Managed Services in a Month: Part One
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1 Managed Services in a Month 9 Managed Services in a Month: Part One Start making a plan Today's topic has three simple sections: 1) Get off your butt. Start making a plan. 2) Rules and Policies 3) Know What You Know About What You Sell Let's do it: First, Get off your butt The most important element of your success in this project is: Do it. Don't hesitate. Don't waste time. Get started today and don't stop. You'll need to set aside some time every day. Carry a tablet of paper with you and write down your ideas, thoughts, and decisions. Remember: Don't waste time. Make decisions and then implement them. And don't be afraid. Every decision is reversible. Start Making A Plan. Look ahead. Keep the upcoming process in mind. You're going to reformulate what you offer and standardize it. You are probably going to raise your rates.
2 Managed Services in a Month 10 You're going to get rid of some clients. Start thinking about who you'll pass them off to. You're going to write one or two service agreements. Take notes about what you want to include. Consider your new pricing plan. What will it look like? Review your thoughts about practice management software and remote management or patch management software. You don't have to make all these decisions today. Just start considering them seriously and write down notes. Second, Rules and Policies Here are some suggestions to make your life easier and your business run more smoothly. If you haven't implemented these rules and policies already, I highly recommend that you do so. These rules have to do with cash flow, which can kill your business if you grow too fast and don't have a system in place to get your money up front. Many consultants work on terms of 20 or 30 days. You can't do this with Software and Hardware any more. Don't assume you'll lose sales. Assume clients will simply say "okay." After all, if they don't buy from you, they'll have to use a credit card online. Here are your new policies going forward: 1. Hardware and software must be prepaid. The process is simple. You'll give the client a quote. The client will sign the quote and fax it back to you with credit card information. Or the client will mail a check. Once you have payment, you order the equipment. 2. All contracts must be prepaid. Option one is credit card, to be billed on the first of the month. Option two is by check, to be prepaid three months in advance.
3 Managed Services in a Month You'll still have hourly labor for project work (anything outside the flat fee portion of the service agreement). This will be on terms of net 20 days. 2. You will assess finance charges on the first of each month for all monies past due. You will enforce this. In some states you won't be able to enforce this without a signed agreement. 3. All clients must sign a service agreement. You should have been doing this all along. Of course you can't do all this over night. But begin today to implement these simple rules. Clients won't bat an eye as these are very reasonable business processes. The stranger who signs a deal to tune up the copy machine has all these rules in place. You, a trusted partner, will have no problems. Third, Know What You Know About What You Sell The next step is going to take a bit longer. If you haven't done this kind of financial analysis before, it is a good idea to run these reports at least once a month. Our goal is to figure out where your money comes from. That is, where it really comes from. We all make assumptions about which clients are "important" and which ones keep the lights on. Every time I put together a list of our "top ten" clients, my staff has some surprises about who's on it. The following discussion involves QuickBooks because that's what we use. If you use something else, translate and figure out how to do the same reports.
4 Managed Services in a Month 12 Note On Collecting The Right Data When you make sales, you need to use the correct categories so that you can collect the right data. Most people use either too many items or too few. We use the following: Hardware Software Other stuff Labor - Hourly Labor - MSA If you use the right set of categories when you make sales, you'll be able to get the right data when you run reports. If you don't use an appropriate set of categories, your reports won't be as useful. You'll have to dig a little deeper. Start setting up and using these categories right away. Ask your accountant for assistance, if you need it. So now let's get some data out of the system. Adjust as needed. Translate per your existing categories. Report One: Sales By Item Key Strokes: In QuickBooks, go to the Reports menu and choose Sales, then Sales by Item Summary. Goal: Where do you make your money? Look at your data and figure out the most important pieces of your income. We're primarily interested in labor. The assumption is that hardware and software are sold at a premium and excluded from any service agreements you sign with clients. So, inside the labor category, how much is hourly and how much is flat fee or fixed price?
5 Managed Services in a Month 13 Report Two: Sales by Client Key Strokes: In QuickBooks, go to the Reports menu and choose Sales, then Sales by Client Summary. Goal: From Whom do you make your money? Simply put, who is your largest client? What percent of your revenue comes from them? And your second largest? Percent? etc. Most consultants can name their top client. But most cannot name their top ten. And most are surprised that #5 or #6 is even in the top ten! Remember, you psychologically raise a client's perceived importance when that client complains a lot, takes a lot of attention, or someone convinces you that they're important. But if, at the end of the year, they're worth less than a client who pays the bill and never complains about anything, you need to focus on the reality instead of the perception. Report Three: Create A Custom Report: Labor Sales For One Client Goal: For labor only, who are your largest clients? You ll have to create a customized report for this. Here s how: In QuickBooks, go to the Reports menu and choose Sales, then Sales By Customer Detail. Modify the filters as follows. For Items, select your labor items only. For Name, select one client. On the display tab, cut out all the columns you don't need (left margin, balance, etc.). Change the date to be the last 12 full months. Run this report for one client. This gives you the total they spent on labor in the last twelve months. Do this for each client. Create a table so you can look at this information:
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