How to Grow from a One Man Operation to Two
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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.
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@mike-davis said in How to Grow from a One Man Operation to Two:
@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.
So if they have a home lab and professional experience , you're gonna still pay minimum wage?
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@mike-davis said in How to Grow from a One Man Operation to Two:
@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.
Home lab worked for networking (WAN networking, and MPLS, and OSPF scale well from labs to enterprise shops). There's a lot more clearly defined best practices in networking, than in the systems world.
On the systems side, it's not the same. My shop didn't do desktop support, so the traditional low-end windows stuff didn't exist to work people up. Our lowest tier was doing VDI support (clustered storage, hypervisors, GPO in environments with 8000 users). There are people who run VDI at their house and run NSX for security services but they are few and far between and they certainly aren't cheap.
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@irj said in How to Grow from a One Man Operation to Two:
So if they have a home lab and professional experience , you're gonna still pay minimum wage?
If they have professional experience, you have to figure out how valuable that experience is to you. If it's professional experience in something that you don't touch, minimum wage might be appropriate. OTOH they might be able to make more somewhere else, so it's not a good fit. They are worth more - just not to your business.
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@irj said in How to Grow from a One Man Operation to Two:
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.
So if they have a home lab and professional experience , you're gonna still pay minimum wage?
I paid a guy who was doing part-time desktop support at IKEA, and had a 5 router home lab, with a VMware cluster ~38K to hire. At 90 day I moved him up to 56K. He got brisk (Sometimes twice a year raises) and was over 100K in under 3 years. I could also bill his time at 200-250 an hr (and had work backed up for weeks sometimes for him. It was clients requesting him specifically for him). I got lucky and found someone who had a curiosity and capability but that is useless without the work for him to grow into. I was constantly throwing him into projects that were above what he had done. Do you have that kind of work available? I hired away a lot of guys from Small MSP's who had guys with VCP/CCNA's skill ranges fixing printers, and desktops. The initial cost to hire them was never that bad (45-70K) but it was the upside. of growth to 6 figures (and the skills to demand even more) that brought them on. I hired one guy from a low end MSP for 44K OTE, and ended up having to give him a raise to 70K in under 2 years. He got bored quickly and left (he's running NSX/vRA automation deployments for an airline for ~180K OTE now). If you can't keep the work to keep someone interested it can be more disruptive onboarding, and offboarding them than it's worth. I tried to shoot for ~2 years tenure as my value target.
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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:
So if they have a home lab and professional experience , you're gonna still pay minimum wage?
If they have professional experience, you have to figure out how valuable that experience is to you. If it's professional experience in something that you don't touch, minimum wage might be appropriate. OTOH they might be able to make more somewhere else, so it's not a good fit. They are worth more - just not to your business.
I can't see paying someone in any type of job that even touches a computer $8 an hour let alone someone you want doing networking or sysadmin work. I can't imagine they stay long either since most entry level IT jobs pay $17+ an hour
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@scottalanmiller 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:
It can be done. I think I remember reading even on NTG that they started during the IT boom and had the advantage of taking on an incumbent customer base.
No, we started as a software shop and moved into IT gradually.
So did @Bundy-Associates
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@scottalanmiller 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:
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.
In the context of starting from scratch and ascertaining new accounts in 2017. Incumbent businesses with existing revenues and clients have a 20x advantage.
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@bigbear 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:
@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 network help in the late 90's and early 2000's?
If we only knew.
In the context of starting from scratch and ascertaining new accounts in 2017. Incumbent businesses with existing revenues and clients have a 20x advantage.
If your looking for "hot jobs"
SRE, Machine Learning, and general development are all doing quite well.
In infastructure NSX people are hard to find and pay decent (~200K+).
Operations people who know enough automation programming and scripting to do Devops (DevOps is about ops people becoming devleopers not the other way around).On the topic of advantages of large shops vs. small it's pretty huge.
You are also competing against guys with DEEP skill benches. Not only can they bill more per hour, but they have guys who can do what you do in 1/4 (or less) the time.
New site deployed? I would quote the labor at flat fee 2 hours $400 knowing it would take the engineer maybe 15 minutes to copy paste an existing DMVPN config he had done.
Larger shops also get significantly better pricing on MSP tools (RMM, and PSA pricing models skew towards heavy discounts once you have 10,50,100 employees or thousands of sites being monitored). I've seen 80-90% off list for software.
Large shops have benefits that just can't get matched.
Going from a small employer who's health insurance was so bad it was cheaper out of pocket to a medium sized shop where it was all free was huge. There are guys with chronic conditions (Type 1 Diabetes, Cancer survivors) who historically couldn't work for a small business because of the out of pocket insurance costs.
Going from a medium to a larger shop can double your compensation. Even if you pay them the same in cash you are likely not to offer:
ESPP - Variable income between ~3K and 30K depending on how the stock is doing. Can pay employees at long-term capital gains with this to cut their tax bill in half.
RSUs - Variable income, that has special tax treatment if held. Can pay employees at long-term capital gains with this to cut their tax bill in half. It's a golden handcuff but the employee can leverage this into a larger signing bonus at their next hop.
Bonus - 5 figure performance bonuses and bonuses paid out more than once a year are nice.
401K with match, and low carry costs. Note the last one can be a legal liability if you screw up.
Education (Cover full costs of an Masters/MBA, any certification or training they want and send them to 1-2 conferences a year.
Expense/travel reimbursement policy - Small shops will balk at someone spending $30 on dinner. Large shops will not care about a $100 lunch. Small shops will force lowest cost fair rules on travel, and force discount carriers, and tickets. Larger shops will allow business class on long flights.
Equipment/other misc - Small shops will give you a 10-year-old compaq laptop. Larger shops will happily give you a $3K XPS or Macbook pro. Cell phone reimbursements and other fun things also add up. Small shops have to count pennies....
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@storageninja said in How to Grow from a One Man Operation to Two:
Expense/travel reimbursement policy - Small shops will balk at someone spending $30 on dinner. Large shops will not care about a $100 lunch. Small shops will force lowest cost fair rules on travel, and force discount carriers, and tickets. Larger shops will allow business class on long flights.
I'm seeing the opposite here. Small shop, doesn't blink at flight costs, dinner is always $100+, we can just request luxury apartments wherever they are needed, etc.
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@scottalanmiller said in How to Grow from a One Man Operation to Two:
@storageninja said in How to Grow from a One Man Operation to Two:
Expense/travel reimbursement policy - Small shops will balk at someone spending $30 on dinner. Large shops will not care about a $100 lunch. Small shops will force lowest cost fair rules on travel, and force discount carriers, and tickets. Larger shops will allow business class on long flights.
I'm seeing the opposite here. Small shop, doesn't blink at flight costs, dinner is always $100+, we can just request luxury apartments wherever they are needed, etc.
Meh, startup burning cash to attract the right talent. After startup phase this type of thing will typically change.
