Thu, Jan 7, 2016 12:00 PM - 1:00 PM PST
Presented by: Harry Brelsforf CEO of SMB Nation and Anurag Agrawal Heading Techaisle
Story by Harry Brelsford, CEO, SMB Nation -
John Scheich, long-time SMB Nation member and Southern California MSP, is also a CPA and can lecture on the Section 179 matter. Shown here at the SMB Nation Fall Conference 2012 holding a book by Karl Palachuk!
What is a Section 179 provision and why are MSPs happy about it?
First – the technical definition defined by MarketWatch: “The Section 179 deduction allows the cost of qualifying new and used depreciable assets (including most software) to be fully written off in Year One. For assets placed in service in tax years beginning in 2015 and beyond, the new law maintains the maximum Section 179 deduction allowance at the generous figure of $500,000 (same as for the last few years). For post-2015 years, the $500,000 cap will be indexed for inflation.”
Second – What is the context? In 2013 on my nationwide tour touting the Windows XP migration opportunity, I trumpeted the Section 179 tax provision as a door opener for having clients invest in new IT assets and upgrade to Windows 7 (or maybe, just maybe, Windows 8). The generous $500,000 upfront deduction was about to be reduced to a mere $25,000. The idea was to spend in late 2013 like a drunken sailor and reduce your tax obligation dramatically before New Year’s 2014. The investment in hardware, software and your services all qualified under Section 179. Comprende?
Third – What does it mean today? Literally today as your read this on December 27th, you have several days to spend baby spend. That’s because the Congress, when it passed the Protecting Americans from Tax Hikes Act of 2015 in early December, retroactively applied the $500,000 upfront deduction to calendar year 2015. You are home free in 2016 under this legislation as well.
Translation: MSPs should awaken their clients over the holidays and seek spending authority to rapidly deploy hardware, software and services before midnight December 31st. Then do it all over again January 1, 2016! This is your very best short-term value proposition for your sales outreach efforts.
Fourth – Can I still buy a Hummer? Section 179 was well-known years ago for spurring sales of heavy SUVs like the Hummer as a business vehicle (wink-wink). That loophole appears to have been restricted with a $25,000 deduction limit (read here). Assuming you and your tax adviser understand all that – here is a list of heavy SUVs that would qualify: At first blush, I’d take the Ford F150 as my choice. How about you?
Finally – this is how the game is played in Washington DC. Lots of add-ons to the >$1.1T spending bill for the US Federal Government. This Section 179 reinstatement is expected to cost the Treasury nearly $200B over several years. If you’d like to get more politically active as an MSP, I can recommend two organizations: CompTIA and Microsoft Voices for Innovation.
If you asked 10 IT Directors or Managers for their definition of UC, you’d probably get 10 different answers so let’s simplify it to “An easy way to work together via voice, video, online collaboration and mobile devices”.
By Shannon Mayer, Senior Product Marketing Manager, Continuum Managed IT Services
The eighth installment of a monthly blog series offering tips and best practices on various ways MSPs can help their SMB clients work through the most challenging daily business issues.
In the last installment of “Better Call an MSP,” I offered tips on how to easily navigate the current flurry of M&A activity. Now let’s discuss something that too often has had a negative connotation surrounding it—outsourcing. I really think this is an area that many MSPs are overlooking, and here’s why. Below are some of the most common misconceptions about outsourcing and why you should consider this approach as you continue to grow and scale your business.
Misconception #1: Poor Customer Service: This is probably the most common stigma about outsourcing. Many might have personally experienced less-than-stellar customer service from a company that’s not even using outsourced employees, and now hold a grudge. As competition continues to increase, this is an area in which quality needs to outpace quantity. Why does bad customer service still exist? The four biggest customer complaints are long hold times, unresolved issues, multiple transfers and unsympathetic reps. So, how can an MSP implement a solid customer service level through outsourcing to avoid these complaints?
• Scale: Hiring and retaining talent is the most common struggle for MSPs. How can you grow your business when you can’t find and retain good people? Outsourcing helps by allowing you to take on additional customers without the fear of encountering some of the customer complaints mentioned in the previous paragraph. Working with a solid outsourcing vendor within the industry that understands the SMB space and the pain points of MSPs is the first step to getting an effective outsourcing plan in place. With the right vendor, your company will be staffed by reps who know and understand your managed IT services business.
• Proper Knowledge Base and Broad Skill Sets: I mentioned in a previous blog that it costs six to seven times more to acquire a new customer than it does to retain an existing one. Outsourcing helps gain access to a wide knowledge base that allows issues to be resolved quickly and easily. Taking the time to build your own knowledge base is something that many MSPs can’t afford to do from a financial and time standpoint, especially when trying to build their customer base. For example, if a customer has an issue with a Mac operating system, and you don’t have a skilled tech, outsourcing is particularly helpful; it provides access to techs who have broad and/or specific skill sets that would be difficult to keep on staff.
• Consistent Procedures: Outsourced companies generally have written and proven procedures that all employees follow. There are clear escalation guidelines and rules on how to handle specific situations. And when these procedures are enforced and followed, your client base experiences consistent customer service. You also don’t have human resources issues like hiring, firing and training practices.
• True 24/7 Support: With outsourcing, you truly have access to constant support, which is something that can be taxing as a business owner who is trying to expand. Growing your business is one of the most important areas in which outsourcing can help, and according to Defaqto Research, “55percent of customers would pay extra to guarantee better service.”
Misconception #2: Outsourcing is Pricey: Like the stigma of poor customer service, this is also a myth. Why? Because reducing your overall IT budget is still the number one reason for considering outsourcing. Most MSPs think outsourcing is more expensive, and they miss out on valuable cost-savings opportunities. Not only does outsourcing help you save money, it also helps to keep employees happy, which undoubtedly leads to company loyalty and longevity.
Hiring an outsourcing firm also allows techs to focus on proactive projects, rather than scramble to put out IT fires. If you have techs dedicated to Level 1 tasks, have your outsourcing company take those calls and put your best techs on project work that’s more satisfying to them, all while bringing in additional revenue and new customers.
Remember that the advantages of outsourcing go beyond the actual price. Examine, too, the cost of delivery of your services. When considering cost, it’s important to look at how much you are spending on tools and use the new outsourcing opportunity to work on more revenue-generating tasks. You also want to consider not only what it costs now, but also in 6-12 months from now.
Misconception #3: Outsourcing is Difficult to Manage: Externally, outsourcing allows you to spend more time working with customers that have proactive needs, while working to recruit new ones, and deepening your relationships. Internally, outsourcing gives employees the ability to gain and develop fundamental management skills by allowing them to manage the outsourced provider, thus enhancing their value and expertise. By giving employees management responsibilities and allowing them to work on projects of their choosing, this alleviates the number one issue that MSPs deal with—hiring and retaining good employees.
Remember that it’s OK to reveal any struggles you are experiencing in managing a help desk on your own with your vendor partners. By outsourcing, you save time on items such as metrics, reporting, structure and processes. This can all be done without the outsourcing provider completely replacing your help desk—they can simply enhance it, augment it and help identify what is not working as well as areas of improvement.
Don’t allow the misconceptions of outsourcing to stand in the way of prosperous business growth as well as happier employees and customers.
Shannon Mayer is Continuum's Senior Product Marketing Manager and is directly responsible for platform go-to-market strategy and messaging as well as business intelligence. She manages the Continuum Peer Groups program and content for Navigate 2016, Continuum’s annual partner conference. Shannon was named a 2013 Channel Chief by CRN and has also been named to the MSPmentor 250, CRN’s ‘Top 100 People You Don’t Know, But Should’, and CRN’s ‘Women of the Channel: Power 100’ lists. Follow her on Twitter: @shannonjmayer.
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