to their clients, but are not making more money?
Karl Palachuk: I see this all the time. An MSP finds some interesting new solution, pays the vendor for it, and gives it to customers without raising prices. Then the MSP wonders why profits are down! If you’re delivering more value to your customers, you have every right to charge them more as well.
Manuel Palachuk: Also, be a little more selective about which products you sell your customers. Rather than adding products just because you can, take a look at the services you offer once or twice a year, add ones that your clients need but don’t currently have, and remove ones that maybe they don’t need anymore. Adjusting your prices—up or down—should be part of that process.
ChannelPro: Here’s an issue lots of MSPs are struggling with amid today’s essentially zero percent IT unemployment rate. What should people who say they can’t find good people do?
Manuel: When people say there’s no one good out there, I always ask, “What are you fishing with?” In today’s tight IT labor market, you need a good offer, not only in terms of salary but of benefits and job responsibilities as well. You can make finding candidates for those offers easier too by constantly maintaining and updating a list of the next five people you want to hire. Those might be interns or people currently employed by a competitor, for example.
Karl: If the problem here isn’t that you can’t find good job candidates but that the job candidates you hire keep turning out to be mistakes, maybe you’re hiring too quickly. As the saying goes, good companies fire fast and hire slow. Do a phone interview before a face-to-face one. Take the job candidate to lunch with some of your employees and see how well they get along with people and how polite they are to the servers. My job listings used to ask people to send me a few paragraphs about why I should hire them rather than a resume. If they sent a resume anyway, it told me they can’t follow instructions, so I dropped them from consideration.
ChannelPro: Here’s another payroll-related issue. What tends to be the problem when MSPs say they regularly land new projects but have no one to work on them?
Karl: This is usually a result of not knowing what your capacity for new work is. Make sure your techs accurately record all their time, billable and not billable, in your PSA. That will help you determine the total number of billable hours at your disposal in a given week. If you’ve been including time estimates with all your tickets too, you can now compare available hours to hours of work outstanding. At that point, you’ll know if you can or can’t take on new projects right now.
Manuel: The other option if your staff is too busy for more projects, of course, is to add more staff. If you’re worried that you won’t have enough work to keep a full-time tech busy, consider hiring a contingent worker from a service like WorkMarket or Field Nation. Either way, make sure your salespeople are always aware of your available capacity, so they don’t overcommit you to projects that you can’t complete promptly.