As most entrepreneurs know, the most common route isn’t the only path to take.
Doug Bates doesn’t know how to troubleshoot a server issue or write script to automate tasks like a lot of MSP owners, but his 20-plus years of corporate sales and business administration experience helped him successfully scale CMIT of Southern Atlanta Crescent & Atlanta Northwest. As president, Bates focuses on building the team and processes that deliver outstanding customer experience to cement long-term relationships. Here’s how he did it.
Focusing on Vision, Not Tech Work
Bates was working as a global vice president when he was laid off during the 2008 recession. He launched his CMIT franchise in 2009, hit $1 million after just under five years, and recently expanded to a second location.
A key reason for that rapid success was his company’s structure keeping him out of the technical weeds, though that could frustrate Bates at times. “There are days it’s really frustrating when we’re swamped, because I’m a problem solver and I always want to help. [But] I can’t roll up my sleeves and start fixing the server problem or reconfiguring something,” Bates explains. He simply doesn’t have the knowledge necessary; for that, he leans on his team. “I have to stand back. That frustration is real, but as far as keeping the business on [our] strategic path, you have to stay out of the weeds.”
Effectively, Bates’ lack of technological know-how keeps him focused on working on the business, not in it—which has been key to the MSP’s success. But this lesson is critical for MSPs with a tech background as well. Bates says that time is better spent considering questions like: “Why are you doing this project? What software’s down the road? What’s your vision for your business?”
Not to mention, “When you start doing the tech work, then you become a technician to your client, not their strategic partner,” Bates says. “It’s hard to undo that, when they have you on the phone and [start asking for computer help].”
Teamwork Makes the Dream Work
Lucky for Bates, he found the perfect person to run the tech side of the business early on. He hired Brian D’Arcy, now CMIT’s VP of IT services, as his first technician. “[He] has been with me almost since the beginning, and his job is to make [new hires] great techs,” Bates says of D’Arcy.
Because D’Arcy was able to tackle the technical side of the business, Bates was freed up to focus on building their sales pipeline. “Back then, almost 80% of leads came from networking and client referrals. So the only thing I could do to generate sales was network,” he says.
“Joining the chamber, showing up, and being consistent [was key],” Bates says. “Calling on somebody who’s only going to spend $500 a month with you is not as intimidating, but you still have to treat them the same, especially when you’re starting out, to get that grassroots [marketing] momentum [going].”
“I would sell anything that I could make a profit on,” Bates says. “I think one of the faults I see in a lot of new MSPs is only [being willing] to sell managed services. Well, it’s much harder to shift [a prospect] from another MSP to you. You may have to start with some break-fix work. You may have to start selling hardware. You may have to start with other stuff, to make profit, pay your bills, generate revenue, spend on marketing, and get the clients that you want.”
A Different Kind of Client Relationship
Unlike many MSPs, Bates doesn’t build automatic escalators into his MSP’s contracts. “Some people say that’s crazy. Automatic escalators increase the value of your business,” Bates says. “But, I’m a franchise, and the chances of me selling outside the system are slim or none. So, I’m going to run this business. I do price increases based on merit, stock changes, or economic conditions. I just don’t do automatic. I don’t like them from my landlord; I don’t want to do them to my clients.”
Even more unusual, Bates doesn’t have contracts with his clients. “We have three-year agreements that have an evergreen [clause]. But most of my clients have a 30-day out [clause]. There is no buyout. I’ve got clients that have been with me 10 years, pay me $10,000 a month, and if they want to leave tomorrow, they could leave tomorrow. They give me a 30-day out, and they’re going. That forces me and my team to stay frosty,” he says.
“We have to make sure we’re doing customer service, because everybody’s only 30 days away from leaving. There is no security blanket for us. Again, that doesn’t help the value of my business to a potential buyer, but it makes my client’s customer experience significantly different. It’s allowed us to grow and scale and keep our client turnover [low]. I think I’ve lost nine clients in 16 years.
A Million Dollar Mindset
For MSPs looking to follow in Bates’ footsteps and cross the $1M mark, Bates says his mindset made all the difference. “You are responsible for everything in your life,” he says. “If you’re successful, it’s your fault; if you’re not successful, it’s your fault. When you are the owner of a small business, you are responsible. There are so many people who [start businesses] and try and blame factors, [like the] economy, for their success or failure—when at the end of the day, ultimately, it’s you.”
“I find [growth] happens exponentially when people just stop looking behind them and blaming everybody else, and take responsibility and look forward,” Bates says. “Extreme ownership. You have to be in it to win it. If you’re not willing to make sacrifices, then you’re not in it to win it. But that’s why small business ownership is hard, because a lot of people aren’t willing to make those sacrifices and those hard decisions.”
For Bates, it’s clear that mindset, morals, and grit make all the difference. To hear more about staying gritty through tough periods, work life balance, and advancements in automation, tune into his full episode on My First Million podcast here. For more MSP success stories, read how Nathan Whittacre made his first million.
