Now That's IT: Stories of MSP Success
Surviving to Thriving: Tim Clarkson of OxygenIT
Hear from Tim Clarkson, founder and managing director of OxygenIT, who shares his remarkable journey from struggling to surviving to thriving. Tim discusses the challenges of transitioning from accounting to IT, founding his MSP, and navigating severe financial hardships.
Learn how he turned his business around by focusing on financial transparency, team alignment, and operational efficiency. Tim's story is packed with practical insights and strategies that every Managed Service Provider (MSP) owner can use to build a resilient and successful business. Tune in to discover how to stop digging and start thriving.
Get an in-person rundown on what N-able has to offer including products, insights, networking and more.
The N-able Roadshow is visiting more cities than ever before in 2024. Take a look at our first group of locations; we may be in a city near you! -> http://spr.ly/6000RsTOq
'Now that's it: Stories of MSP Success,' dives into the journeys of some of the trailblazers in our industry to find out how they used their passion for technology to help turn Managed Services into the thriving sector it is today.
Every episode is packed with the valuable insights, practical strategies, and inspiring anecdotes that lead our guests to the transformative moment when they knew….. Now, that's it.
This podcast provides educational information about issues that may be relevant to information technology service providers.
Nothing in the podcast should be construed as any recommendation or endorsement by N-able, or as legal or any other advice.
The views expressed by guests are their own and their appearance on the podcast does not imply an endorsement of them or any entity they represent.
Views and opinions expressed by N-able employees are those of the employees and do not necessarily reflect the view of N-able or its officers and directors.
The podcast may also contain forward-looking statements regarding future product plans, functionality, or development efforts that should not be interpreted as a commitment from N-able related to any deliverables or timeframe.
All content is based on information available at the time of recording, and N-able has no obligation to update any forward-looking statements.
Hear from Tim Clarkson, founder and managing director of OxygenIT, who shares his remarkable journey from struggling to surviving to thriving. Tim discusses the challenges of transitioning from accounting to IT, founding his MSP, and navigating severe financial hardships.
Learn how he turned his business around by focusing on financial transparency, team alignment, and operational efficiency. Tim's story is packed with practical insights and strategies that every Managed Service Provider (MSP) owner can use to build a resilient and successful business. Tune in to discover how to stop digging and start thriving.
Get an in-person rundown on what N-able has to offer including products, insights, networking and more.
The N-able Roadshow is visiting more cities than ever before in 2024. Take a look at our first group of locations; we may be in a city near you! -> http://spr.ly/6000RsTOq
'Now that's it: Stories of MSP Success,' dives into the journeys of some of the trailblazers in our industry to find out how they used their passion for technology to help turn Managed Services into the thriving sector it is today.
Every episode is packed with the valuable insights, practical strategies, and inspiring anecdotes that lead our guests to the transformative moment when they knew….. Now, that's it.
This podcast provides educational information about issues that may be relevant to information technology service providers.
Nothing in the podcast should be construed as any recommendation or endorsement by N-able, or as legal or any other advice.
The views expressed by guests are their own and their appearance on the podcast does not imply an endorsement of them or any entity they represent.
Views and opinions expressed by N-able employees are those of the employees and do not necessarily reflect the view of N-able or its officers and directors.
The podcast may also contain forward-looking statements regarding future product plans, functionality, or development efforts that should not be interpreted as a commitment from N-able related to any deliverables or timeframe.
All content is based on information available at the time of recording, and N-able has no obligation to update any forward-looking statements.
One, two, three, four. Welcome to Now that's it Stories of MSP Success, where we dive into the journeys of some of the trailblazers in our industry to find out how they used their passion for technology to help turn managed services into the thriving sector it is today.
Speaker 2:Tim Clarkson, welcome to the Now that's it podcast. I've really enjoyed speaking to several Australians on the pod, but you're my first Kiwi, so welcome. Awesome, Good to be here. Yeah, you and I got to spend some time together in the Blue Mountains outside of Sydney several months ago. It was summertime then, probably getting a little bit colder now. I think you just said it was zero overnight. That's brisk Tim.
Speaker 1:Yeah, it's moving towards winter. We've got some cold facts coming through.
Speaker 2:Yeah, crazy. So you're the founder and managing director at Oxygen IT, a service provider delivering enterprise-level IT services to small and mid-sized businesses in New Zealand. Thank you for joining us. I really appreciated getting to know you over the last year. I think most people that know you would say that you enjoy talking about your entrepreneurial journey. That's the one thing I really like about you is you've always shared. If my story helps somebody else, then that's great. Then that's why you tell it. So thanks for telling us the story today and we'll get right into it. So, as a young lad and very, very similar to many, uh, uh, young, young individuals, you finish university and you enter the workforce. But did I read this right? You were going to school for accounting and finance, but then you started working with computers.
Speaker 1:Yeah, I came out in the captain degree in 91 92. It was a recession, so I had a half-time job doing accounting and got a 20-hour-a-week job doing IT and within about two months I realized I was not going to be an accountant. Well, maybe I would be, but I wouldn't be successful. I'd be in jail. There's just no detail and my mind was around computers and I left that, and that's where it started.
Speaker 2:That's great. What did those early jobs in the IT business, in the IT space?
Speaker 1:what did they do to help set yourself up for a career leading a business? Well, one of my early ones is I very quickly progressed from an engineer to an IT manager at a young age and one thing I found there was I had a boss who was not a good boss and having a boss like that at a very early age can be quite detrimental and I realized it's like his management style was not a style I wanted to emulate anywhere. Part of my business was coming to banging hands on desks and shouting and yelling. I'm like let's not getting the best out of your people. So I went through. I went through that, then went to work for a multinational company, then moved back to Christchurch and worked for a friend's business and from there I realized at the age of 27, in New Zealand we have a thing called an OE and so we went and did our overseas experience. It's supposed to be two years. Eight years later, after working at Royal Bank of Scotland and Shell, I came back to New Zealand to start my own business Awesome.
Speaker 2:So you did some consulting early on. I saw from your resume and is that? First of all, consulting is its own bag of risks and everything, but was that your first real exposure to what it might be like to run a business someday? Yeah well, I opened up consulting before I left the UK, your first real exposure to what it might be like to run a business someday.
Speaker 1:Yeah, well, I opened consulting before I left um the uk. So I found a couple of larger firms who didn't have representation in asia. Pacific said hey, do you want somebody to do this work for you? And they jumped on us and I had one small child at that time and the second one on the way came back and started consulting. And it was a grind. It was every second week I was away overseas to bangkok, sydney, installing systems, covering systems.
Speaker 1:Um. To the point where I was doing that we started 2005, 2008. The um gfc hit and I'm sitting there going to my wife. If I don't have some work by friday, I've got to go get a job. Um, and then two days later we had six months worth of work. It's like wow. And I just at that point I said I can't care, I'm doing this, this is it's. It's like an. It's like a great fixer tea firm with roller coasters. You know we have a really good month, so you and then you have really bad months, and the bad month you don't do anything, you can't spend the money because you don't know when the next money's coming in. So you can't prepare yourself for the next good month. So you're stuck in the cycle of highs and lows that is um what we call it yep, it sure is.
Speaker 2:I've heard so many tell the stories about those, those days and consulting, where you have a really good month and then you might not have any income coming for a couple of months and so, uh, more power to you. Congrats. That is not my, my style and wasn't for me. So tell me about oxygen it. Why did you decide to to start oxygen it? Oh, say, 19 years ago, I think it was, uh, and then what were some of those early days like tim?
Speaker 1:well, I didn't start oxygen. I actually started a small business system management consulting okay, yep, and this myself, and it was a consultant path. And then I brought on an employee and then we even brought. I didn't start auctioneering. I actually started a small business called system management consulting Okay, yep, and that's myself, and it was a consultant part. And then I brought on an employee and then I went and bought another one-man band business and that was really scary. I put $100,000 on the table and said I'll buy you and it had no, it was all break-fix. It's was hard. That was my start.
Speaker 1:I was an engineer first rather than sales and marketing. So the only way I knew to get customers was I thought if I'd build it, they'll come, I'll do a great job. It's just such a crock of shit that doesn't work that way. So it was a struggle Converted the customers from great fix and then over the time, I brought a business to Sydney. And then, over the time I brought a business to Sydney, sold the business in Christchurch Oxygen IT. So I brought that back around 2000 after Christchurch earthquakes, about 2012 or 13. Sold the Australian business, focus on New Zealand and it's just been that sense. And it's a struggle with trying to get past those pit hoses. Small business owner, sure you know, when you one or two, you only got one or two staff. You're going. Okay, I'm, I'm really, really busy. I'm working 60 hour weeks, 70 hour week, but if I bring somebody on now, I've got that wage I'm actually not going to take home a pay for the next three months or person on.
Speaker 1:So that's, that's a hard thing and in my way around that was, I just went and brought a couple of businesses some success, some not.
Speaker 2:But I was like actually, if I acquire the engineers, acquire the income, that could be a bit easier interesting so I think you had told us um in sydney that that you had, you had built your business to about almost four million in turnover and but you weren't happy because you weren't profitable at the time. So you talk a little bit about where that business was at that point.
Speaker 1:Yeah. So I ended up buying a business a month after I signed the contract, a month before we were in lockdown with COVID, and got to delay that for months. A month after we were in lockdown I took over a business and that was a real hard struggle to try and turn that around. I didn't look at the business through the correct lens with the knowledge I have now about recurring revenues and customer makeup and stuff like that. So we struggled for quite a while. For me it was like revenue, get revenue, get revenue, get revenue. And there wasn't the consistency of knowledge around.
Speaker 1:Actually, not all revenue is good revenue, because some of it comes from noisy customers, poor customers. Some of it diverts you from where you are, it's not focused on exactly what you do, it's just a dollar. As small business owners, we tend to do that that it's a dollar. I'll take it because that's got to help me, not reason. It cost you a dollar twenty, dollar thirty, a dollar fifty to deliver that dollar. Um, so we got to you, we got close to four million and then I was really unhappy. I was losing copious amounts of money. It was a ninety thousand dollars a month. Um, because I had too much snark and right size hadn't consolidated tech stacks. Um, all these things that I now know in hindsight from gary pico and robin robinson true methods and enables courses and all that stuff here's what you need to do to be able to get world-class figures and I was really happy.
Speaker 1:I was sitting in a hotel room going and sydney going next month. I don't know how I'm going to keep the light on. I'm losing money. Why the hell am I working 16, 18 hour days to do this? So I got out the insurance policy and went well, will that cover all the debts? And as I did that, I just thought I'm not dumb. I've got a degree in accountancy. I've run a business for 20 years. There's got to be a way to make this work Right.
Speaker 1:And I had a conversation with a friend. He went it's easy. You work out what you can afford to pay in salaries. You draw yourself a wee lifeboat and put some seats on them and put some people into that lifeboat. You know, fill it up with the seats and if somebody doesn't fit, they don't fit.
Speaker 1:Because if you try to, you know if you, if you I suppose that's kind of my nature and I'd say a lot of us in it is we're helpful, we want to help other people, right, we want to do the right thing. There's very few of us who are completely self-centered. Um, so you can well, how do I put one more person in? And he said my mate's like if you put one more person in, everybody goes down. Right, my mate's like if you put one more person in, everybody goes down. And the hard reality was all those other people would go out and get jobs tomorrow. They're employees. They'll be like that sucks. But I'm a senior engineer. Where's the next position as a business owner? It's like a tornado coming through a small town in Iowa. It leaves a lot of damage behind you. Don't just hop in your car and drive to the next place. Yeah.
Speaker 2:That had to be awful, tim. I mean, you're obviously thinking to yourself, man, I got into this to be, you know, to do what's right, right and help other people out. And to your earlier point, you had brought people on, and their families, their lives, depended on what you were delivering. But you couldn't do that, and so you had to make a tough decision. You realize you're over staff and you had to start to lay some people off, and so maybe talk a little bit about what was sort of your process to get out of that hole. What were some of those strategies? Obviously, writing the ship from a technical perspective, getting the right stack in there and hiring the right people, or keeping the right people. But what was that like to try to work yourself out of that, that hole?
Speaker 1:what was the meat? I mean like, as much as you say I can get rid of people is, yeah, a few people self-selected.
Speaker 1:So we had a meeting I said here's the situation. I've tried to do this all by myself and I think too many of us. As owners, we get very fearful of discussing the figures and profitability of the business and the business with our staff because they're gonna see oh you make this much money, I want to pay rose. But what that leads to is all these people didn't know the position we're in, right, all they saw, all they saw was the consequence we couldn't pay this bill. We, this credit card didn't go through. What the hell's going on, which caused enough nervousness. So I sat down and just went okay, here's the situation, here's what we have to do. Some people went well, I'm well, you know, there's one person working for us and they put their hand up and said I'll go get another job elsewhere. I like you guys, I like the business. I'd love to be here, but if I'm here here and the business isn't here, I'll go, and we're still keeping in contact.
Speaker 1:So the first thing was get to zero. My only goal in those first two or three months was get to zero. If I've stopped losing money, I then have a runway where I can think how do I make this better? But if you're in a hole, stop frigging, digging. So we stopped digging, we cut expenses. We went to vendors and said look, hey, here's the situation. We're screwed. We've got a business, you lose a customer. But can I have three or six-month kind of gratis period? Or stop paying Like I'll turn your service off? It's not critical to the business, I love it, but I don't need it. Some of them we keep it running because hopefully you're here in three or six months time used to be a customer, absolutely so. Rationalization of services, cutting everything back that wasn't critical. Um, got me to zero. Got to zero.
Speaker 1:Then took the time and I sat in my garage making gin over a summer um, being a moonshiner. Yeah, watching that still drip as I watched Gary Pico videos and Robin Robin's videos and all the stuff I could know. Okay, here's what world class looks like, here's what best of class looks like. Where are we? And then working out the plan what do we need to get there? Okay, we've got three different. Stop changing products because you're a 19 engineer. Oh, that Android looks really good. Or that MDR looks really shiny, it's got this new feature makes no difference. Pick one, get everybody running it, train your staff. And that's where our operational numbers. We were almost a ticket per endpoint and well over half an hour per endpoint per month down to we're 0.3 of a ticket per endpoint and we're doing about 0.2 of an hour. So those things make a huge difference.
Speaker 1:Um, at the same time I kind of looked forward and went where's automation going? So, even though we're not a huge business, I was like let's get everything automated. We can make my staff happier, less dependent on level one, level two staff coming through. Um. So we put automation in to help drive those numbers down. And I'll also say it's, it's not just one thing. So, as much as I'm going on about operational, I'm like, no, to run the business, you can't just do operations. And so I'll get this going really well and then I'll be marketing on the sales later and then I'll do sales marketing and then I'll do my hiring processes after that. So as much as I fix operation numbers, in hindsight I realized I was absorbing a lot of marketing and sales information at the same time. To start slowly getting that stuff out there, getting operationally efficient is fantastic. It will increase us from minus 20% net profit to plus 20% net profit.
Speaker 1:That's amazing 20%, net profit of $10 is still only $2. You have to take that $10 and make it $1,000. Yeah, but you don't want to go from minus 20% on $10 to $1,000. To now I'm losing $200. So you want to get operationally efficient as quick as possible Right, but you also, at the same time, have to build up your sales and marketing. And people, people.
Speaker 1:I caught in the same track for about a year at 18 months. Where's the easy button? Yeah, yeah, I'll use an external lead generation company. Dang Yay, that's going to sort it. I'll do this and I'll send out some marketing. And I didn't get 10 new customers.
Speaker 1:So marketing is, as I'm coming to realize, is a one, two, even three or four year process. And I say don't aim for perfection. You know you don't want to put out. I watched this video and this guy said you know you need to do I wanted to do a YouTube kind of webinar type things. He said your first one's going to suck. It can suck in three months time while you try and get it perfect, or it can suck today. And if, while you try and get it perfect, or it can suck today, it sucks today, that one more step towards getting good, so three months times you'll have a good one, but rip that bandaid off and something that's horrible like our marketing going out initially, absolutely yuck. Yeah, we weren't following up correctly, but it was going out good, you have to just make a start that's's good.
Speaker 2:Yeah, I love that you mentioned. Operational efficiency is sort of your foundation. You want to get that right first, but you can't stop there Because there's no house to live in if you don't figure out, go to market and all the rest. So I love that you called that out. One of the other things that you mentioned, Tim, was that when you went through those tough times and you came to your employees and said this is the situation that you were in, a lot of them were surprised because you weren't as open with your finances. That's changed, hasn't it? You're quite a bit more open with your team. Well, it was quite funny.
Speaker 1:I sit down with one of my guys He'll probably watch this and he's about to move cities and I'm like I'll sponsor you to move cities, do whatever you need to do, don't want to lose you and he consistently signs new contracts like I want to pay you guys and I was just gobsmacked. I'm like, no, I'm saying you didn't deserve it. He's a fantastic person and I think he deserves the money. And my big mum going where the hell am this money from? I'm struggling, you know, just come down profitable. I have creditors, all the other stuff I'm paying off and I'm trying to get the balance sheet in order of the cash balance so that the business is healthy, I'm going yeah and then I I read the great game of business, um, but and which is a highly recommended um, this is a really good stuff you can pull out of there.
Speaker 1:So I sat down, I took them onto the pub and said okay, here's a napkin, write down how much you think out of each dollar I get to keep. And one was 70 cents and one person was 50 cents. And I went I wish. And the average MSP? Well, 23%. Mfps lose money. Yeah, I know, I was one of them at some point. The average MSP is between 8-10%, depending on who you listen to.
Speaker 1:And the guy after the race said why would you do it? I said what do you mean? He said why would you go through all the effort you're doing if you're only making 8% on those dollars? I said you know, because we can do better. We can get 20, 25, yeah, but we all have to do it together.
Speaker 1:And after what he said to me, I felt sorry that I asked you for that pay rise. I said no, you were entitled to ask and I'm entitled to say no, but I'm entitled to say no by giving you the facts, not just saying no and looking like a douche. It's like here's why. And now he's got, you know, a decent pay rise kind of a year later. I'm like it's with the business. The business will do what it can do to support everybody, but the business first and foremost, you've got to realize, has to look after itself. Yeah, and I see a lot of negative stuff sometimes on youtube about people saying you know businesses will throw you out and they're not in it for you and and I think it's maybe some businesses, but at the end of it.
Speaker 1:You know, if you give into one person, well you could lose nine or ten people because the business goes under. So you don't you want that. So now we do. I try to do a quarterly, you know, taking through a P&L balance sheet cash flow. I'm trying to work my accountant to get him to come in to run training courses. So translate that into the P&L is what you earn as an employee and you pay your taxes. The cash flow is what you have left over the end of each month and the balance sheet is what does your mortgage and your assets look like? Let's try and transpose business into personal financial education, which america is the same as new zealand.
Speaker 1:It's woeful you go to a high school and they teach you how to count to 10, but they don't teach you about compounded interest and debt on credit cards and high purchase and all the other stuff that derails your life.
Speaker 2:Yeah, I love that about you. Tim is number one. You see something that isn't going so well and you look at it as an opportunity, not as a I mean, even after everything that's happened for you to say we can do better. I love that about your personality. And then the other piece of it, and so many MSPs that have read the Great Game of Business and are clear, you know, or they're open with their books. They are educating their teams, just like you are, to be better and better understand the inner workings of the business. Because, who knows, maybe someday one of them takes over for you and you're prepping them now with that financial know-how that they might not normally have if they were just an IT tech. So really, really good stuff that you're doing, tim. Keep up the good work.
Speaker 1:The other thing from that was one of the checks came. He said we're paying $1,000 a month for this tool. I went, yep. He said I don't think we're getting enough benefit from it. We have to sell $8,000 a month to pay for that $1,000. Wow, the tool. Because he said that's that's three new customers that they bring on board, that bring on board this year, because we can save that piece of cost, because it's it's not doing the job we need it to do.
Speaker 2:I'm like that's empowering yep, very good, very good. Yeah you, you've done something well there. So part of your course correction was obviously taking a look at parts of the business that you know, maybe parts of your service offering that didn't fit and like the overall goals of business, what you were doing. You were probably doing a little too much of everything. Can you talk a little bit about some of those conversations and maybe what you decided? You were in business for once, that you are no longer in business anymore.
Speaker 1:On yeah, so at the same time as we had these financial struggles in the business I got hacked about must be coming up on four years ago financial struggles in the business um, I got hacked about must be coming up on four years ago.
Speaker 1:Um, I brought a business, gave the, the previous owner, access to systems while doing the transition he was 62, didn't really care about security. They got in, they hacked us, they encrypted our backups. Um, I went, yes, so what? Because I always expect that to happen at some point. So I had a second set of completely separate backups, restored it.
Speaker 1:But it made me realize actually, if I'm hackable and I'm the MSP, what's it like for customers? And that's where we started our security journey. So that's when we got to the point where the two kind of came together. I'm sitting there going, I'm not making enough money, I've got all these wrong customers. I need to do security better. I can focus on that. I'm going to have happier customers, less risk.
Speaker 1:So we went through and got rid of a lot of customers I had. I think I did the numbers I can't remember exactly. I had like 160 customers on the book I was invoicing each month for we are now down to 40 customers, 24 contract customers only. But those customers I got rid of, like the 120 I got rid of accounted for like 3% to 4% of total revenue. Wow, but when I got rid of them, one of the engineers came to me concerned. I mean, what's going on? The phone's all gone quiet. They were concerned about their jobs because we're down to like three or four phone calls a day. We do, on average, kind of across 600 endpoints. We're doing like 15 to 20 tickets a day. Obviously numbers change right, right, conditional access, and it blows out and comes back down again. But they're like what do we do? You know the phones and tickets aren't there. I'm like we'll deliver excellent service phone the customers spend the time with them, speak to them. You know we're still making. We're still making, but paying us to do a job. Now we can actually do the job for those who are paying us correctly. So, rather than reacting to the person who is break, fix ad hoc, paying you two thousand dollars for subscriptions, like they pick the phone up and say this is broken, fix it now. And the answer is well, why? Well, because I'm paying you $2,000 for subscriptions. They pick the phone up and say this is broken, fix it now. And the answer is well, why? Well, because I'm paying you an hourly rate. So I expect this done right now.
Speaker 1:Where, when it was moving to customers who are managed contractors Like we, will triage your tickets and move you through this correctly and when you have a major problem, we will all hands on deck and we'll deal, deal that in a timely manner. And we can't. We have the staff and ability to do that because that's what you're paying us for. And at the same time, we increased our revenue quite a large amount. Um, I went, I looked at the figures the other day. I think we were went up by about 60 70 percent on revenue and more on profitability. Um, by implementing proper cyber security standards. So saying the customers we have a minimum you need to meet Yep, and the minimum de-risks both businesses. It de-risks your business because you know we're doing the bare minimum and it's a minimum right, it's a bare minimum to keep you safe.
Speaker 1:And it de-risks my business because the chance of you being hacked is substantially reduced. So therefore, I'm not going to get to a book in one phone call saying how to get up and running and impacting the service delivery for my other customers. So I was laughing. I'm just doing a new website that goes live in about yeah, today, as we have this as a thing, um, and one of the things I'm going is for those customers for being in business and it is something I haven't told you which I'm quite proud of For those customers who have adhered to my security advice.
Speaker 1:I have not had a cyber incident for 10 years. That's great, very good. I've had a ransomware attack two years ago. I went to them six months beforehand. Here's our standard minimum you need this. No, no, we don't need it. We're fine.
Speaker 1:Got hacked, had another customer who had email been breached three times. They're like you need this. On the third one, we're like we have to let you go. You're not listening. We just know no-transcript who you can service really well. And that's Michael McCullough's right.
Speaker 1:The pumpkin plan. I've read those books and all those sorts of things. Find the right customer. We've now said the engineers. It's like an email the other day that I haven't seen it since my draft book. But like who's our top three customers by revenue? Let the engineers understand when that phone call comes in from those top customers, they treat our top customer and then who's the top three customers by engagement, not by revenue. Who's the top three who we love hearing from? We hear them, we want to help them. How long can we spend on the phone with them and sort their problems? Who's the bottom three? And so, driving the business? It's like, okay, well, these are the bottom three. Why? Oh, they just had a bad, they've been having a bad month. No, they're just not a right fit. Okay, so when we get more money, we move that, we move them on. Because we went, I want, I want easiest content. We can't find three disengaged customers, right?
Speaker 2:yeah, that's very good, it makes their job easy, yeah yeah, that's really good, tim, and and that that is one of those uh, steps of maturity. Obviously you had you had hit rock bottom from a profitability perspective years before this. But when you can get to a spot where you say, hey, these customers are actually costing us money, both time and money, and so we need to find them another home, right, we need to fire them, find them another home. And, oh, by the way, it's freed up time for our techs to be more proactive. You're truly a managed service provider now, tim, and you're doing stuff that most customers don't expect from their IT company. Right, to be able to proactively keep them up and running and so really, really powerful.
Speaker 2:The other thing that I heard you mention earlier was this mind shift that you had to make that revenue wasn't the most important thing. It's important, but profitability is the most important thing, right, like, like you had to make sure. Again back to the, the efficiency piece, but can you talk about how difficult that was? I mean, obviously you had gotten to a spot where you thought you were doing for really well with 4 million in turnover, but you're underwater from a profitability perspective. But was it an overnight thing or was that still? Did you have to convince yourself on a daily, weekly basis that make sure we're doing. We're going after the right customers, the right deals and the revenue will come.
Speaker 1:For me it was an instant thing. I was sitting in that hotel room. I went into Xero, I generated numbers, I sorted them and we okay, if it's just me looking after the business, who can I service? Great, okay, now, as I fill that lifeboat up, okay, I'll bring an engineer on to help me. Okay, I can look after these customers. Okay, I need somebody to do the billings. I want to do some sales.
Speaker 1:Okay, that's didn't give me any more customers, but filled another seat and I just went through and went. That's what I have to do, because I was in such a bad position. I didn't have the luxury of my next six months. Maybe I'll sign a contract and get out of this. I'm like, if I don't sort this tonight, I can't go home back to cross. And then we put a quarter million dollars back on the house and financed the business to get through it. You know that was a few tears in the family, so I'd suggest you don't get to that position first.
Speaker 1:So I'm working with another MSP. So one of my goals is to work with MSPs, right? So I've got two MSPs. I'm working with two MSPs. I'm working with one guy in australia and we're going through going. Okay, let's right size your customer. Let's right size your customer base. What's the revenue, what's the profitability of them? Okay, what are you doing for these ones? And he's gone through and gone. Okay, I can get rid of these five customers, but it's actually not going to unpick me at all. I'm actually going to be better off. Yep, and it's just, you don't have to do it on one go, like, if you are at 3% profitability, you have the luxury of time. You can sit down and make a plan and discuss it with. I'd say, find another, find somebody you can discuss it with. So I discuss my business in too much detail, as you well know, with too many other.
Speaker 1:MSPs Cause I'm like I in too much detail, as you well know, with too many other MSPs, so I'm like I don't compete against them. Even in my local town I was at Kaseya Conference met a Christchurch MSP. I don't think we've lost business to each other in 10 years, so why would I be concerned about telling you what and how I'm doing? But work out your plan on a methodology. Now I have a methodology and I'm a really people go, you're so innovative. No, I don't have an innovative bone in my body.
Speaker 1:I'm an imitator. Yeah, I, uh, but imitate the best and then tweak it for how it works for you. Um, and so I did that. I got a methodology, went through with this other msp, said okay, okay, here's how you calculate all the figures. Here's how you calculate it on a methodology. It gives you a ranking. How do you feel about that?
Speaker 1:And there might be somebody who's an F customer, who you think, well, I just can't fire them at the moment. Well, you're going, okay, great, but that's a decision you've made. You haven't let it happen to you. You haven't let it get worse. And it might be. Look, I'm not charging enough, but they've given me $50,000 worth of contract revenue over the last three years as referrals. So they're not paying for the service but there's no redeeming features. Then find somebody. So we have two business partners. I have two other IT companies. I go this customer doesn't fit for me. Now I'd like to hand them over to you. They're like what do you want for us? I don't want anything, I just want you to look after them, right? Yep, because if you don't hand them off, it will come through in your tone in your service desk manner as a leader you will say to your
Speaker 1:staff. Maybe we shouldn't be dealing with that customer in this manner. That customer, after six months, will say your service has dropped and they will leave you anyway. Right, that's good. It's not a case of fake it till you can't, fake it till you make it, and that when you've got a customer who is truly not the right fit for you, it's a reverse. You need to get rid of it, find focus, have a conversation with them, explain how you have moved on, explain how their business is slightly different and, by the way, I found somebody who I think could be good for you. That's great.
Speaker 2:Tim, you've left me with a bunch of nuggets over the last couple of months. I call them Timisms, if you will. One of my favorite ones. I want to share with everybody. It's sales is not a dirty word. Want to share with everybody it's sales is not a dirty word. I think you shared that with us. Uh at at our event in uh in the blue mountains, because we were talking about uh and thanks for the reference to uh, an american movie. Uh, field of dreams. It msp is not a field of dreams, right, it's. You can't just go out there and say, here it is, people will come. You got to get your butt out there and you got to start knocking on. People will come. You've got to get your butt out there and you've got to start knocking on doors and talking to people. So talk a little bit about your mindset around sales.
Speaker 1:So I was an engineer and I thought and there's always this comfort, so it's quite funny, because I've got a salesperson and he says this is one of the few SPs I've worked at where there's no comfort between engineering and sales. Is, this is one of the few SPS I've worked at where there's no conflict between engineering and sales? Engineers don't go, why the hell have they sold it? Sales don't sell shit, and that comes from I was watching to get myself into sales mindset. I'm like sales is just a skill, so therefore you can learn it. Therefore, it's four hours a day of videos. Here's subscribing to Robin Robbins, gary Pico, galactic Advisor, all these different services. They'll get sales training.
Speaker 1:It's like I would just put a video on when I walk to work in the morning at double speed, so I'd listen to an hour's video on the way to work, an hour's video on the way home, an hour's video where I walk the dogs. I'd go for a walk around the park for an hour and there's two hours worth of videos. It's like repetition, repetition, repetition. And what that taught me was like sales is only a dirty word if you're trying to sell the wrong thing to the wrong person. Sales isn't about selling. It's about education and finding the person who wants what you have to deliver. And if you can find that it's not, isn't it? I mean, look, we've lost some sales recently. People go your price is too expensive. I go well, that's the price I've priced myself out to run a profitable business, to stay in business and deliver the service that I believe you need. Now, if that's not the service you need, then there's other people out there who will deliver the service you need and I have no problem with that. I don't get upset, but I don't get angry. I'm like I go well, we'll see where they are in three years. I know who they've gone to, then put them on the list, we'll carry a marking to them, we'll follow up with them and if they've got what they want and they're paying for what they need which is less than what they want from me, fantastic. By all good graces, go forward and run a happy I want them to run a happy business.
Speaker 1:But if you try to sell the wrong things to the wrong customer, now that is sales and that's where it leaves a dirty. You know dirty word? I mean we have one customer, one prospect, who wanted to sign up with us. I just said, salesperson, no, we're not signing them like, but it's five thousand dollars a month. I'm like, no, they, they're not the right cultural fit for our business. They're going to cause problems.
Speaker 1:Um, so for me it it was training, training, training, the advantage that it's given me, as my sales guy loves taking me on sales calls now, even though I've been an engineer for coming up on 30 years. He said you don't revert to engineering, you don't risk feeds and feeds and solutioning. You're like I can look at what the customer's talking about, I know how to solve it. And my agent goes I've solved that, cool, move on. How do I turn that into something?
Speaker 1:I can explain to this business owner or C-suite person that we give them an outcome. It's not about breaks, it's not about managing the technology. It's about delivering an outcome to them that they can quantify so that they can then say, yes, we'll pay the premium you want to charge, because we understand how you're different and that you know I give the sales training right through the whole business. People may choose not to do it I mean engineers. They really don't want to do the sales training, but there's a framework course we do that explains why we're different and how we do what we do, so that they can sit in front of the customer and understand, you know, if the customer says, oh you know our bill's too much, it's like, well, it's too much, because here's what we're doing for you. We have all these different departments who do different things. If you go to a one-man band and there's nothing against one-man bands, I was there and we have a need for them- and I've seen some negative things in the past.
Speaker 2:They serve us a great job for the right customer, but our price goes up as we deliver more, more departments awesome. So, tim, you mentioned you have a 30 year short, a short it career. 30 year it career, uh, and you have experienced some things that I think a lot of folks would have never experienced. But what would you tell young tim when he was just about ready to start his it career that you know now that maybe you didn't know that so I went through school and tried to get expelled.
Speaker 1:They tried to expel me from school because I just didn't really enjoy it. I was like like I'd turn up and go. What are we taught the textbook at the end of the year I'm out of here. And so I lacked self-belief. I failed English, I couldn't write really well. That had a massive impact on my ability to do sales. So I didn't go down the sales route because I couldn't write proposals. I'm like I'll be an engineer because if I pull this widget or this lever, something happens. It's easy, it's mathematical and logical. Um, if I was going back up, you're going like sales is. Even if an engineer, sales is really important. How do you get your next job? You have to sell somebody that you can do a good job. You know, not just. I got 99 on on the Cisco exam. So if I had my way again when I first started the business, I would be back there going I'll go and employ an engineer and I will do sales.
Speaker 2:Awesome.
Speaker 1:And then marketing. So I think the really big thing is I've got sales is understanding marketing. We as a business and industry waste so much money on marketing Yep, because we don't understand it.
Speaker 2:We want somebody else to do it for us and we abdicate it.
Speaker 1:Now I didn't say delegate, we abdicate. I've paid you $4,000 a month. I want some results. Six months later, why haven't I got the results? I'm going to move to a different agency or try something different.
Speaker 1:Marketing doesn't work and marketing is a lot harder than sales, because sales is tangible. I can go and knock on the door and speak to Chris and say I won the deal, didn't win the deal. He liked me, didn't like me. My price is too high. It wasn't too high. It's instant feedback and you can put a really good process for it. That's quantifiable. I found 100 people. One person gave me an appointment out of 10 appointments. I got four proposals out of four proposals. I won one of them. I have numbers once gone. Well, business just do more of that.
Speaker 1:Marketing is a field of dreams. It is you, you. You build it and you're hoping they're going to turn up at some point because it's really quantifiable. There are some parts like google ad words turn up at some point, because it's really unquantifiable. There are some parts like Google AdWords. You can get metrics, yep, but it's had to miss Like. You might put a bad ad out there and you might spend $15,000 and get one lead, you change your ad slightly, all of a sudden you've got 100 leads. So marketing, I think, is something that, as MSPs, we need to not stop abdicating.
Speaker 1:We need to start actually getting involved in it, and you can delegate it. If you're really busy, you can delegate it.
Speaker 1:Find a smart personal agency to delegate who's going to teach you and walk you through it. So, as a business owner, you can make the decision. You don't actually have to do all the work like print the flyers and the newsletters and post the ads. I'm not saying you should do that, but you have to have metrics and be responsible for it yourself. You can't just go I'm paying this company 2500 a month, I'm all good. Yeah, so like seo, like I write all my own blogs for for the seo. Um, until today, I post all the social media posts. I review them all and know them all because it doesn't take too long to do. But I get all that content delivered to me. Like the social media posts are formatted by somebody else, but I'm picking. I know what's going on in the business.
Speaker 2:Very good, All right. So I always I think I told you I was going to ask this question. The name of the podcast is the Now that's it podcast, Tim, and so I'd love to ask you when did you know? Now that's it.
Speaker 1:And what sort of did I want to carry on doing IT?
Speaker 1:Yeah, that you were yeah, yep, I think the funniest thing is I sat in my garage and I told you I sat in my garage around just before Christmas. We've now got to profitability. We're now growing above the industry average of 10%. You know we did 50% last year of MRR increase. I use that to get rid of customers. We're on target to do the same again this year. Okay, well, now that's it. What next? And I went.
Speaker 1:Actually, what I want to do is help other MSPs. I'm not saying I'm perfect. I'm not saying I've got all the answers Hell, no, I'm so far from that. But what I am doing is going to yeah, I'm in three peer groups Enable True Method, rub and Rub. So I'm trying to gain all this knowledge and tidbits. I'm like, well, how can I help other MSPs? You know how can I have conversations? I mean I'm helping two at the moment, but I've also had conversations with like three or four more. It's like let's have a look at your books, let's have a. You know how much help do you need? Do you want a?
Speaker 2:little bit of help.
Speaker 1:Do you want somebody to say, hey, ed boy, you're on the right track. Or do you want somebody to say, no, you really need to change this? But it also comes down to what they want to do. You know what's the end goal, but for me, you know, I mean after 30 years it's like what now? What now?
Speaker 2:is how can I help other people? I was hoping you'd say that because that's something you shared with us. I think the first time we ever met and it's something that I love MSPs that have gotten to that point in their maturity level where they've said, look, I've made some mistakes, I've done some good things. If my stories can help somebody else, I want to share it, because this idea of MSPs helping MSPs is really really powerful and that's what's unique about our channel. Is that? Yeah, I mean we could technically say we're competitors with everybody, but we're not. I mean you've got folks in your own community there that you look at and say, look, I'll send you deals that aren't good fits for me If they help you, great, like that's really really powerful, tim.
Speaker 2:Tim, I really want to thank you so much for joining the pod this week. You're an amazing individual. I'm glad I got to know you. I can't wait to see how Oxygen IT continues to be profitable and grows over the coming years. I wish you and the Oxygen IT team the absolute best of luck in the future. Thank you so much.
Speaker 1:Well, thanks for having me along and hopefully, as I said, hopefully this conversation can help another MSP realize it's not all shit. In closing you said about helping the community we are, we do help like, we are very helpful. So you just find the right people and I put and rather having a trying to close one new customer against a competitor in my local market, I'd far rather go for a beer with them.
Speaker 1:it's great having a beer with somebody who understands the struggles we go through because you can't take it home to your family? You? Can't take it home to your business partner. You need somebody independent who you can go have a beer and go. I've had a really shit week and they go, let's have a chat about that, but the shitty customers. Thanks for having me on board and hopefully, um this helps another usp up there. Thanks so much, tim.