Owning an MSP can be lonely. Most of the people you talk to on a regular basis, whether they’re your spouse, your friends, or even other local business owners that you know, don’t understand what it’s like to run an IT services business or the types of challenges you face. That’s one reason why many MSP business owners turn to peer groups for help making their MSP more successful.
Steve Alexander has seen the power of peer groups firsthand. With more than 25 years of experience managing, building, and eventually selling two MSPs, Steve now facilitates business advisory peer groups for IT service providers through his company MSP-Ignite. We sat down and talked to Steve to get his insights on the benefits of peer groups and how MSPs can get the most out of their participation.
Q&A with Steve Alexander of MSP-Ignite
Why should IT service providers consider joining a peer group?
Having a peer group gives you a place where there is no agenda other than helping each other. Nobody’s putting on false airs, and no one’s trying to sell you anything. Everyone in the room is wearing the same hat you are, and they’re not competitors. They’re from different geographic areas so they can simply give you good sound advice, at least from their experience.
I always say that I learned two lessons from my father. The first lesson was that you’d better learn from your mistakes. He taught me that one because I made a lot of mistakes as a kid and got in a lot of trouble. But as I got older he said, “I’ve always told you it’s important to learn from your mistakes, but if you really want to succeed in life, you need to learn from the mistakes of others.” And that’s where the power of a peer group comes from. It’s having someone else say, “Wait a minute, I’ve tried that, and here’s what happened to me” and stop you from walking down a path that’s going to cost you time and money.
What are the most important benefits of being in a peer group?
I’d say the number-one benefit is comradery. As much as everyone wants advice, sometimes it’s just nice to know you’re not alone out there. I know that’s why I joined a peer group initially. The second is learning from the mistakes of others to save yourself time and money. And, the third is strategy.
If you want to succeed, you need to learn from the mistakes of others – that’s the power of a peer group. @MSPIgnite
Most small business owners don’t strategize. They want to grow by, say, 30 percent, but there’s no real plan on how to get there. There’s no real discussion of exit strategy until they’re in the 11th hour of their life plan or their frustration with the business or their desire to move in a different direction. A peer group kind of forces you down that path of strategizing.
What’s involved in a peer group? What should someone who’s considering joining one expect?
Being involved in a peer group is definitely a time commitment. Our groups meet either two or three times a year for two days, so that’s at least four days out of the office, flying somewhere and meeting with a group of 10 people, sitting down and talking about your business, your business needs, your business challenges, learning about new technologies, new pricing offers, so on and so forth. We also do a two-hour call once a month, at least when we’re not meeting together face to face. There’s an email distribution list as well, and members are emailing the group all the time asking for feedback or advice or for someone to talk them off a ledge.
There’s also a financial commitment, but with our groups it’s pretty minimal, about $200 a month. I always tell everybody, if the financial commitment is an issue you’re probably not in a place in your business that you would benefit from being in a peer group anyway. Most of us spend that much money on sillier things than trying to grow our business.
Who’s a good fit for a peer group?
There’s always an operational maturity that you’d like to see people get to before they’re in a peer group. Ideally I’d say it’s someone with anywhere from 10 to 50 and up employees that can take the time away from their company. I have seen a few one-man shows that joined peer groups. They’re no longer one-man shows, I’m happy to say, but they were when they joined. In most cases they’d been a one-man show for a long time, making very good money and somewhat operationally mature for a one-man company. It’s not that they couldn’t afford to grow their team. They’d just never really bridged that gap to figure out how to trust someone else with their client base and move forward.
What mindset does it take to do well in a peer group?
If you’re the type of person that thinks you have all the answers and that your company is ultra-successful because you’ve had all the answers and will be as successful as you deem necessary, depending on how much work you want to put in, peer groups are probably not for you.
If you really want to benefit from being in a peer group, you have to be willing to come and kind of bare your soul and tell us where your struggles are, or—as one of my peer group members says all the time—tell us where you suck. We had someone who was in a peer group for well over a year, a very active member who contributed whenever anyone else was talking, but whenever his turn came, he would tell us about all these things he was doing that were great and how good his company is doing. We would try to ask him where he was struggling, and he always said everything was fine. At one point, another member looked at him and said, “Hey, just tell us where you suck.” I swear it was like someone flipped a switch. We were trying for a year to get this guy to open up, and he finally just let it out.
I’ve had members who have been in business for years come in and say, “I’m embarrassed to say this, but ….” If you can start that way you’re going to do good in a peer group because something that you’re embarrassed to share but are about to is where you’ll get the help.
One member in particular comes to mind who said: “I don’t really have a handle on my financials at all. I don’t understand QuickBooks. Someone else plugs everything in. I don’t know how to read the numbers. I know we’re doing okay because we have money in the bank, but ….” A year later, he’s the guy showing other people how to look at their financials.
There are also a lot of service providers out there that don’t call themselves MSPs. They know they need more recurring revenue, but their model’s working, they’re ultra-profitable and growing. They’re just not sure how to make a turn into some kind of predictable recurring revenue. Those people are still really good in peer groups, and they have a lot of successful ideas on how they’re doing things in their own right.
What advice do you have to help someone get the most out of their peer group experience?
Well, the first piece of advice I have for everybody is, whether it’s MSP-Ignite or someone else, join a peer group. If you’re in business, you need to be in some sort of business advisory group. To maximize being in a group, though, you need to understand that every opinion in your group matters. Frequently I see people join groups and quickly dismiss those that maybe aren’t as successful as they are or have smaller companies or haven’t been around as long. The truth is some of those companies are more nimble and have better ideas on things that some of us that are more successful never thought of. So, be willing to take advice from all comers.
If you want to benefit from a peer group, you have to be willing to share your struggles @MSPIgnite
You should also have it in your head — I’m not making business decisions without my group. That doesn’t mean stalling all the time to make decisions. But, you’ve got the ability to email a group of people that will easily understand where you’re at in a given situation, so why not ask? A lot of people don’t. They come to meetings and say, “So here’s what we’ve done since the last meeting.” Everyone else in the room is saying, “I would have told you not to do that.”
Any tips on how to choose a peer group?
Ask people you know. For example, MSP-Ignite is affiliated with Autotask. Not all our members are using Autotask, but if you were using Autotask as a PSA I would say you really should be in an MSP-Ignite peer group. That doesn’t mean if you’re not using Autotask you shouldn’t be. But if you were using another PSA, I might tell you that you should be in one of the other peer groups because we really focus on how to pull numbers out of certain tools. So it just makes sense to join a group that’s using a similar tool set or focuses on companies your size. So, the first thing I’d recommend doing is ask your colleagues, those you know from conferences or your surrounding area. The next is simply doing a web search and getting on the phone and seeing who you connect with. If you connect with the facilitator, then you’ll probably have a good peer group experience.