Ambition Mission

Today’s coverage of the election is commonly called “Decision ‘08.”  For some, an easy decision, for others a tough decision.  I am certain there are enough blogs out there dedicating something political to the fray today, so I will not add.

 I will however draw a parallel to business.  There is a reason we have term limits and elections.  First, nothing lasts forever.  Second, It is necessary to continue to challenge (and sometimes revisit) previous decisions.  Elections force us to do that with our government’s leadership.  Unfortunately, nothing forces it in quite the same way in a small business.

I speak with hundreds of small business owners each month and some, I am afraid to say are simply on “auto-pilot.”  VERY FEW change the way in which they market, sell, hire, operate, do their books, compensate staff, compensate themselves, or even answer the phone.  I am not advocating change for the sake of change,  (please don’t read into that too much) but it IS necessary to take a look at all areas of one’s business regularly - sometimes a hard look.

Here is an example that is common and based on the conversations I’ve been having with Partners out there seems to be all too familiar in this market/economy, etc…  The scenario is when to cut back on expenses.  In particular, when is it the right time to let an employee go?  This is such an emotionally charged topic, that concepts of fairness, guilt, regret, responsibility and fear all get in the way of making a business decision. 

I was talking with a business owner that had hired staff too quickly.  (hired staff and then began selling)  When business didn’t grow as quickly as anticipated to support the new expense of the additional staff, a decision had to be made.  The options, as the business owner saw them were

1) just sell more, it will take care of itself

2) fire the last person hired (that’s fair right?) [note: this was owner’s least desirable option]

3) cut back on other expenses, such as benefits for all staff

4) dramatically reduce the owner’s compensation (for the time being)

The owner was looking at emotional reasons and NOT looking at his business.  He was not analyzing the P&L, sales pipeline, balance sheet, and cash flow analysis - but he should have been.  In this case, he was considering lowering his pay by 50% to $4,000/mo and cut benefits such as mileage reimbursement and some other healthcare and fringe benefits to all employees.  His total savings would equate to approximately $6,500/mo.  Alternatively, as I saw it his other option was to let go one of his high paid (slightly overpaid) techs.  This single change would save approximately $8,000/mo when everything from payroll, taxes, benefits, mileage, etc was factored in.

Which is more emotionally taxing for the business owner?

Which is more emotionally taxing for the remainder of the staff?

And finally, the most important question (and really the only one that matters) is:

Which course of action is best for the health of the business both long and short term? 

Here is my point. 

When making dramatic decisions in your business, always do two things:  First, Pretend you are not the owner/operator but rather an investor looking out for the long term value of the business.  Second, be certain to look at major decisions from multiple angles and not be clouded by emotion.

Good luck and happy hunting!

P.S.  If you find yourself at this decision point and want an objective opinion from one’s who’s been there, reach out to me, I will be glad to listen and offer my opinion and help however I can.

Let Ambition Be Your Mission!

~ Matt Makowicz

Here in NJ, the slogan goes… “NJ and you, perfect together.” 

While I can practially hear the snickers through the Internet (especially from you folks out West), hopefully one we can all agree upon is the title of this post:  “Projects & Service Contracts - Perfect together!”

Service contracts = recurring revenue.  Projects are (by their nature) transactional sales.  BUT, if we can somehow marry a project sale with a service contract, then Projects (can) equal recurring revenue. 

Here’s how to do just that:

First, understand that the project is what the customer has a perceived need for almost in all cases.  Rarely does a customer complain that they need a monthly IT service contract.  They do, however usually agree with and understand the need for a new server, new equipment, or even new software - it’s easier for a customer to grasp.

 Thus, it is necessary to do a good job demonstrating value for & selling the project.  REALLY addressing the customer’s needs (both perceived and otherwise) as it relates to the PROJECT, will lay the groundwork for the service contract sale.

The problem:

Most IT providers see the project and service contract as two separate sales.  Furthermore, if the IT provider is seeking recurring revenue, the focus is therefore shifted from wanting to make project sales to wanting to make service contract sales.  (the opposite of what the customer thinks they need).

The solution:

Marry the two sales.  Act as if the project is a student sky-diver tethered to an instructor.  Regardless of how much the project may feel the most important, the instructor is in charge.  The service contract (and recurring revenue that goes with it) is always there - an integral part of the sale.  To remove it will… well only the instructor has a parachute. 

Even if not asked for directly, every project proposal should be accompanied by a service contract proposal.  Remember that the real SOLUTION to the customer’s pain is NOT Small Business Server, a new firewall, or even a great line of business software application.  The real solution is YOUR SUPPORT OFFERING!  Would the customer be in the situation they’re in now if they were already on your support offering?  No.  Would they be able to focus upon their business and its growth and sustenance if they were not on your support?  Likely not.  Your offering is the solution.  Presenting your support offering with every project proposal is as critical as having a parachute when skydiving - it simply doesn’t make sense without it!

This is why I advocate a very thorough proposal for the project.  Since that is the part the customer wants to hear about, I would spend the majority of the time presenting the details, options, and scheduling of the project.  All the while demonstrating through “picture painting” and “seed planting” that the company is thorough, has attention to detail, has considered the business’ needs and recommended an APPROPRIATE solution.  These emotional qualities will then be translated by the customer to the support offering and make it an easier sale.

The last critical tethering is that of a discount.  The desired outcome (best for the customer & best for the IT company) is for the customer to go ahead with BOTH the project and the support contract.  So the “carrot” needs to be placed to incentivize that outcome.  This is done, most easily by presenting a built in discount if the customer says yes to the project and yes to try out the support contract. 

The way I used to do this (with greater than 95% success) is to offer the project with two prices A) T&M estimate and B) reduced, fixed price.  The “A” price was really an inflated premium price I would charge the customer because a customer that only wants a project took us outside of our desired business model and therefore had to be charged a premium.  The “B” price was the price I really wanted to charge to be profitable on the project.  The difference between “A” and “B” was usually NO GREATER than one quarter of the support contract.  I then presented this difference as a discount the customer would receive if they “went ahead and gave our support a try.”  The result:  Most customers felt silly to NOT try out the support and of course not one ever cancelled after a quarter, because the customer realizes by then how integral our service was to his business and has trouble contemplating how his business survived without our service for this long. 

 Happy Hunting!

~Matt

Price comparison in a fragile or down economy is of utmost importance and crosses industries…

 My friend, Lisa, owns a territory of FIVE GUYS chain restaurants, here in NJ.  Her sales are UP close to 50% over this time last year.  The reason?  The down economy!

(for those of you who don’t know FIVE GUYS, it is a restaurant chain that serves high quality burgers & fries made from top quality, fresh ingredients)

 Here’s why - in a “good” economy, people “traded-up” from the franchise burger places (McDonald’s, Wendy’s, Burger King and the like).  In a “bad” economy, people “trade-down” from other chains (Fridays, Applebees, etc…). 

When people compared FIVE GUYS with the franchise burger places, i.e. lower end places, the value AND price was higher at FIVE GUYS.  The result was a 50/50 choice… A) lower price and lower value vs. B) higher price and higher value.  Now that the economy is not as good, there is an additional set of customers.  These new customers are those who choose between FIVE GUYS and a chain place where a lunch or dinner with the the family could easily cost twice as much.  In fact, in some ways, the better quality burger at FIVE GUYS is a higher value than one can obtain at a chain.  So these new customers choose between A) higher value and lower price vs. B) higher price and lower or equal value.

This is similar to the topic of today’s Ambition Mission Community webinar - “Comparing Price: Why comparing your managed services offering to an IT department compels prospects to say “I’ll take it.”.  The prospect is more likely to engage  in a managed services offering if what they compare the offering to is higher in price and equal or lesser in value.  This is the case when comparing a fixed price, managed services agreement for a small business customer to that customer having an internal IT department or dedicated IT professional on staff.  The benefits to the business with the managed services offering are equal if not higher than the business hiring full time IT pros and the managed services offering is a mere fraction of the cost.

Here is a slide from today’s webinar that shows where the value and price questions are answered for a customer in realtion to 1) a T &M solution, 2) an in house IT Department or IT Pro, and 3) a proactive maintenance ans support (managed services) offering:

Good luck and happy hunting…

Let Ambition Be Your Mission!

~Matt

So many folks talk about Marketing & Sales as if they are synonymous, but they are not the same.  True, Sales and Marketing are closely related and in smaller companies there can be one individual responsible for both, but they are not the same.

Whether Sales and Marketing are two different departments in your company or simply two different “hats” worn by an individual in a business, it is critical to observe the difference between Sales and Marketing.  It is only in the separation of the goals and responsibilities of each “department” that each can be focused upon properly for the upmost growth of the company.

So simply put, “Sales” is defined as the process by which an opportunity or lead is converted into a customer.  The most common analogy is that of a funnel.  The wide mouth at the top of the funnel is where opportunities and/or leads are put.  “Sales” meets with the customer, determines needs via analysis, presents solutions, prepares contracts, negotiates with prospects, and garners commitments to successfully convert the opportunity/lead/prospect into a customer.  “Sales” final task is to transition the new customer to the Operational or Implementation department of the company to execute the solution just sold and committed to by the customer.

“Marketing” is generating or finding the opportunities or leads for “Sales” to work through the process described above. 

Observe the funnel below…

Clearly “Sales” and “Marketing” need to work together.  If Marketing floods the top of the funnel with too many opportunities for Sales to be able to give attention to, Sales will become frustrated and not work on any of the opportunities for there may be too much “bad” opportunities to get through to get to the “good” or qualified ones.  An example of this would be the purchase of a cold list from a website that sells this information.

Conversely, if Marketing over qualifies opportunities, Sales will likewise become frustrated becuase they will feel that there are not enough opportunities to work on and that Marketing is not keeping them busy enough.  An example of this is when 100% (or close to 100%) of all opportunities come from referrals or word of mouth sources.  Another complication of this situation is that the Sales department usually will be overconfident in their ability to convert opportunities to customers and consequently unprepared to work different types of opportunities (generated from different marketing strategies) through the sales process.

My recommendation is to first, understand the very different roles of “Sales” and “Marketing” in order to execute on each effectively.  Second, add additional marketing strategies to the overall marketing plan rather than simply relying upon referrals only to ensure that the Sales department effectively understands its capabilities and appreciates when an super qualified referral is dropped in their lap.

Happy hunting and Let Ambition Be Your Mission!

Matt Makowicz

My friend Stuart Selbst (www.SecureMyCompany.com) pointed out a website for a Managed Services provider in Tennessee who’s website had a “Managed Services Offering” listed.  The provider (www.DoubleClick-Solutions.com) was kind enough to give me permission to blog about it.

The page speaks to BENEFITS to customers for Managed Services customers, rather than speaking in vague features or technology terms.  I love it!  The only aspect I don’t agree with is the use of the term “Managed Services” in the title of their offering.  It should be, in my opinion, “Double Click Total Support” or something thereof.

 So to visit the page in question click here… http://www.doubleclick-solutions.com/ManagedServices.html

Here are the BENEFITS that impressed me - what a great customer facing message about the value that a customer has working with an MSP!

Unlike other computer consultants who profit from the failures in your IT environment, our purpose is to PREVENT computer problems from escalating into unexpected downtime, data loss, interruptions in business, and financial loss. In fact, our DoubleClick Managed Services program does not allow us to profit from your technology troubles in any way. This program is ideal for business owners who:
 

• Need to have their computer network, e-mail, database, and Internet access up and running 24/7/365 without problems.
• Value the security of their data, and want to do everything possible to prevent loss, corruption, or theft.
• Want to maximize the speed, availability, and performance of their network.
• Hate dealing with–or thinking about–computer problems and other complexities of operating a computer network.
• Don’t have the time or staff or budget to deal with computer network maintenance.

  The Benefits Are Obvious ·         You’ll avoid expensive repairs and recovery costs. Our network monitoring and maintenance will save you money by preventing expensive network disasters from ever happening in the first place.·         You’ll experience faster performance, fewer glitches, and practically zero downtime. Some parts of your system will degrade in performance over time, causing them to slow down, hang up, and crash. Our preventative maintenance and network monitoring will detect these problems early and prevent them from escalating into more expensive repairs and downtime.·         You’ll feel as though you have an in-house IT department–without the costs. As a network maintenance customer, you’ll have access to a knowledgeable support staff that can be reached immediately should you have any kind of problem or question. ·         You’ll receive substantial discounts on IT services that you are already buying.
Most IT firms will nickel and dime you over every little thing they do. Under this program, you’ll pay one flat, affordable rate and get all of the technical support you need. No hidden charges, caveats, or disclaimers. ·         You’ll reduce trip fees and receive faster response to your problems. Thanks to our remote monitoring and maintenance software, we will have the ability to remotely access and repair most network problems right from our offices. If we cannot fix it remotely, we will dispatch a technician to your office the same day.  If you currently work with a technician or technical service company we will partner with them to control your costs, alert them of alarms, and have them dispatched to your site when needed.·         You’ll be able to budget for network support just like rent or insurance. Wouldn’t it be nice to avoid unexpected costs for fixing or restoring your network? Now you can.·         You’ll sleep easier knowing the “gremlins at the gate” are being watched. Cyber criminals never sleep! But thanks to our 24/7/365 monitoring and on-going maintenance, you’ll have one less thing to worry about.  This may require the purchase of some additional hardware or software if necessary components are not present.  This will be identified during the free audit.•    You’ll safeguard your data. The data on the hard disk is always more important than the hardware that houses it. If you rely on your computer systems for daily operations, it’s time to get serious about protecting your critical, irreplaceable electronic information.•   You’ll stop annoying pop-ups and spyware from taking over your computer and your network. Not only are these intruders annoying, but they can introduce viruses and jeopardize the security of your network.  This may require the purchase of some additional hardware or software if necessary components are not present.  This will be identified during the free audit. •   You’ll gain incredible peace of mind. As a business owner, you already have enough to worry about. We’ll make sure everything pertaining to your network security and reliability is handled so you don’t have to worry about it. Happy Hunting!

Matt Makowicz

Everything Channel’s Xchange ‘08 had approx 250 VARs meeting with over 100 leading vendors.  Some highlights of note:

Bandspeed (www.bandspeed.com) - a fantastic WLAN solution that can lead to huge profitability for MSPs who want to deploy and sell managed WLAN solutions for customers.  Once I learned of them and asked other partners if they’ve heard of Bandspeed, I received one of two answers 1) “never heard of them” or 2) “Bandspeed ROCKS!”

Symantec - during our boardroom appointment, someone introduced the “elephant in the room” by asking the exec presenting about Syamntec’s recent partner/channel policy changes notably the practice of going direct to customers cutting out partners on renewals.  The exec tried to play the good cop bad cop routine but was unsuccessful at delivering any feelings that were warm or fuzzy.  At one point he even blamed the new practice on partners (or at least he tried) by stating that “30% of licenses don’t renew”  - my colleagues and I gently pointed out that the reason for the 30% is more likely due to VARs switching solutions for the customers rather than simply forgetting to sell the renewal. 

Overall, many vendors were trying very hard to position themselves as a one stop shop for a VAR.  “we have this product/software, but we’ll also train you, help you grow your business, etc…”  While all of that sounds great, many miss the mark in delivering what VARs are truly looking for - a PARTNERSHIP.  In an era where VARs need partnerships to diversify offerings, “commitment to our channel” has got to be real.  Of course, some vendors get this and others don’t even come close.

Happy hunting…

Matt Makowicz

Join us at the next TS2 event in your area, where we will focus on exciting Microsoft technologies that will broaden your portfolio of customer offerings and boost your ongoing revenues.

Our TS2 team will offer sales tips to help you promote the following products:

·         Small Business Server 2008 & Essential Business Server 2008

·         Response Point VoIP Phone System

·         Software + Services

Register now! Make sure you www.MicrosoftTS2.com to meet the team, view educational webcasts, and more!

email Events@AmbitionMission.com for more details

 More info coming soon!

The biggest conference (literally) of the year for the IT provider is coming up soon - Micrsosoft Worldwide Partner conference is July 7-10 in Houston.  (other than the Houston in July thing), it’s shaping up to be a good show.  Here are some highlights, what to look for and some tips for maxamizing the conference.  First things first - the conference is at 80% attendance (and already at capacity for certain categories of attendees).  so, if you’re interested in attending, register at www.Microsoftwwpartnerconference.com 

1. My good friend Stuart Crawford will be a speaker at the conference!  Stuart is an expert in leveraging PR and blogging to grow a business.  You’ll definitely want to check out his session.
2. The biggest thing to look for is Microsoft’s S+S (Software plus Services) play.  Many IT providers are not happy, confused, or not sure about S+S.  Look for this to be the main undercurrent of the conference 
3. This is one of the best conferences to network with Microsoft people (see suggestions below) 
4. Sara and I are attending - you’ll usually FIND ME IN THE YELLOW LOUNGE or just look around for “the guy in the suit” its probably me
5. The ISV party will be “the party” but it was invite only and already at capacity - don’t worry there will be PLENTY to do.

This is a small excerpt from my upcoming 2nd book - A Guide to MARKETING Managed Services - faster, easier, & for greater profit (See full table of contents here) - I have an entire Chapter dedicated to Leveraging Microsoft.

Constructively complaining:A Partner’s first interaction with a Microsoft employee is pretty interesting.  It usually involves the Partner complaining and the Microsoft employee smiling and nodding.  When meeting a Microsoft employee, it is important to know that unless he/she is on the development team of the product you’re complaining about – chances are he/she can’t do anything to help you, other than of course to smile and nod and wait for you to stop talking.  FYI – most product team developers and managers are not out and about meeting Partners.   Partners

When meeting a Microsoft employee, ask what they do for Microsoft within the first 15 seconds of introducing yourself. 

Partners

The sooner it is realized what a person does for Microsoft and what that person’s goals are this year, the quicker it can be determined how to best leverage that contact at Microsoft.  Also be sure to offer a solution to any problem that may exist.  So hold that complaint about whatever until:

Partners

1)      You’re communicating with someone in the department that is responsible for those issues

Partners

2)      You have an idea for a solution that you can offer 

Partners

I continue to see Partners find a Microsoft person at a conference or other event and insist on venting about all ways in which he feels Microsoft has not done a good job.  It seems the goal of these folks is to complain to as many Microsoft people as possible.  Perhaps the thinking is that sooner or later, someone will care. 

PartnersSince the chances of meeting the exact right person or manager to vent your complaint to is actually small, why not seek out something positive?  Decide how Microsoft can best help your company’s growth and ask for it.  The more thought out and specific the better.  Not only will you eventually get what you’re looking for (assuming it’s a reasonable request), you’re likely to build a great database of Microsoft employees along the way. 

Happy hunting at WPC!

recently took my 7 year old on a business trip - a 2 day trip from NJ to San Fransisco.  It was fantastic!  We got in a morning of sight seeing before my half day seminar during which my son (in full 3 button suit) helped by setting up books, making a sign with the price of the books (in crayon) and took pictures.  Later on we had drinks in the “View” a lounge on the 39th floor of the SF Marriott where you have great views of the entire city.  Drinks with his dad in the “View” lounge was what he considered the highlight of the trip.

I can’t wait to do it again with him and also my other kids. 

anyone else do something like this?  I welcome any other suggestions on how to include my kids in my professional life.  So far, this enhanced “take your child to work day” was all I have really done and now that I have a taste of what it is like, I want to do more!

suggestions, comments, questions, welcome!