The Disappearing MSP Middle Class (Part One of a Series)

Geek Speak

MSP Middle class picThe maturity of the SMB community is starting to show. In a new series of articles, I detail the current shakeout amongst IT

Pros, vendors and other community members that isn’t in any way wrong, it’s just a reality. I’ll explore master MSPs built for scale, lifestyle consultants built for pleasure. Plus I’ll explore the sales agent and contractor community. I’ll even talk about how to “hang on fast” and how you can try to avoid the middle class trap that I’m about to reveal to you.

Power Elite
At the top of the SMB pyramid is the power elite – the master MSP. I say master, because these firms have consciously raised their hands and elevated up to an elite tier. How did they do it? First and foremost, I point to education over luck. And while our audience isn’t necessarily graduate school-level material, you do see the value in peer-to-peer collaboration. Enter the popular peers groups including the SMB Nation Peer Groups (run by Josh Peterson), HTG Peer Groups (run by Arlin Sorenson) and the Taylor Business Groups (run by Larry Schultz). Think of these confidential cabals as a safe environment to share financial information, operations know-how and general business experiences. Put another way, your peer group is your board of directors.

Admittedly, peer groups aren’t for everyone. However, I have found the peer group phenomenon to essentially turn computer guys and gals into serious business people (even the spreadsheet jockeys) who scale up to repeatable and predictable business models. I feel that moving forward, these groups will continue to make it, because they can efficiently amortize the costs of its PSA system, the RMM tool subscriptions and even the annual costs of peer groups that, when fully loaded with travel and conferences, is north of $5,000. Does that make sense?
Another thing the “power elite” enjoy is birds of a feather with their customers. By growing-up to the “M” or midsize space, these master MSPs attract larger, more profitable customers who buy more goods and services. It just works that way--larger customers trust larger service providers. True that.

Names that come to mind for those who have elevated to the power elite include Jamison West and Ray Engler. Peek at their LinkedIn profiles to see if you can discover their secret sauce. It's all about the 80-20 rule, but on a different level: the power elite are the 20 percent that's currently making 80 percent of the sales.

In my next installment, I’ll feature the business coaches who thrive on the middle class with messages of hope to ascend to the upper caste.
Also – join me for our Thursday webinar where I’ll touch on this a bit more. It’s at 10AM PDT, September 5…sign up here.