Video: What To Do Before Selling Your MSP Business

it wasn't that I had the goal to sell but I really wanted to keep in mind the fact that I was building a business that should be of value to someone else not to me because really being in business is not about you it's about who you serve hey Channel insiders welcome back to channel Insider partner POV I'm your host k boso and my guest today is Nancy henriquez a two-time IT services business owner who has the unique experience of also having recently worked for an IT vendor I pick her brain about what she learned from being on both sides of the partner equation her journey through the it Channel and her advice for those starting or selling a business Nancy welcome it's so great to see you so great to see you Katie it's a really special thing to have you on though because you were probably one of the very first people that I met when I started my channel career about six years ago and I just remember being like is everyone like this they're great then I want to meet every MSP and channel Champion out there so it was wonderful to get to know you then and I'm so grateful for your friendship and the continuing relationship we have why don't you go ahead and tell me how did your channel journey start oh I love it I love that question I actually started within I would say the it space um right out of high school I'm like 20 years in which I'm aging myself at this point but I think that it's something really special because I'm still you know a millennial or whatever especially when I first started within a channel that was something that was really heavily talked about and it was one of the things that made me feel out of place per se but I did start my journey really young right out of high school I interned at a local break fix shop and then you know a few years into it I decided I think I can do this a little better and at the time my my employers weren't really into the idea of recurring revenue or recurring contracts and that's really where I wanted to go and so at the age of 22 with a three-year-old and a newborn on hand I decided it was time to jump ship and take the leak and start my own practice and so I started a break fix shop and small town right so it was it was really a great experience because I got to know a lot of the community and so we grew that business for eight years and 2015 I got accepted into the Goldman Sachs 10,000 Small Business program and really that was my first chance at any kind of business education and so it was an MBA program that was put together by bapson college 3 months of like intensive classes and there was peers and all of that but I came out of that program with having sold the first business and started the second which was a MSP model before that was the title I guess let me stop you right there because knowing that our audience is very diverse and where they're at on their MSP Journeys their VAR Journeys their even just their their idea what it truly is and what an IT solution provider is Define break fix for me and then talk to me about how you defined MSP and where you were when you first heard manage solution provider for the first time break fix is more time and material so uh you literally have to wait until something breaks before you can fix it and so there's no proactiveness in there I I call it um Revenue by love um and so for me at the at the time growing a a family at the same time as a young business it was really how do I make ends meet in an easier way while also really paying attention to what my customer is needing and a lot of the times they don't know what they need because all they know is what they know and so that's where I really started to think about well how else can we make this something that is more beneficial for everyone around not just me and my survival but also uh helping the customers and their businesses and so for me it it really became about how can we be more proactive and that steps into more of what is the managed Services right and so that is more so about managing the cycle of service and so for me it was how do we bring that to a place where it makes sense financially speaking for the customer as well as for us and so I started to look at that how do we do that right and 2016 was the first time that I went to a conference an MSP conference or an IT conference per se that was the first time that I had seen the MSP 501 list and so that was you know the top 501 managed service providers and of course I was like what the heck is that and so when I started to really listen and and to figure out what is it that they're doing it was Ah that's what I'm wanting to do and so it gave me more insight into what are the businesses that are already doing this how are they making it work and how are they making it successful and for me the MSP 501 list uh especially the top 10 really became The Guiding Light uh for how I built my MSP at the time that is so cool so for you being in this space now and just seeing how the the term MSP the practice of being a managed service provider how have you watch that grow over the years and that's a very loaded question but talk to me a little bit about maybe some of the points that you've seen very different from when you first heard the term to where we are now and just the maturity of this industry what does that look like to you and what are some maybe key points that you can point to to say like oh yeah this is way different from where we started first first off I think the um manage services now is so broad you can have managed services within it within print within Telecom within I mean so many ways that you can offer now managed services that it's not just about the infrastructure and support anymore and so I feel like the shifts that we've made within this space are no longer you know so time and material is like if you're still doing that either starting out your practice right now or your customers aren't educated in how they can be more proactive within their business right so I feel like now we're moving more towards uh more Business Solution providers right so as technology is more relied on now we have ai coming into the talks within business and how to utilize that it's no longer just about infrastructure but more so about how do we we as technologists help our customers understand where the intersection of technology and business come into play and how to leverage those things so that their businesses can not only run reliably and efficiently but then also be able to withstand sustainable growth as technology changes and shifts and we bring in more technology and have the need to also secure that technology so it really now we've become a lot more needed and a lot more just depended on and now it's not just about how do we fix something but then also how do we bring in the expertise to bring in the right solutions for all of the small businesses and large businesses to continue to grow within the space that they have no idea about right when you've talked to customers in the past have you ever spoken to any that maybe you're the very first MS P that they had been speaking to about like all right we're we're in SMB and we're realizing that we need to have a better approach to our it and our Technology Solutions so I'm sure they don't even use the word Solutions so when they talk to you though what is that like for them to for you to tell them about this for the first time and do they ever what's just their reaction because I can imagine them being like oh wow we've been lucky not to have anything bad happen up until this point yeah yeah for sure and I think um a lot of the times the conversation start off with like so this is the technology we have and this is what we're trying to accomplish but a lot of the times I just ask let's take a step back because let's understand what your business is who your customers are what's important to them and how do we now bring in technology after the fact to make sure that everything within the business is aligned and so I've had people tell me I have no idea what manag Services is what does MSP stand for or things like I don't know I just I just need it to work right so just just make it work and that's it that's something that I would say has been changing over the years as well which is the customer education aspect of what managed Services is and why it's better for business so as as that uh shift changes it also changes the conversations that we as technology professionals have with our customer and that's changed a lot over the years with a lot more people understanding why it's valuable for their services to be more proactive especially as they continue to rely on technology I got a silly question just because it's one that I always like to he at events when people are talking about you know something that their clients did or didn't do have they ever come to you and asked about this trend or said like hey can we get some of these things not really fully understanding what they're asking for and it just really is one of those things that I don't want to say gets under your skin but it's just like I got to make sure I take a breath before we have this conversation oh yeah oh yeah I'm based out of Texas when I had my my business I was in Houston and there's some areas of Houston or outside of Houston that are really Rural and um so this customer wanted to have a Cloud Server and they wanted to be able to travel everywhere and have access to everything and of course like that's something that everybody nowadays wants right back then this was a few years ago I had to break the news to them of well your Internet sucks um it can't support a cloud infrastructure that was something that you know one one of those things where it's like the customer doesn't really understand they they just want what they hear and so part of what we have to do as professionals is educate and for me that is something that has always been at the Forefront is just making sure that we're educating because people don't know what they don't know and I don't expect them to know because they're not the experts I find it funny especially um when customers were you know I went to this conference and I heard this and and I want that technology for me and then it's like well there's a lot more to what you may want than just make it happen really quickly you really have to understand the positioning of your business the location of your business you know what softwares do you work with and so on and so forth so it's a lot more in depth than just hey I want this now and so that was something that we definitely had to work with our customers on to to understand and to really get where uh what's going to be needed in order for you to be able to accomplish that you've sold two businesses that you previously started and managed and ran and owned and eventually sold I would love to kind of know about what an exit plan should look like for those out there who are considering selling their MS P or maybe they have absolutely no plans to do so but what did you learn about selling your MSP and when was that something that you had to start thinking about is it the day you go I don't want to do this anymore or is it the day that you start the business just walk me through that plan and what you would have done differently now so I talked about the Goldman Sachs 10,000 Small Business program and so the very first day we talked about exit planning and the reason why and I remember this clearly to this day and it's something a phrase that I absolutely love now start with the end in mind and that is what we did that first day and that first day I after uh sitting there for eight hours I think it was the the class uh was and really thinking about what does the end look like for me for my business day one I realized I was not in the right business and so day one of that class I went home and talked to my husband at the time and told him the great fix shop that we had started and had run for eight years now it was time to let it go and we needed to sell it and he looked at me like what you are absolutely insane what did they do to you at this class and so the reason why was because I had built a business that was more so out of survival and necessity less so about what I wanted out of life and less so about what is it that how can I provide more value and so that was the moment that I realized okay I didn't start this business in the best way possible so let's go ahead and start over and so I sold that first business the second business now knowing that I should start with the end in mind I built it completely differently I read a book called built to sell and and that gave me a lot of the foundational aspects that I really needed to look at when building the business and it wasn't that I had the goal to sell but I really wanted to keep in mind the fact that I was building a business that should be of value to someone else not to me because really being in business is not about you it's about who you serve and so that's where I started to look at those aspects um how do I build a business that would be valuable to others as well as to maybe eventually selling it and that led me to putting process in place documenting everything along the way making sure that my books were in a certain way um in a way that a buyer a potential buyer may see as more valuable because of the way that it was cleaned up or or that it was built and so those were all the things that I looked at originally and I had no plans to to sell my business really my plans were to grow it into a national platform but life happens and what helped during that time was the fact that I had built the business to sell ultimately and so the time came where life threw some curveballs at us and we needed to sell the business in order to be able to move on to the next chapter of our lives and thankfully the way that everything was set up and things like that not only was it valuable to somebody else but it was I'm not going to say easy cuz it's never easy to transition but uh for the most part we were very clear as to what our values were what our purpose was who our customer base was and so having all of these things in order made the conversations of who can I sell to much easier than if I would not have had all of this already prepared I would say so I say if you're thinking about selling and it's like the the day of oh I need to go ahead and sell now you've started too late so you're going to have to do a lot of work to clean up and to get to a point of being at a point where you can sell and it being an easier transition so I would say the moment that you're thinking about starting a business start thinking about the exit because whether or not it happens or it happens the way that you plan it's just easier if you get it all done at the very beginning and not have to go backwards you had some really interesting thoughts that you shared with me when when we first sat down to talk about doing this interview of one of the things that you would advise people to do when you're transitioning ownership of your business and that was to really talk through your solutions could you kind of reiterate that story for me and why it's so important to make sure that your definitions of solutions and services match with the person taking over you know everything that I had done with the business to get it ready to sell or or however that may be all the processes that we created everything it was our definitions and while we use a lot of the same words in the industry what I realized when we were transitioning or merging to the company that acquired us was that although we used the same words the definitions weren't really the same and so one thing that we ended up having to do was kind of like like draw out what are the words that we're using and what are the definitions and now how are we going to combine those as we're you now merging into this other company and so one of the very first ones that was as we were evaluating our technicians and stuff like that was like level one level two level three all those levels we all come up with our own ways of identifying who is in what category or what it takes to be in certain categories and so that was one of the very first stumbling blocks that we had was so my technician is a level one but in your definition of it he's a level two so now we've got to move him up and you know all those things that go into it but that was one of the very first things that we realized oh uh we Define these differently when it came to our vcio services and what's included that's part of you know account management or you know it it was just different different words different ways of of saying it and that was one of the first aha moments of oh okay so we have to talk through some of the definitions because there is no standardization within our industry at the moment with what certain words mean my conversation with Nancy is only just beginning come back on Tuesday for what she learned while working at a vendor startup thanks so much to Nancy for joining me and thank you for watching or listening you can check out all episodes of Channel Insider partner POV on Channel insider.com or watch us on youtube.com/ Channel inssider newws and Trends don't forget you can also listen to us as a podcast on your favorite podcast listening platform like subscribe and follow wherever possible so you never miss an episode come connect with Channel Insider on LinkedIn or X or or connect with me at Katie boso on both platforms as well once again I'm Katie boso and I'll see you next time

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