As you grow as an MSP, there are milestones you’ll be required to reach before moving onto the next. This is true of any business.
Some of these milestones are celebratory in nature—for example, landing your very first managed client under contract. Or landing your first whale, or golden goose as I like to call them.
Some milestones, on the other hand, can be absolutely gut-wrenching. There are no hard and fast rules on how to handle some of these milestones, and the fear of making the wrong decision often leads to utter paralysis.
The first of these challenging milestones you’ll encounter as an MSP is undoubtedly hiring your first technician.
Your very first hire should be a technician
Note that I said your first technician and not your first employee. Contrary to popular belief, hiring anything other than a technician out of the gate is one of the worst mistakes you can ever make.
You’re investing in a technician to ultimately take on more clients. The key difference between hiring an admin and hiring a technician is that your admin role has zero capacity to earn you money.
Sure, they may be able to take some trivial work off your plate to free up a few hours for you to go out and resell, but hiring another technician fills this void much more efficiently. This is because 100% of their time can be resold, period.
If I could free myself from 20 hours of paperwork a month or buy myself 160 salable hours within the same time frame, which do you suppose I’d choose?
There’s simply no way around it. Without additional technicians you can’t grow.
Many MSPs resist the need to hire their first tech and run themselves ragged working 60-80 (dare I say 90?) hours a week in an attempt to maximize their intake before bringing on some additional manpower.
Others hire their first technician way too early, leading to a mad dash to try and fill their time with billable work that’s almost universally below what they would normally otherwise charge.
Hiring a technician = Buying more salable hours
So first thing’s first. When is the right time to bring on your first technician?
The advice I always give every MSP, regardless of the question being asked, is to always break down whatever it is you’re considering into its simplest form. In other words, tune out the noise.
Forget about the nonsense paperwork bullshit you’ll have to deal with. Forget about whether the prospective employee will ultimately work out or not. Forget about benefits packages. Forget about all of it.
The simple truth is that these are challenges you have to overcome in order to grow. If you don’t, game over.
So fall back to the original question: When is the right time? Nothing else matters, at least not yet.
When you simplify the question down into its most basic form, it translates to something like this. I have one true salable asset as an MSP: my time.
For argument’s sake, the goal of my business is to sell through all 40 of my salable hours each week at a maximized rate. Once I’ve done that, my growth potential is over. I’m effectively now working the equivalent of a regular job, except that I’m assuming all of the risk, paying my own benefits, and the concept of working 9-5 is nothing short of a cruel, cruel joke.
In other words, there’s now a ceiling over my head and the likelihood of ever getting a raise is virtually zero. To grow, I must purchase additional salable hours and sell them for more than I bought them for. That’s all we’re trying to accomplish here. Nothing more, nothing less.
Your first technician is an investment in the business
Regardless of what anyone tells you, bringing on your first technician is an investment. You don’t make an investment and expect it to explode into profits the very next week. Investments pay off over time. If you view it any other way you’re going to have a terrible go of things.
It’s unlikely you’re rolling with 40 hours of billable time each week at maximized rates, so the likelihood of you covering an entire salary out of the gate is virtually zero.
The belief that you need to be able to fully cover the technician’s salary from Day 1 is a critical mistake many MSPs make. It’s almost never possible.
You’re making an investment that must enable you to do one of two things. It must take technician work away from you so you can transition your salable hours to your new hire, and either free up your own hours translating them into additional sales opportunities (hopefully at a higher rate), or allow you to qualify for a better (or different) class of customer based on a skillset you currently don’t have.
One of my favorite Syncro MSPs to talk to on a regular basis is Brian Morris from Morris Tech Team. I’ve known Brian from our Syncro communities for some time now, and I had the pleasure of meeting him and his wife at a recent MSP event out in Chicago. I spoke with him about this very topic, because it wasn’t too long ago where Brian brought on his very first technician.
Here’s what he had to say on the topic. Take careful note of what he specifically set out to accomplish when bringing on his first tech:
Working on the business and doing marketing was just a very low priority without another tech. Marketing might create too much busyness—and I was busy enough. It was very scary to think about taking on a larger client because one person can only handle so much!
Finding good paying projects, then working on those projects was a huge challenge when there was only one person. I would hesitate finding and accepting a big project because I knew it would be hard to keep a constant focus with other calls and requests coming in.
This is what bringing on your first technician is all about.
Brian freed himself up to market and sell, while simultaneously allowing his MSP to go after (larger) customers he may not have otherwise qualified for due to limited intake capabilities. This is precisely how I know Brian is on a path to success—he clearly identified what he was losing, and more importantly, what he intended to gain with his investment.
When to hire your first technician
OK, by now I’m sure you’re asking, so when the hell do I make this investment???
The answer is somewhere between 20 and 30 hours of maximized intake. That may seem like a fairly broad scale, but this is largely dependent on how you define maximized intake.
If you’re closing 30 hours a week at $50 an hour, that’s not very maximized, is it? That’s $78,000 of annual revenue, and if that’s the only bucket you have for payroll, that doesn’t leave much money left for you when it’s all said and done.
On the flipside, if you’re rolling with 20 hours sold each week at a rate of $150, that’s $156,000 of annual revenue. That’s more than enough to get this party started.
Ideally, you’d like to be around $100,000 – $125,000 in labor revenue before pulling the trigger, and feel free to adjust that according to your proclivity for risk. If you’re earning less than that, you’d better have some savings to tap into if things ramp slower than anticipated, or have every confidence you’re on the verge of closing some absolute monsters.
A lot of new MSPs like to jump the gun because momentum is in their favor, but if I’ve learned anything in this space, it’s that momentum is one hell of a fickle beast.
Vet your first technician hire carefully
So you’ve got your first tech, and you’re extremely bullish on their potential. Now what? First and foremost, vet the hell out of them.
You can research the best interview techniques in the business, but in this space it really doesn’t matter. That’s because, and let’s be honest here, some IT people can be a bit, shall we say, weird. No judgments here, but technical acumen doesn’t trump a customer’s comfort level when someone is coming into their business, or in some cases, into their home.
I never cared how odd or socially awkward a technician was if I brought them on internally, but if you intend your technician to go on site and regularly interact with actual customers, this should be a major concern.
So before you go offloading your VIP clients onto your new technician, put them through their paces with some low-liability clients first. Technical acumen can be tested in house to a degree, so that’s less of a concern. But in many cases candidates can interview extremely well, and then do very quirky things once they are hired and begin going on site.
For example, my third technician hire, who had one of the greatest, if not the greatest technical acumen of anyone I’ve ever hired, apparently asked out customers at two of the three sites I first sent them to. That was not awesome.
I lost both of those customers over it. Thankfully, this didn’t happen to any of my VIP customers. I always wanted my technicians to cut their teeth on a few low-liability hourly customers first, and while it’s never easy to lose any customer, especially over something like this, it’s far better to lose one earning you $500 – $1,000 annually versus one earning you $50,000 annually.
Set clear expectations for your new technician
Another big “gotcha” that MSPs struggle with out of the gate is expectation setting. You hired your technician to fill a specific void, and while you have a clear picture of how this new technician will fill it, do they?
I spoke to Brian specifically about this as well, and here’s what he had to say:
I wish that early on, I wrote down very specific expectations. It’s not fair to desire someone to do X,Y,Z, then assume that they should know, then be frustrated when they don’t do it. For example, “If a new ticket comes in, your responsibility is to make sure that someone contacts that client within 45 minutes and document the action.
In fact, one of the best things you can do, long before sending an offer letter to your first technician, is to clearly define all of those processes that have been stuck in your head up until this point. You’ll quickly find your ideal role may not be as ideal as you thought once you begin defining everything you expect them to do, and how you expect them to do it.
Clearly defining the role is not something you want to be wasting time with post-hire, particularly because any delays you incur in fully ramping them is now costing you hard dollars.
Furthermore, you may be surprised by the amount of time it takes you to accurately document everything that’s been in your head all this time. Let’s be honest, when you’ve been running solo, especially if you’ve been running solo for a long time, there’s a wealth of undocumented knowledge floating around in that head of yours.
Brian made some similar comments on the topic:
I was very concerned that there would be a lot of down time for the new tech unless I was able to generate more business. This was true for sure. It either took a lot of time to document or explain or prepare tasks or was difficult to be able to delegate many complex things.
The amount of time that I needed to spend documenting processes and documenting things that have been done and need to be done went up dramatically. I generally could just keep things in my head and it wouldn’t matter. But with more than one person, everyone needs to be in the loop of everything now and for the future.
The final aspect to all of this is getting your head right from beginning to end. You aren’t going to get it perfect the first time. Hell, you might not get it perfect after the fourth or fifth technician hire. Sometimes, it’s downright impossible to get it perfect due to the candidates in the pool you have to select from.
The point being that your technician isn’t you. Where you see a lead come in at 8 pm as an opportunity, technicians likely see that as additional work. It’s not their business, it’s yours. They will never feel the same sense of ownership you do, and that’s true of even the best hires you’ll ever make.
So don’t get discouraged if they aren’t a superstar out of the gate. It’s up to you to mold and shape them into what you want them to be, while understanding that, once again, they aren’t you.
Learn everything you can from this process, and keep extremely meticulous notes. When you really begin to ramp to the point you’re bringing on a new tech every three to six months, you’d better have learned from every aspect of what didn’t work well in your early hiring days, because there is nothing worse than bringing on new techs regularly at a 50% efficiency rate out of the gate. Then you’re having to hire twice what you really need just to cover inefficiencies you haven’t resolved originating from your first few hires.
The bottom line in all of this is to never, without exception, allow yourself to go into full-on paralysis mode because you’re so laser-focused on the absolute perfect conditions for bringing on your first tech that you lose sight of the reason you need the tech in the first place.
Did you enjoy this straight talk from Andy Cormier? Then you’ll love So You Want to Be an MSP, the book where Andy pulls back the curtain on his successful MSP business to show you exactly how he built it. Grab your free copy of Andy’s book here.