Three years ago, at CanIT in Kelowna, I was introduced to a technician from an MSP. We started talking, and he stopped me, looked at me and said, “We will never use or recommend Benji Pays. Your customer service is horrible, probably the worst I’ve ever experienced.”
It shook me. No one had ever said that about us.
It turned out his MSP looked after one of our merchants. Not long before, Microsoft had turned off a root certificate that a lot of software relied on, and the QuickBooks Web Connector went down worldwide for a couple of days. At the time, our whole team was three people. We were trying to support all of that chaos at once, and we just didn’t have the cycles. That merchant had a bad experience, and a little while later they left. It really bothered me.
Fast forward to Pax8 Beyond this year. Same technician. He’s buying the MSP with a couple of the other techs, and he wants to use us for payments. I never brought up that day, and I never tried to sell him.
I think about that story a lot, because both halves of this post are in it. When you’re small, one bad day exposes every gap in your foundation. And when you get the foundation right, the good stuff compounds – slowly, and sometimes from places you’d never expect.
Why are we so busy but not making money?
Most MSP owners I talk to measure success by revenue growth. More agreements, more endpoints, more techs. Growth feels like progress.
But more revenue also brings more complexity, more overhead and more stress. I co-founded a brewery in Port Moody, a suburb of Vancouver, back in 2014, and people would see a full taproom and assume we were killing it. Money’s flowing, right? But a brewery is really a logistics business, and plenty of them are lucky if they’re breaking even.
Busy isn’t the same as healthy. So the real question isn’t “How do I get bigger?” It’s this: are you building a better business, or just a bigger one?
What kind of MSP are you trying to build?
There’s an analogy from Alex Hormozi that I keep coming back to. A two-storey building needs a two-storey foundation. A hundred-storey building needs something completely different underneath it.
There’s nothing wrong with a two-storey business. A smaller, founder-led MSP that pays the owner well and doesn’t eat their life is a great business. Plenty of people should build exactly that.
The mistake is building a two-storey foundation when your ambition is a hundred storeys.
Bigger businesses need different things: defined roles, repeatable processes, real leadership and financial reporting you can trust. When those are missing, you don’t notice right away. You notice on the bad day.
We still work on this. This summer I was travelling and asked our ops team to handle refunds and a few other tasks without me. It would have been faster for me to do the work. But there was a tonne of upside in having the team work through it and write SOPs that didn’t rely on me. It’s not hard. It just needs a process.
Start with the future and work backward
Know which building you want before you pour the foundation. That means starting with a picture of where the business is going, then working backward:
- A long-term vision of what the business should look like
- Five-year, three-year and annual plans
- Quarterly priorities
- Weekly activities
Look far enough ahead to choose the right foundation. Work close enough to know what to do Monday morning.
We run our company on EOS, the Entrepreneurial Operating System. It’s one framework, not the only one, but it gives us a rhythm: annual planning, quarterly priorities (“rocks”) with a clear owner, and a weekly check-in. I don’t follow it to the letter, though. EOS asks for a 10-year target, and I’ve never liked doing 10 years. For a software company, things change too much. Five years is about as far as I can plan honestly.
The other thing EOS reinforces is the power of “not now.” Every priority you add has a cost, and every rock shouldn’t create ten more weekly meetings. I’m a great example of someone who has to remind himself: we’re not doing this now.
Turn your vision into a financial model
A vision without numbers is just a nice story. Set real targets for:
- Revenue
- Recurring revenue
- Profitability
- Customer count
- Cash reserves
Then work backward. What sales, retention, hiring and service capacity do you need to hit those numbers? When we build our plan, we start with the revenue numbers and work out roughly when we have to bring people on to get there. For us that’s meant adding support, then a BDR, then an AE, roughly in that order.
And remember that a financial plan is a collection of assumptions. Test them. Reviewing one version of our plan, I realized it only worked if we just kept hiring people. That’s a red flag, because at some point everything starts to break down. We’d also spread our marketing spend evenly across twelve months, and our business isn’t linear through the year. That one bit us.
A number is only good or bad in relation to a plan. Without the plan, you’re just reacting.
What does a healthy MSP actually look like?
Healthy doesn’t mean big. It looks like this:
- Sustainable profitability: a net margin of x% you can hold year after year, not one good quarter
- Strong customer retention
- Predictable recurring revenue
- Adequate cash reserves: x months of operating expenses in the bank
- Operational processes that don’t depend entirely on the owner
- A business that gets easier to run as it grows, not harder
Sales creates growth. Retention makes it compound. Margin makes it valuable. Systems make it scalable. Cash makes it usable.
A bigger business gives you more activity. A healthier business gives you more control.
Decide what you’re building before you pour the foundation
That technician at CanIT wasn’t wrong about how that day went for his client. We were a three-person team holding up more than our foundation could carry. Since then we’ve added people and process around support, including an experienced customer success manager.
Three years later, he came back on his own.
So before you chase the next round of growth, decide what you’re building. Two storeys or a hundred, either is fine. Just pour the right foundation for it.
