Evolving From "Computer Repair" To MSP
The other day I answered a question in a forum. The poster had just gotten out of school, couldn’t find a job and was looking for advice on starting his own computer repair business…
… where he would go to folks’ houses and fix their computer problems.
This, of course, is a common story. When most techs look to start their own business, they aim for what seems like low-hanging fruit, consumers in their local community.
This could be a great way to get started part-time. You can send out the word to friends and family and quickly get your first jobs to generate some quick income. At the hourly rates most IT guys charge, you could make a pretty decent income if you can drum up just a handful of hours each week.
However, there are certainly drawbacks when serving the home-user market… and it’s why I don’t recommend relying on them as you grow your business.
These drawbacks include:
- They’re one-time customers. This is because consumers typically don’t call you, until something goes wrong. Real wrong. Otherwise, it’s rare when one takes time out of his or her day to take preventive measures. Then, when the job is done, you’re likely to never hear from him or her again – or at least until the next disaster occurs.
- The more they need you, the less they like you. Don’t take it personally. But if a home user’s computer breaks and it’s going to cost them to have you to fix it, they’re not going to be happy. If they need you a lot, they’re going to be very unhappy and will eventually start looking for another solution to keeping their computer working.
- Intense competition from well-known brands. You’re not just competing with the Geek Squad and the like, but consumers’ Internet service providers, as well as, service companies who have contracts with computer manufacturers like Dell or Lenovo. In other words, finding regular clients isn’t always easy when you’re up against companies will multi-million dollar ad budgets and built-in audiences.
- They’re reluctant to invest on technology. The consumer with an out-dated computer and who really needs your services likely does not place a high-value on his or her computing needs. Thus, getting paid for what your time is worth becomes much more difficult. Moreover, the consumer may not understand why he or she shouldn’t simply go with the lowest price provider, which leaves you to justify your prices.
- You’re not protected. You’re not in an office building where certain laws apply to protect the worker. You’re in this person’s house. If they smoke and you don’t, if they have pets you don’t like, if they’re just filthy and have a keyboard that looks like there’s an experiment growing on it, you have to decide what you want more… the work or your health.
But the biggest drawback by far is that you have no predictability for future earnings from this customer.
The strongest foundation for a healthy company is to have customers that bring in regular, recurring revenue. You need to be able to sell to your customers again and again.
With home users, for you to maximize the lifetime value of each of your customers, you better hope their computers break an awful lot.
So, who should you target instead?
The answer is small business owners. Folks where your work directly makes and saves a fortune… as well as… staves off disaster.
Small business owners understand how important their computer systems are to the life of the company. And they understand they have to budget properly to ensure those systems are properly maintained and protected.
But a savvy business owner is also looking to minimize spending wherever intelligently possible, and IT Support is always an area where management is looking for a way to cut back.
This is why providing IT Support to small businesses as an MSP today makes great sense.
With the low cost of monitoring and remote support utilities, and the low overhead overall required to operate an IT Support business, a consultant can charge a fair, competitive rate to provide a very high level of proactive support.
Monitoring your client’s systems for any problems will keep them operating more reliably and will cut down on the number of on-site hours you will need to perform. This keeps customers very happy.
And because you charge a flat-rate for your services, your income is more secure and highly predictable. You know exactly how much will be coming in next month, and if it’s not enough, you know exactly how many more clients you need to acquire to reach your goals.
You need to be able to accurately measure how your business is doing if you hope to continue to grow it. The MSP model will give you the regular recurring revenue you can count on, plus an accurate target to shoot for with your marketing efforts.
More Managed Service Provider articles
- Get your message out: Make your business tagline work for you
- How do you make the leap from owning a job to owning a business?
- How to get employees comfortable with business change
- For MSPs, meetings are more than get-togethers, they are come-togethers
- Is your MSP a business model or just a billing model?