Lessons learned on the path to building a successful managed IT operation.
Top: MOEbiz’s new headquarters in Monroe, Louisiana. Below: Chap Breard
Can a small office technology dealership in rural Louisiana successfully sell managed IT? Yes, they can.
For MOEbiz, in Monroe, Louisiana, 18% of its annual revenues are attributed to managed IT. That’s pretty impressive for a business founded in 1923 that over the years has sold virtually everything anyone working in an office might need, including furniture, office supplies, mailing machines, and copiers.
The dealership was started by the current owner Chap Breard’s grandfather. Breard took over the business in the early 1990s. Eight years ago, he sold the furniture and supply business to a competitor so MOEbiz could concentrate on the technology segment of the business, including managed IT.
“It was a good decision,” said Breard. “We made more money on less revenue in the first year and had less stress and fewer headaches. I wish I had done that in 1991.”
Breard credits membership in SDG and his SDG connections, as well as the guidance of managed IT guru Paul Dippell for inspiring him to enter the managed IT business. With the knowledge gleaned from his colleagues in SDG and a Dippell seminar sponsored by GreatAmerica Financial Services’ Collabrance division, he formulated a business plan and took Dippell’s advice to hire “smart people.”
MOEbiz entered the Managed IT business eight years ago, but it has taken some time to get the business off the ground, with a couple of missteps along the way.
“We couldn’t close anything,” recalled Breard. “We got desperate and then found a couple of clients that turned out not to be a good fit.”
After initially partnering with Collabrance for his help desk, he switched to a low-cost call center, discovering you get what you pay for.
Other dealers might have given up at this point, but not Breard.
MOEbiz re-established its partnership with Collabrance to handle its help desk, jettisoned the clients who weren’t a good fit, and refocused.
“It was painful, and we learned,” observed Breard. “We bled red for two to three years with payroll and expenses, but at the end of the day, we turned the corner and are profitable and growing that business. We’ll probably end the year with $750,000 to $800,000 in recurring revenue.”
He added, “We could not have done it without our dedicated employees. They knew what we needed in the space and were excited about new opportunities in a small market.”
MOEbiz focuses exclusively on recurring revenue and averages about $155 a seat. The managed IT department is staffed by a full-time IT director, two full-time techs, and two part-time community college students. The leads are driven through the sales team and IT director, as well as Breard himself.
The discovery process is a given in the managed IT world, and Breard had an epiphany of his own about the process. After initially offering discoveries for free, MOEbiz started charging.
“We don’t do anything unless it’s a paid discovery,” emphasized Breard. “Our job is to find out what the customer doesn’t know. Most of the time, business owners don’t know what they don’t have. For example, they haven’t tested their backup and to them, it’s not important because it hasn’t failed.”
The other thing MOEbiz does is examine the customer’s bills such as their ISP bill and their phone bill.
“Every time you do that, there’s always some kind of value that you can bring,” said Breard. “Do you know you’re overpaying on your internet service provider bill by $200, and there’s an auto-renewal clause in there? Did you know that?”
Recently, MOEbiz closed a deal for more than 400 printers. And the customer paid a significant discovery fee as part of that deal.
Breard also learned a lesson about marketing managed IT.
“After we sold our furniture business, people still thought of us as selling pencils, pens, staplers, and copiers,” recalled Breard. “What we sell is technology. We just hadn’t earned the people’s trust. We spent a ton of money on rebranding.”
MOEbiz created video advertisements about why businesses should consider having MOEbiz manage their networks. That helped, but equally valuable was the traditional sales approach.
“What we realized is that it was top-of-mind awareness,” said Breard. “Out of 35 clients, two called as a result of the ad. The others were a direct result of us going out and beating on doors.”
He doesn’t regret the marketing expense because as he said, “it raised the awareness that we are in that business.”
Another lesson learned was you can’t do it all yourself. Partnering with a third party like Collabrance has been beneficial.
“For a dealer my size, I would never try to build my own NOC, it’ll break you,” opined Breard.
Another lesson he credits Dippell for teaching him is picking a path and sticking to it.
“Determine if it’s going to be the right customer, and for some people, it may be different ones,” said Breard. “Figure it out upfront and don’t chase every rabbit. Dippell told us that only 20% of current businesses would pay a fixed fee, and that we were going to be more expensive than anybody in the market. He was right, but we did not see the value and we didn’t have credibility the first two years because we didn’t have any customers.”
Another important criterion is getting compensation right.
“I still struggle with that,” acknowledged Breard. “We’re trying to get our copier people to be copier people and now, we want them to be network people and we went on to be solutions people. In a small market, you just can’t have all that expertise on the payroll. If you’re in Minneapolis, you’re going to have specialists, but we don’t have those options in this market. I couldn’t afford to have that many people. We’d go broke.”
So, what’s his solution?
“Back it up with internal expertise. My IT director has a great skillset. Then, leverage your vendors. We’ve leveraged HP’s knowledge of printers.”
Recently, his HP rep accompanied him on a discovery for a bank. The rep discovered firmware that was so out-of-date on the bank’s printers, it created a security risk.
“We can’t have that expertise in house,” said Breard. “But they were willing to go do it with us.”
More than anything, Breard has nothing but raves for his employees who are helping drive the managed IT business.
“We are fortunate that we have a dedicated, loyal team that has been here a while. People know them in the community, and they all want to see MOEbiz succeed. MOEbiz is fortunate to have the people we have, and I am truly fortunate for that.”
Above: MOEbiz’s new headquarters and its downsized demo space.
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MOEbiz moved into a new space, a former gym, in February 2019. The new space has a high-tech feel, polished concrete floors, an open plan work area surrounded by private offices, and workstations constructed of antique doors.
“That was a little bit over budget, but it came out to be a cool space,” said Breard.
There’s also a small showroom, smaller than what MOEbiz had at its previous location.
“People don’t get too excited anymore about demoing copiers,” acknowledged Breard.
A new headquarters is a great excuse to host an open house for customers and prospects, and MOEbiz did just that this past summer. Representatives from Collabrance, Square 9, and HP were on hand to discuss their solutions and services. Of course, HP discussed security, always an intriguing topic.
According to Breard, it’s too soon to tell if any business will be generated because of the open house, but he feels the open house generated a lot of enthusiasm for MOEbiz’s offerings, and it was an opportunity to introduce customers and prospects to its managed IT services offering.
Above: Check out the desks in MOEbiz new headquarters building. They are constructed of antique wooden doors.
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