Sharing the Risk

Why I Sold eMonarch

At the end of 2010, I began to look at a number of things with respect to eMonarch. I began to ask myself, how far can I take this company and what will it take to get it there. Well I quickly came to realize I had three choices:

1) Run eMonarch at a steady pace and attempt to grow organically with the skills I had and the team I had. We would add 1 or 2 clients every now and then and continue to serve our customers. This would provide a nice living for my family as well as those team members that were at eMonarch. But this is what I refer to as being a "Lifestyle Entrepreneur". This is a business owner that has a good business and it provides him/her with the lifestyle he/she wants to live. There is absolutely NOTHING wrong with being a lifestyle entrepreneur unless your name is Sean Fullerton! I did not want that as I am a very Type A person and like to push the envelope, so that leads us to option 2.

2) Aggressively hire staff with a special focus on sales team members. All small businesses need to become selling organizations to succeed. If you are not growing, you are dying. It really is that simple. But there was a number of problems with this scenario:

    a) I am not a sales manager! Sure I could hire a sales manager but not all good sales managers are good sales people and vice versa. And in a small company, you need to have sales people! 

    b) I do not understand sales people and therefore I am not good at hiring them. I have had some good sales people in the past but as they can probably attest, I did not provide them with the tools for success. I simply stuck them in an office with a phone and email and said "Go sell something!". Not really a good sales support structure for sure!

    c) Time. To begin to grow aggressively in a small company you have to commit a lot of time outside of normal hours. Well that is difficult for me as I have three small children and if success came at the price of my family then success is not worth it. 

    A number of years ago, I did an exercise with a group of fellow business owners where I ask them to write their "I AM" statement. This is a statement about who you are as a person and it really has nothing to do with business. Many of the folks came up with statements that had something to do with their work or business in it. But I told them "Nope, can not be about the business". Many of them shot back that it did! So I asked a very simple question, "If I could guarantee you business success as you define it, but it would mean you had to divorce your spouse and lose your kids, would you do it?" No one went for it. So the "I AM" statement really has nothing to do with business.

    So that long winded statement to say that the Time commitment it would take to get eMonarch to the next level was a cost I was not comfortable making.

    And there are a number of other reasons for option 2 really being difficult. Every business owner has a threshold. This threshold is just how far the owner can take the company. Some owners are able to grow beyond their threshold because they quickly realize their threshold and they go out and find that "one person" that can add enough to the business to help the owner get past their current threshold. But then that person has a threshold and the cycle continues.

    I believe I had reached my threshold as an owner. I have a lot of talents and had grown eMonarch into a wildly successful business that made a good amount of money and provided good jobs,etc. But the next level was going to be tough for me by myself. And that led to Option 3.

3) Sell eMonarch to a firm that wanted to grow Managed Services and had strong leadership that I could learn from and help grow the business with. The key there was really strong leadership that I would feel comfortable working with. You see I am convinced that I would make a horrible employee. But as I thought about selling, I came to realize that most of the companies that I had looked at as potential partners did not have the leadership that I would feel comfortable working under. It takes someone that has been there and been through the paces before I am willing to sit under them to learn from. I had to have confidence that the leadership could take me to the next level.

I found those things in Peak UpTime. I knew Gordon Martin from working with him on the Strategic Planning Committee at our church and had gotten to know him over about 1.5 years or so. It is funny as to me when I found out that Gordon was the President of Peak, I was like "he is the enemy, I cannot talk about what is going on with eMonarch or else he will get some valuable intel on us!" But nothing was farther from the truth. Gordon was a genuine guy that loves Jesus and has an amazing brain for business. Two very critical components for me. 

So as I was walking through this in my mind, I spoke with Gordon briefly one day after a committee meeting and the process began. Peak has some great talent and I really saw how eMonarch and myself could fit into the business as well as bring some of our skills with regard to managed services. And it would be a GREAT win for our customers. We would not be as resource constrained as we had in the past and would be able to really do it even better than we had. Our values matched and I knew that I could trust Gordon.

So why did I sell eMonarch?

I want to provide a stable future for my family.

I want to grow as a leader.

I want to grow as a business leader.

I want to take Managed Services to a much broader market.

I want to give eMonarch customers the best service.

I want to learn.

I want to not do sales management (yet)!

But ultimately, because I felt God place Gordon and the Peak group in my path for a very distinct purpose.

So here is to a new future and even bigger things. It has been a remarkable ride and thank you to ALL the customers, employees and friends that have made eMonarch the success it grew to be.

 

Outsource v2

Just read an articlefrom David Bellini, the President of Connectwise, that discussed outsourcing the help desk if you are an IT provider. He mentioned some benefits and also outlined the reasons why he keeps it internal.

I agree with the internal point of view for eMonarch. We staff our own help desk, we offer our own backup service, we provide hosted Exchange,Sharepoint, OCS, and even soon MS CRM. Why? Because I do not want to be like every other IT provider out there just reselling other peoples stuff. eMonarch is an IT Provider not an IT Reseller.

Could eMonarch make more money in the short term if we just resold all these other services? Oh you bet! But I think they are just short term gains. Instead I believe the long term strategy for eMonarch is to innovate our own solutions for customers and to be the provider of those services where we can.

But perhaps one of the most important part of what David mentioned in the article is the discussion around relationship. Small Business customers want to talk to someone they know. They want to be able and come see your team if they wanted to. Even with our remote backup service, I can say to my clients "You are more than welcome to come see where your data is being kept safe at". Now to be honest are they likely to take me up on that offer, no. But often times it is the fact that the option exists.

So in the end, outsourcing makes sense for some things. But I go back to an earlier post on this topic and I feel that outsourcing your core business is a bad idea.

But the real question many should ask is "What is your core business". Find that out and it makes determining what to keep internal vs. external a lot easier discussion.

Outsourcing your core business

Would you do that?

If you are a legal firm, would you outsource litigation?
What about a medical doctor, would you outsource your patient care?

Probably not but this is quickly becoming the trend in IT service firms. I am seeing what I perceive to be a troubling trend amongst my peers to outsource the very thing they are supposed to be doing for their clients, managing the IT environment of their customers.

I can understand the desire as most IT providers are small companies that the biggest cost is payroll and when someone says you can lower that cost, then they jump all over it. But is this the best thing for the customer?

I tend to think not! I believe that you should NOT outsource your core business. Some may make the argument that "Our core business is being the trusted adviser to our customers with respect to technology." But I would challenge those folks to go ask their customers what they believe the core business of the IT provider is. I bet they would hear something very different.

Providing IT support is not a glamorous business on the surface but with technology becoming such a vital part of the business landscape, it is an important business.

There are lots of examples of successful outsourcing for sure. If your firm is a marketing company, then outsource the coffee, the IT support, the cleaning of the office and probably even accounting functions. But I bet they won't outsource their marketing! Doctors typical outsource transcription and billing services and this has proven to be successful.

Outsourcing can provide a lot of benefits to a company (it better as that is what we do!) but be careful of what you outsource.

A Vision Transformed to Reality

Ten years ago, I wrote a vision document for eMonarch that outlined my vision for eMonarch and what I believed the future of technology would hold for small business. It revolved around a concept/business model called Application Service Provider (ASP), whereby  a small business would no longer buy servers, software, and other applications but would rather "rent" them from an ASP.

The first attempt at this vision is what got eMonarch going and I still remember sitting in my living room with a lot of HP servers with my little brother trying to get it all put together so we could make it real. But eMonarch was not ready nor was the market. So eMonarch ventured down other paths but I strove to keep the vision going in my mind as I developed our offerings.

This vision became a reality this month at eMonarch with the signing of our first hosting infrastructure client and the actual turn-up of that customer. It was a big day for me to see a vision that I had outlined 10 years ago to finally come to fruition. And nice to know that I was not crazy but just a little early.

Our offering is based on a business being able to get almost all of the software they need to run their business (MS Office, Email, IM, CRM, etc) all without buying the hardware or even the software to run it. Instead, we host the infrastructure in our data center and the customer accesses everything via a remote terminal session.

What makes this really exciting for me is that our transition to a managed service model was a step along the way to the hosted infrastructure that we are know offering.  We package it all together to create a rich environment for our customers.

Another great part about this solution, is that when a customer tells us they want to go hosted, we can typically have them up and running in under 2 hours. Everything ready to go!

But to be honest, the major story here is that for every business to not give up! As a business owner, we are often thought to be crazy with our ideas and visions. But sometimes you just may be early or the market you are in has not caught on to the idea. Stick with it and look at ways to take baby steps to lead to the realization of your dream. In my case, it took many years to watch the market change and to carefully plot the course along the way to make sure I never lost sight of my vision.

Sure there were weeks,months and even a year or so when I thought "That vision is dead, need to come up with a new one" but I worked to kick that thought out of my head and drive forward always looking to see if the technology and the market was ready.

It has and exciting times are ahead as eMonarch drives this vision into the market and also looks at how to further develop the solution.

Evolution - New Service

Background

eMonarch is a managed service provider that has made its mark in the flat-fee managed IT space for small business. Our services differ greatly from the typical break-fix IT provider as we assume the majority of the risk associated with managing the IT infrastructure of a company. We are the IT department!

Here is how I typically have looked at the break-fix model:

The only person that wins is the IT provider. When a server is down, the customer is loosing money on both fronts. The customer is paying the IT provider an hourly rate and the customer is also loosing productivity (aka money) during the down time.

In a flat-rate model, the person that is losing is the IT provider but really this is the opportunity for the managed service provider to shine by preventing the downtime to begin with. You see in a flat-fee model, the managed service provider is paid to keep things running smoothly.

Roadblock

In our model, we have run across businesses that are not quite ready for managed services as we define it. They really wanted to do business with us as they liked our philosophy and talent but could not afford the full services that we provide.

These businesses were typically under 10 desktops and had only 1 server.

Solution

So we developed - Evolution! Evolution is a cross between a fully managed IT environment and a on-demand IT service. We realized that some businesses need to ease into managed services and so we developed that solution for just those customers. As the name implies, Evolution will provide a path to managed services that all small businesses can work with as they transform their business.

For $299 per month, Evolution provides a small business with a program that will enable their systems to be monitored and a number of maintenance tasks to be taken care of without additional fees. This program will be for 10 desktops and 1 server initially and available for an 18 month term. 

The business will have access to our help desk, CIO services, On-site services, and all other aspects of eMonarch services at an hourly rate.

Each month eMonarch will monitor the usage and work with the business to determine if moving to our fully managed suite, Chrysalis IT, is right for them.

I am excited about this new opportunity to add to our customer base but also to be able to provide an offering that provides some great value to the small business community.