This MSP’s Profits Continue To Double. Here’s How.


Dec, 13

This MSP’s Profits Continue To Double. Here’s How.

Choice Solutions was a $21 million general practice networking VAR in 2009, and the company was projecting 17% growth at a time when the economy was tanking. When I caught up with the CEO of the company, Jim Steinlage, and asked him how things were progressing, I could not have been more surprised by what he shared with me.  Four years ago this company was a general practice networking VAR with six technology practices:

1. An Avaya VoIP/Unified Communications practice
2. A Great Plains CRM practice
3. A Web development practice
4. A hosted software practice
5. A SharePoint practice and a
6. Virtualization practice.

The company found itself winning only about 40% to 50% of the deals it competed for and it was having a difficult time keeping its top employees, so Steinlage made a bold move and sold off five of the company’s six technology practices — leaving only the virtualization practice. “I think too many companies are too diversified, just like we were four years ago,” he says. “This business works just like a healthcare practice. Which doctors have the longest waiting lists and charge the most money? it’s the specialists, not the generalists.”

But, doesn’t this move fly in the face of the old age to become a “total solutions provider?” No, and here’s why: Choice Solutions learned how to form strategic partnerships to fulfill its customers’ non-virtualization needs. It uses a professional organization called Avitas Partners to fulfill its client’s other IT needs. This same concept is familiar to some of Ingram Micro’s partners, who specialize in one area of IT and use Ingram Micro’s Professional Services group to provide IT services outside their core focus. In this business model, Ingram handles all the noncompete paperwork as well as vetting other solution providers to ensure they have the proper credentials and references to be able to fulfill any given IT task.

Choice Solutions’ radical business change has proven to be a wise move in several ways. Not only is this MSP now able to close more deals, it has an 85% win rate. The company’s expertise in virtualization now pulls them into much larger deals than they were able to compete for previously, including deals with Fortune 500 companies. And, finally, their profitability continues to double each year.  I talk to a lot of VARs and MSPs that believe that the only way they can ensure customers receive the best IT solutions and service is if they provide it themselves. Unless you’ve been experiencing healthy year-over-year profitability growth like Choice Solutions, perhaps it’s time to challenge that position.

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