A Short Guide to Planning for a Change in your Business Model
Michael Michalowicz wrote a top-selling book on growing your business (The Pumpkin Plan). I read the book some seven or so years ago. I was intrigued by his method which was, in a very small nutshell, to prune away the clients who were not so profitable and leave the ones who are lucrative; thereby allowing those profit-enhancing clients to grow even more and using the time saved for marketing to a more defined set of potential clients.
It seemed like great advice, right? Right. Maybe.
Transitioning your business from a reactive consultancy to an MSP requires a TON of changes. It requires building processes. It requires testing and implementing new business operations systems and products. It requires more than a bit of mental gymnastics to make the shift. You’ll have to develop client management techniques and you’ll have to pony up for professional services such as accountants and lawyers and web developers. It’s no hobby-turned-business anymore; it’s the real deal.
One Size Does Not Fit All
If your goal is to have a few high-paying clients (work less, make more) this works out well. If you are good at building relationships and partnerships, this would be a good direction for your business growth. The sales cycle will surely be longer than it was for your ad hoc clients, but the payoff is great if you can push through the initial cycle.
If your goal is to build a business that is product-first, where sales of products (or someone else’s services) are the key, then pruning your list will result in a client list of recurring product revenue and one-off projects: i.e., reactive tech support. This model works for the consultant who is great at setups but not so great at building relationships – someone whose experience is more aligned with a sales or retail/wholesale experience than with a partnership mentality.
And, of course, there is a place for a business model that combines the two: having some managed services clients and some reactive clients. There is success to be had for all of these models for sure. Any of these are sustainable if you acquire the business knowledge and put in the work to make them happen.
The Common Thread
(Disclaimer: wherever it says “business” or “business owner” you can modify to be “department” or “department manager/director”)
It doesn’t really matter which of the models you choose. Well, it does, but not for this article. Instead, I’m here to give you some things to think about as you change your model to meet your work and family needs.
Business owners change up business structure for any one of a number of reasons. Maybe the business suddenly exploded and the phone is ringing like mad with new client inquiries. Maybe it’s the opposite — the business isn’t generating enough revenue and you’re looking for a business refresh. As a business owner, it could be that you’ve had a life change and now you need to structure your business in a way that better suits your or your family’s way of life. The reason behind the change is yours and yours alone – you don’t owe us an explanation.
Keep in mind that a structural change will impact more than just you alone. IT staff, direct reports, other departments beyond IT or sales, vendors … really anyone you interact with will be impacted by a business model change. Most of all, a change will impact your clients and users.
In any given moment we have two options: to step forward into growth or step back into safety –Abraham Maslow
Talk the Talk
Sticky notes have never been more valuable than when you’re making a big change. Choose your colors and clear off a wall. You’ll have a list of tasks that need to be completed and lists of clients and vendors to talk with. And you’ll have to assign each of the tasks to a person or persons. None of these parts live in a vacuum so they should all be visible to your team at all times.
You’ll want to talk with your financial and legal experts to draw up proper contracts and to set pricing. You’ll talk with vendors to test the alphabet soup of back office software, RMM, PSA, MDM, SSO, and so on. Hopefully, you choose one that can handle multiple features at a great price point. (Author’s note: at JumpCloud we recently released this interactive pricing calculator that can help you understand the relative costs of a number of services like these; it’s just one perspective, but a good place to start.)
You’ll have to decide on a menu of items and services to partner with and you will need to get your IT admins educated in those solutions so they can install, configure, and support them. You’ll also have to choose a distributor for those items that must go through the channel.
And then there’s the conversations you’ll be having with your clients and users. Once your clients buy into your new program, you’ll have to train them on the wonders of their new support system. They should know what to expect at all stages: the pricing, what exactly they’re buying, how they request onboarding/offboarding, how they submit tickets, what the SLA is on those tickets, what will happen when IT magic happens behind the scenes (and how it will impact them), and every other detail of how their technology world will change. In other words, you will be writing a user handbook for your clients.
Walk the Walk
This is only a smattering of things that have to be done in order to make a major change. When it’s all put down in paragraph form, it can be overwhelming. BUT, take a tip from the construction industry: build punch lists. What you’re doing is building a new business model — not unlike building an office building in theory. Punch lists are effective when they follow this process:
- Build your list early in the process. Don’t start transitioning until you have your list nearly complete.
- Meet regularly with key players to assess progress.
- Assign responsibility for every task. Delegate tasks to the person most capable of making an informed decision.
- Move items visually through the process from To Do to Complete. Each type of task will have its own process, e.g., what you need to do for your contracts is not the same as what you need to do for your vendor selection.
- Be flexible. Life is weird, things change. Be open to adjusting the plan on the fly if you see a better way to serve your clients.
At some point you will have to pull the plug and put your plan into action. Choose a reasonable switchover date — one that isn’t so close you cause undue stress on your employees, but also not so far in the future that you lose the kinetic energy associated with moving forward. This can be a scary time — change is scary. Mistakes will happen. But with the right tools, the right planning, the right people, and the right partners you can lessen the chance of making big mistakes that reflect poorly on your company.
You got this!
Have you made a business ops change recently? Are you looking to change your support model? Visit us in the #Admin-Life channel in the JumpCloud Lounge on Slack.