About the Episode:
Rick Jordan explains the history of hiring for his Managed Services Provider Company, ReachOut Technology, along with the ups and downs he experienced finding the right hires in the beginning. Learn how to decide who you need to hire to keep your business growing, and more importantly, scaling.
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Today, I’m going to talk about how I met some of my team members because I have a Cybersecurity company that started out as a Managed Services IT Provider (MSP), 12 years ago.
This year we’re going to be a Public company, which is pretty impressive, right? I keep saying that I feel like my ass is on fire because of how fast things are moving. I feel like I’m a start up again because we’ve added on a lot of new team members over the past year to help fill some of the gaps that we need for our new efforts and initiatives.
I am going to go way back to when I started and explain some of my first hires, because especially in the MSP industry, there’s always this big question that I see posted on social media. “Who should be my first hire? Should it be sales? Should it be admin? Should it be another tech? Should it be a bookkeeper? Should it be a janitor? Should it be somebody who’s going to clean my toilets?” I’m going to go through that today and give you what I learned in my experience. Which actually works quite well for most MSP’s that want to scale up and continue to grow because most will stay stuck as a one to two man shop and I’m going to give you this transition.
I started thinking I’m doing all this work and I started looking at what’s making me money. This is how I separated in my head. What’s making me money right now? When it was just me. What are activities that I’m doing that don’t produce any revenue or any income?
If I sit and create invoices, and of course invoices you get paid off of those, but I’m thinking the act of creating invoices doesn’t make me any money. Sitting down in front of QuickBooks and generating these things, doing that activity doesn’t make me any money. I start thinking, following up on some emails and scheduling some things, that doesn’t make me any money.
I started going through this whole list of things and thinking, “What can I put in place? What person can I put in place to help me with these things?” That was that separation I made, what makes me money and what doesn’t make me money right now. “Who can I bring on board to help me on the things that don’t create money?” Which means that in essence, was a complete expense.
If I put somebody in that role, which ended up being an admin, was my very first hire.
She was pretty good at what she did. I started looking at those things, but then I started realizing a roadblock, and there were some things with her that actually ended up in my book, Situational Ethics, and I ended up having to fire her. It wasn’t because of job performance, but what I started noticing as I approached that moment, it was like it was supposed to happen.
I kept filling my plate with more and more of the tech work, because I kept adding clients because I was selling and I was doing the work. The actual work that made me money. I saw sales activities as something like the first step of generating revenue, which it is. After that, I would be the one. Performing the work.
I felt, “Well this doesn’t work out too well.”
I started realizing that my time was very limited, meaning I had reached a cap and I could not scale. I reflected, “OK, what else am I doing that doesn’t actually generate revenue somewhere?” I’m thinking, “Well shoot.”
I was an engineer. I cut my teeth in the enterprise space with Merrill Lynch, 120,000 workstations, 10,000 servers or so rolling out to the branch offices. I’ve told that story before.
I was also the first Geek Squad agent in Chicago, one of the seven test stores across the nation. I was a porn scrubber for them. I had come from this world of being a tech engineer, computer engineer, network engineer. That’s what I was thinking of, I was confined in that box. I was tying it to revenue, which isn’t actually a bad thing to think about.
I’ve already offloaded the admin work and now my two responsibilities are sales and operations, meaning operations doing the work, which actually generates the revenue, and I had not been selling MSP contracts yet, flat fixed fee, recurring revenue.
I was doing a break fix. This was still within the very first year of my business. Break-fix and doing block hour contracts. I start to think, if I still need to produce the revenue, and I’m the only one that’s doing the work, I think I need to offload sales now. I hired a salesperson. Here’s where I failed with that because that didn’t last very long.
I was still the person doing all the work, I had zero time whatsoever to properly train this individual. Within a short period of time, the initiative that they had, the hunger that they had, completely disappeared because I did not provide the resources to them that they needed to be successful and actually sell for me.
It was this conundrum that I had, that I was still completely full up with doing the work which produced the revenue. It made no sense to me at that point in time to offload that part of it, because I’m thinking, if I’m the only person that can do it, then I’m the only person that can actually make the company money. I can have somebody else go on to find work for me, and I can do the work and then I can have an admin on the back end actually go on an invoice for the work, and do all the other stuff that bogs me down during the day. That was my thought process and I was wrong.
Both these people went away. They failed for different reasons, but they failed ultimately because I was confined in the space that I had to do the work. Yet, prior to that salesperson coming on, I was the one that was selling the deals, which means that I could actually sell.
Everybody in my MSP today, pretty much works for sales. Everybody is tied back to top line revenue.
I don’t have an admin that is just there as an expense, there’s also ways that you can tie them back to top line revenue. Sales people, they’re tied back to top line revenue obviously.
They’re not just an expense, there’s no one that exists that is just an expense because everybody offers solutions and chances to generate revenue and even everybody was compensated for that.
What did I do way back when? I eliminated both of those roles and said, “Here’s what I think I need to do. I need to hire somebody to do the work for me so that I can go out and I can sell.”
My very first hire was another engineer, the very first successful hire that I had was another engineer. I also started using outsource help desk providers, to put out the fires as they came in and then I started focusing on actually eliminating these things.
I realized if I’m out there producing revenue, I always wanted something that had recurring revenue to it.
At that point, I drew the line in the sand with my clients and forced all of my 15 clients to sign a managed services, fixed fee recurring revenue, billed on the 1st, everything included plan.
The only way I could ever get to the point that I knew so that I had the revenue coming in to pay this new person, to do the work, so that I could be freed up to go out and focus on growth. For the next few years, I still wore two hats and I was still doing some of the work, but I was able to shift more and more over and stack it up Ryan.
He runs the operations and he’s been with me for 11 years now. Absolutely amazing man, he has put teams in place, he has put procedures in place as we’ve continued to grow and continue to mature to where we do multiple $1,000,000 a year with one third the people that most MSP’s have because of how efficient and mature we are. We have documented processes and procedures and we measure KPIs that no other MSP does. That’s how we stay so efficient. We have 1/3 the tickets that most MSP’S do, and we generate three times the amount of revenue that MSP’s do. Wrap that around your head.
The only way I could ever get there to begin with, was my very first hire after screwing it up two times, that was successful, was hiring somebody to do the work for me so I could dedicate specific time for strategy, sales and growth.
The only way for you to scale, if it’s an MSP or anything else, if you’re a coach, if you’re a business growth coach, a social media coach or a digital marketing agency or whatever it is. The only way that you’re going to grow is if you stop doing the work.
Bring other people on to do the work for you, that is the first competency you need to hire, is somebody to take the actual work that produces revenue, meaning fulfillment of the services that you sell. You need somebody else to fulfill and deliver those services, manufacture those products, ship the products, so that you don’t have to.
As an owner, as a CEO, the only way you can scale is by having somebody else do the work to free up the time for you to focus on growth.