Episode 7 – Chad Lauterbach – Be Structured

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Episode 7 – Chad Lauterbach – Be Structured

Welcome to the Confessions of an IT Business Owner podcast. In this episode, you’ll learn about some profound struggles related to owning and growing an IT business from the perspective of Chad Lauterbach, CEO of Be Structured Technology Group.

This episode is sponsored by 5stepmarketing.com and BVOIP.com. Check out Josh Whitford and his offering at 5stepmarketing.com/audit, and learn more about the perfect channel only offering for your IT firm and MSP business at BVOIP.com.

Read Transcript

Ryan  Goodman: Welcome to the Confessions of an IT Business Owner podcast, where we believe that healthy cashflow is critical for your IT business, automation is paramount, and building trust with your clients by looking professional will help grow your business.

 

I’m your host, Ryan Goodman, and today you’ll learn about some profound struggles related to owning and growing an IT business and how Chad Lauterbach, from Be Structured Technology Group, overcame them.

 

Chad Lauterbach: Why would I make money for someone else when I can make money for myself and chart my own destiny rather than be on somebody else’s sailboat?

 

Ryan  Goodman: Here’s the podcast with Chad.

 

All right. Well, Chad, thank you for jumping on today’s podcast. Excited to learn a little bit more about you, about your business, and some of the successes and struggles that you had, and allow us to share that with the greater community.

 

Chad Lauterbach: Definitely. Yeah, thanks for inviting me.

 

Ryan  Goodman: You bet. To kick things off, I gave up your first name. I’ll have you state your first and last name as well as your company name.

 

Chad Lauterbach: Sure, yeah. It’s Chad Lauterbach, from Be Structured Technology Group out here in Los Angeles, California.

 

Ryan  Goodman: Well, you’re warmer than us in tropical Fargo, North Dakota. That’s for sure this time of year.

 

Chad Lauterbach: Yeah. Yeah, not to speak of the weather too much, but it’s been crazy this week; it’s record-breaking heat out here by multiple digits, so no winter here, that’s for sure.

 

Ryan  Goodman: Beautiful. So, to kick things off in our interview, here, I’d love to have you tell us a little bit about your business and some of the passion behind starting it.

 

Chad Lauterbach: Sure. Well, I’ll start with the passion, actually, ’cause I think the root of where people come from and how they started their business is always an interesting story.

 

I’ve always been interested in technology and how things work. I was the kid that was picking apart the Discman and the radio and taping stuff from the radio onto cassette tapes and using the camcorder. My parents gave me an old Yashica camera. I was always into figuring out how anything that had technology in it worked.

 

I was really lucky in that my parents had computers around at a very young age. I was born in 1980, so it was pre-personal computer era. Late 80s, early 90s was when most people started to have computers in the home, but my dad had a computer in ’84 or ’85, I think. He had this giant computer, and then we had a Commodore PET computer at home. So, I got to learn to program in basic on that thing when I was six.

 

Then we had the original Mac Classic and we had an IBM XT, so I actually got exposed to both platforms at their very, very earliest stage. We had a very first generation Windows 2.0 and then a Windows 3.0 computer.

 

I feel like it was unusual that my family had those around. They were mostly around for my dad’s work, so they weren’t play toys, per se, but he let me use them. I got a lot of exposure to the personal computing age at a really young age, which was great. I was always really excited and passionate about it. I ended up doing the things that kids do. Building my own systems, gaming, all that stuff as I got older and just always had a passion for technology.

 

Then I got really lucky, again, in that I got to turn that passion into a career really young. Between junior high and high school, one of my dad’s friends was a part owner and president of a life insurance company, so he gave me a summer job working in their IT department, working on an AS/400.

 

My after school job, when most of my peers were scooping ice cream in high school, I worked doing junior admin work. Basically help desk and junior admin installs and stuff at Mayo Clinic in Scottsdale, Arizona. Again, just total luck because I had some computer skills from a young age. I was able to jump in and actually get paid to do some work at a really young age doing IT stuff.

 

When I was 20, I got my first full-time gig and worked for other people for about five years in various capacities at a transportation company and health care company, building IT departments from the ground up for them. So, literally going from nothing to 100- or 200-employee companies, full server build outs, all that stuff.

 

Ryan  Goodman: Wow.

 

Chad Lauterbach: So, yeah. It was crazy. I feel just really lucky with the opportunities that landed on my plate at a young age. Having had that experience, I realized, “Oh, I have a knack for not just doing work, but actually being able to understand business and being able to take something from a design and architecture phase all the way down to a build phase.” Which I still, to this day, view as one of my strengths, is being able to see something strategically and design and architect it. But I still, even to this day, can turn the screwdriver.

 

So, I know how to configure a switch on the command line, I know how to work on the operating system. I like that I know those things, ’cause when I walk in and talk to a client and consult them, I know I’m not shooting crap out there; I know that what I’m designing or telling them I know can be done all the way down to the configuration level, which I think you don’t always find in IT service company owners.

 

So, yeah, I started Be Structured in 2007 officially. I incorporated it. I’d been doing it, essentially, for a year or two before that. Then I’ve grown it to where it’s at today; about 15 employees and 50 or so customers. Went from doing the break/fix model 13 years ago to being the managed IT service provider that we are today.

 

Ryan  Goodman: It’s an awesome story. In fact, as I was listening to you and the path, not only was it … I wouldn’t say complete product of environment, but it was a saturation; it was all around you. But I don’t think there was another option for you, actually, which is a beautiful thing.

 

Obviously you’re very successful in that as well, and it sounded like you had some great mentors. Not only family, but also family friends were able to get inside of the business aspect of IT at a young age. Now here you are in the position you’re in as an entrepreneur, owning your own business, which is awesome. Living the dream.

 

Chad Lauterbach: Yeah, and I would add to that, too, just in the luck column: My dad is not an entrepreneur. He worked in big companies his whole life, but a few of my dad’s friends and my uncle are entrepreneurs.

 

I learned a lot from them about owning businesses and how business operate and function, and my uncle’s still a mentor of mine. He’s an investor in a different company that I have. He’s somebody that I still talk to and rely on for that business-level advice, too. So, yeah, beyond just the technology that I got to mess around with, I did have mentors in the business space as well, which was cool.

 

On the technology front, I feel like most people that are successful in technology are a bit autodidactic. I feel the same way. My mom always joked I was staying after school in elementary school, offering to help my teachers with their computers, and I would charge them. I’d be like, “Hey, I’ll stay after school and help you with your computer for $20,” or whatever, and they’d be like, “Oh, okay, great.” They would pay me, and my mom was like, “Is that appropriate?” I’m like, “I don’t know. They gave me money, and I helped them with their stuff.”

 

Ryan  Goodman: You’re like, “It is definitely appropriate, trust me.”

 

Chad Lauterbach: Exactly.

 

Ryan  Goodman: “I’m buying the things you don’t wanna buy.”

 

Chad Lauterbach: That’s right.

 

Ryan  Goodman: I’d love to learn, as we talked about this story growing up around IT, technology, being the guy to take things apart, figure out how it works, and still being very knowledgeable of that, and now growing a team …

 

Why don’t we talk a little bit more about some of the wins that you celebrated in being the owner of a technology business? We talked about employee count, where you’re at with customers. What are some of those wins along the way that you can clearly call out and say, “This was a defining moment inside of my business?”

 

Chad Lauterbach: Yeah, yeah. I struggled the first few years to figure out how to get the business off the ground, on its legs. I was doing break/fix and then I was starting to do some retainer contract stuff. I was struggling to find a business model ’cause I was like, “Well, I know I need to hire another full-time person.”

 

Especially when you’re real small; when you’re a one-person company, adding a second person is doubling your staff. It probably is not quite a doubling in payroll, to be quite frank, so it’s a huge undertaking, that first person you hire.

 

So, yeah, I struggled with it a lot in the beginning, and that’s where managed services really came into play. That’s when I was able to hire my first full-time person. I honestly wish I could tell you, I do not remember where exactly I heard of the managed services concept or learned about it. And of course, there were a lot of failures along the way. I bought junky PSAs and RMMs at first, trying to understand what I was doing until I landed on some good solutions.

 

But just getting into that model where I was selling people a flat-fee service and an outcome rather than selling hours was a total game changer because it allowed me to feel confident hiring somebody else, because I knew when my revenue hit X, I was able to do that.

 

That gave me the confidence to grow my business, and still to this day does. I look at the books and I know product sales, one-time service sales or setup fees, or anything like that. That’s all great, but that’s gotta be icing on the cake. Our managed services and our other types of services sales have to cover our regular expenses, including payroll. If they don’t, I’m not gonna feel comfortable hiring somebody. That’s still a gauge I use today, and that’s been probably the biggest win starting this whole journey.

 

Ryan  Goodman: Yeah. That’s a great win, and it’s a great feeling to have monthly recurring covering the base, so to speak. Then anything else is additive, and you can monitor growth and regulate growth based on at least that being one of the key metrics inside of the business.

 

Chad Lauterbach: Absolutely, definitely.

 

Ryan  Goodman: Not everybody’s to that point yet, so you’re proof that this is a goal that’s completely attainable as long as you have enough drive, focus and attention to the details and the day to day.

 

Chad Lauterbach: Yeah. Yeah, it definitely is. I’ve talked to guys that are trying to get started in the IT services space and oftentimes they talking about, “How’d you hire your first person,” and, “How did you get where you are today?” I always tell them, “Having some sort of recurring service model is critical to being able to do it.”

 

It’s not impossible, I suppose, to have an hourly service model, but I think especially in today’s environment, it’s gonna be really challenging. More of the firms these days that are gonna be the better paying firms, your financial services industry companies, banks, auto dealers, accounting firms, legal firms, anything that’s in that professional services territory, they’re expecting to pay a managed service provider a fixed fee. So, if you’re going in there with hourly, I think people are gonna look at you funny.

 

Yeah, you might be able to pick up Joe’s Auto Shop down on the corner or the convenience store or whatever, but I think you’re gonna struggle to stay alive with that type of business these days. I think large or small businesses or professional service companies are expecting to have a managed service provider. We find a lot of people in sales these days.

 

It’s interesting, I’ve been noticing a big change. Up until just a couple years ago, we would often be at times the first managed service provider in the company. They had a break/fix company before of some type or maybe a retainer contract or a block hour contract. We were the first MSP in there.

 

I’d say more than 50% of my current leads or sales are actually changing from existing MSPs to us, and that’s been a shift I’ve noticed just in the last few years. People are getting so comfortable and confident in the MSP space they’re actively looking for other MSPs if they’re not happy with their current one. So, that’s been a big shift I’ve noticed.

 

Ryan  Goodman: That’s really interesting. As you spun up the business, we had talked that you were building or working as an entrepreneur prior to 2007. You define 2007 as the official start date. What was it like moving in to that role in that transition period prior to 2007? Were you working full-time somewhere else and doing your practice on the side? At that point of leaving that 9:00 to 5:00 structure and becoming self-employed, what was it like for you taking that step?

 

Chad Lauterbach: Yeah. I’ll take a quick step back to high school before I jump into my adult life. I had started two smaller companies when I was in high school. One was a computer building company, like a system builder, which, of course, back then was popular. That was a lot of fun; I learned a lot about the tech and I really enjoyed it at the time.

 

But the margins were real slim. Even back then you had eMachines and just chic computers on the market. It was hard to make money. It was hard to differentiate yourself, because even when you tried to differentiate yourself on the high end, you still had the players like IBM and Del and Gateway back then out there that were making high-end systems. So, it was tricky to differentiate.

 

I also created a web design company, but I sucked at design and I wasn’t a very good coder. I didn’t really spend the time to learn code. If I had one big regret when it comes to my time and work in the IT space, it would be I didn’t spend more time learning to program. I learned basic programming concepts and I spent some time doing it, and I can read some code, but I’m by no means a developer, and I wish I would’ve spent more time and energy learning to develop.

 

But that being said, both of those businesses are long, long, long defunct now. I went and worked for other people for four years only. I worked at a transportation company and a health care company roughly two years each. Again, building those departments from the ground up.

 

Ryan  Goodman: Sure.

 

Chad Lauterbach: I always wanted to get back to working for myself. I really liked that.

 

Again, I feel so lucky. I feel like I just keep saying “I’m lucky” all the time, but I had great bosses, great mentors, great people that I got to work with. I did not have bad experiences working for other people, but I still had the entrepreneurial bug; I wanted to get back out there and try to do my own thing.

 

I always was moonlighting, working on clients after hours in the evenings, weekends, et cetera. I already had some clients in my client roster, if you will, so when I decided to make the jump, I went to one lead I had in Los Angeles and I went to my current employer, the health care company, and said, “Hey, will you guys both sign up with me?”

 

The health care provider said yes, so they became a client instead of hiring me as an employee, and the other company said yes. So, I was able to make the jump and take a very small pay cut when doing it. I was able to architect that in a way that was fairly easy.

 

I think a lot of people have to do something a little more drastic; I think generally people would have to do something more drastic, and that’s I think still the reasonable choice if you have the skillset and the desire to do it. But I was able to do it without a whole lot of pain.

 

Ryan  Goodman: Well, that’s a really cool story, and it’s really neat to hear as we interview a broad spectrum of service providers and partners just what brought them to that point, and it’s fun to hear the big differences.

 

I don’t think there’s a right or wrong way. It’s always interesting to hear how someone ended up exactly where they are. Appreciate the insight and explanation around it as well.

 

Chad Lauterbach: Yeah, definitely. Yeah, I’ve always been a bit of that … I loved the movie, Good Will Hunting, and I’ve always been …

 

In school, I didn’t go to college, and one of the reasons was … One of the funny things I always tell people is I couldn’t fathom paying people to give me work when I could get paid to do work. So, college didn’t make any sense to me.

 

Likewise, after having worked for people for a few years, I was like, “These people aren’t any more special than me. They’re great people, nothing against my former bosses, but I can do this too. Why would I make money for someone else when I can make money for myself and chart my own destiny rather than be on somebody else’s sailboat?”

 

I’ve always had that mentality toward life, and a lot of people don’t have that. I know a lot of people that want to show up to a 9:00 to 5:00 and their passions lie elsewhere outside of their work, and their work just enables them to live those passions. That’s awesome.

 

For me, those have always been tied together. I like being able to chart my own course in business and in life in parallel at the same time.

 

Ryan  Goodman: Well, it’s the true definition of an entrepreneur. You’re sitting in exactly the seat you were designed for, and I think that’s really clear.

 

Chad Lauterbach: Thank you.

 

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So, as you made that transition from break/fix and project work as your primary source of revenue and then moved over to the managed services business model, what’s it been like for you? Was it a hard transition, or do you feel like it was a really smooth transition in operation once you’d landed here?

 

Chad Lauterbach: It was a very hard transition for me. I’m not a natural salesperson, so that’s one of the weaker areas for me. I’ve learned to be better at it, but I don’t think I’ll ever be a killer sales guy.

 

I always believe that people can excel the most when they work out their best muscles. Somebody that’s a naturally good basketball player is gonna become an amazing one if they work hard at it. I can become a better salesperson, but because that’s not a natural fit for me, I’m never gonna become a rock star salesperson.

 

The sales part of it was really challenging for me to figure out the sales pitch and why this is a value. I have a sales pitch now that I think works really well and I think is honest, but that was a hard part for me.

 

And then besides the sales part, finding the right tools was really a challenge. That might be because we weren’t cutting edge, but we were earlyish to the managed services game. Kaseya was one of the only players in town on the RMM town, and its still a good product; we still use it for some things, but the monitoring component didn’t work that great. The backup component was really bad.

 

There weren’t a lot of great managed service provider backup solutions at the time. There weren’t a lot of great managed AVIM solutions at the time. There was ConnectWise, which no offense to ConnectWise users, but I didn’t love. There wasn’t really other good options. We chose a product that’s now defunct and we eventually moved to Autotask. But I think we’ve been through four backup solutions, two RMMs, two or three PSAs.

 

There was a lot of fine tuning on the actual services we wanted to deliver and the way we wanted to deliver them. I feel good about the solution we have now, but it took a lot of time, so I’d say it was more painful than easy.

 

Ryan  Goodman: Sure.

 

Chad Lauterbach: Fortunately.

 

Ryan  Goodman: And I think as you’re evaluating those tool sets … It looks like you had looked at a lot of things and automation, of course, inside of the model, is critical to the success of the business.

 

You had also mentioned a little bit earlier that managed services, as a concept, there wasn’t necessarily a definitive point where you said, “Okay, here’s the model. I get it. It was spelled out clear.”

 

What about the process of realizing that model existed? How did you go about finding the tools to help you automate your business? ‘Cause it sounds like a fluid progression, but I’m guessing there were some different points in time where you had something presented to you or you were at a conference and you saw some of these different PSA tool sets or monitoring tool sets.

 

What were some of those points inside of the business where you realized that automation and moving to that MSP model was critical to your business success?

 

Chad Lauterbach: Yeah, I wish I could speak to when I learned of the model and started to do research on it. I just can’t recall the exact point when that came up.

 

Ryan  Goodman: Sure.

 

Chad Lauterbach: But when I started looking at import tools, the best investment I made was buying Kaseya. There weren’t a lot of tools on the market at the time. I think N-able was out there.

 

There weren’t that many tools at the time. It’s amazing how many there are now. Now I can go talk to a newbie that wanted to get started in the MSP space and be like, “Okay, here’s the only three PSAs to look at and here’s five great RMMs to look at. Go. They’re all pretty good, so pick the one you like.”

 

Back then, it just wasn’t quite like that. Like I said, we made some definite mistakes on the ticketing and PSA systems, but I think we got lucky in choosing Kaseya. I think it was … We obviously looked at other products carefully, so it wasn’t a uneducated decision, but choosing Kaseya and moving forward with them was definitely a first really good step.

 

And it was a scary one because, before I could have any managed services revenue, I had to buy a remote management and monitoring product so I had something to sell. That was a bigger risk for me than starting the company.

 

Ryan  Goodman: Right?

 

Chad Lauterbach: The biggest risk I took back then was … Now you have all these subscription model stuff, so you can go to Autotask and get a whole package, PSA, RMM, everything, for a relatively low monthly fee. If you fail, you just go bankrupt and you say, “Sorry, guys.”

 

But for me, I already had a business that was established for a few years. I had some revenue and customers, and that was my livelihood at the time. Kaseya was like, “Hey, yeah, for $35,000,” or whatever the number was, “You can buy Kaseya.” I was like, “Oh, man. That’s intense.”

 

They didn’t have a friendly monthly service offering, so that was a big risk, and it ended up being the right risk. And actually, in some ways, I think it … There’s a small benefit to that that I think is lost in today’s world with everything being subscription service. When you plunk down a big chunk of change, you commit to something. I was really passionately committed to making it work.

 

I think we do this in our regular lives when we buy a car, or buy a house, or any time we make a big investment. We think about it. Maybe a stock or something. We’re cognizant of that being a big investment, and we’re stuck with it for some period of time whereas, when you sign up for DirectTV, you throw it away tomorrow if the cable company comes up with a better offer. With all these monthly services, you have no commitment to them. You just don’t care. You can sign up for X service for Y dollars per month and cancel the next month.

 

I think I could’ve gotten squeamish if I had signed up for Kaseya for $500 a month and, four months in, not had a sale. Would’ve been like, “Oh, let’s cancel it.” So, having plunked that change down, I’m like, “I’ve gotta make this work.” I was really committed to it.

 

Ryan  Goodman: It kept you committed.

 

Chad Lauterbach: Yeah.

 

Ryan  Goodman: So, you talk about taking that risk, and you’re right; people making those decisions today, it’s not such a either game time or go home decision anymore. What as the point where you felt like, “Okay, I see momentum from making this decision,” and …

 

How did you feel? Was that a huge boost in confidence to continue to step forward and look at other tools at that point?

 

Chad Lauterbach: Yeah. It started with … I went to my existing time and materials, a retainer client, and sold them on managed services. Now I’d have to …

 

I probably have records of it, but I’d have to look and see. I bet more than half, for sure; I bet close to 75% of my clients converted, so that was really exciting. I was like, “Okay, other people agree and see this model as a functional model.” That was really exciting.

 

And even my clients that were a little bit skeptical of it. They were like, “You know, I’m not totally sure, but I trust you, Chad, and I think you’re gonna make this work.” I was glad I had that much clout with some of my clients that they’re like, “We’ll give it a shot with you and see how it goes.” Some of those clients are still with me to this day, so I think it’s proved that the model can function really well over a long period of time.

 

But certainly, probably the most exciting thing was those first couple brand-new clients I landed that had never been clients before and signed up for managed services deals. That was really exciting.

 

I will say, something that I can teach a newer MSP person that I wish I had taught myself, that I’ve only learned, honestly, in the last few years, is I’ve oftentimes short-sold myself. ‘Cause when you’re selling managed services, the sale cycle is long and you do get objections.

 

It’s not a slam dunk sale. If you go in and they’re like, “Hey, I’m gonna charge you $150 to fix your computer, so call me when you want. Here’s my card,” everybody’s gonna take that. Even if they don’t call you, they’re gonna take your card and be like, “Oh, okay, we’ll keep you in mind. Great, thanks.”

 

Ryan  Goodman: Right.

 

Chad Lauterbach: Or if you did short sell yourself and you’re like, “Yeah, I’ll manage all your IT for $40 a user a month,” and you just lose your shorts on the deal, well, everybody’s gonna take you up on that, too, ’cause you’re selling way under market and you’re losing money.

 

It was hard for me to force myself to sell at the right price and let deals pass if they weren’t good or not to revert back. For a number of years, I kept reverting back. When a client was like, “Oh, I don’t want managed services,” I’d let them do TNM or I’d let them do a retainer. It took me a long time to just say, “That’s all we do. We don’t do anything but managed services anymore; we won’t sell you anything.”

 

And I had some really lucrative projects come up. People coming to me and saying, “Hey, I have an $80,000 buildup project.” I’m like, “Man, we can make 30% margin on that or whatever.” I’ve just gotta be like, “You know what? That 24 grand and that in-gross profit is not worth the destruction to my team and distraction from my primary business goal, which is managed services.”

 

It’s only been the last few years I’ve gotten to that point where I have that level of confidence to say, “No, thank you.”

 

Ryan  Goodman: That’s a big turning point in a business as an entrepreneur, saying no to money to follow a proven model and continue down that path.

 

Chad Lauterbach: Yeah. Yeah, and I’ve seen a couple … The MSP space, one of the things I really like about it is, it’s real friendly. A lot of business spaces are real competitive or cutthroat, but I know a lot of my competitors.

 

I know a lot of the owners, and one of the guys I’m thinking of right now, I won’t mention his name or his company name, but he’s roughly my age and he’s grown faster than me. I actually attribute his more successful growth almost directly to him saying no to everything that’s not high-margin managed services.

 

He learned that lesson earlier than me and he was able to grow faster than me, I think, because of his commitment to that. I remember having a conversation with him quite a few years ago about it. He’s like, “I won’t do anything but that.”

 

Ryan  Goodman: Now, you led me perfectly into my next question, which was, “If you could talk to your younger self after seeing what you’ve accomplished today, what would you say? What wisdom would you impart to your younger self?” I think you talked a lot about that with, you oftentimes sold yourself short early on. Is there anything else that you would tell your younger self?

 

Chad Lauterbach: If I was telling my much younger self, being really honest, I’d probably say, “Learn to be an expert coder.” I think I had it in me. I think I still have it in me if I ever had the time, although it’s harder to teach older dogs new tricks.

 

The nice thing about managed services is it scales. That’s the problem with TNM work is, it’s very, very hard to scale. It’s not impossible. Of course there’s TNM shops that have scaled, but very tricky. But nothing scales better than software or digital assets.

 

So, if I could’ve created a tool for the managed services space … I already knew IT and computer systems. If I could’ve created a tool for IT people, that would’ve been a totally different way to scale my knowledge and create a business. But I know that’s not specifically what you’re asking.

 

If I was to talk to my younger self that was already committed to IT service and managed services, or the person I guess committed to IT services but not sure about managed services, I would say, “Figure out a way to get more confident faster.” I think that’s one of the things that …

 

Maybe this is unique to me ’cause I started so young. It’s hard for me, at 24 years old, to walk in a room of older men and women that are on the executive team of some company and tell them how amazing my company’s IT services are. I felt [inaudible 00:34:24]. I felt that weight of these experienced people and me being less experienced. I lacked the confidence it took a while to build.

 

I think now I know there’s way to build that. I could’ve joined the Chamber of Commerce, I could’ve taken public speaking classes, I could’ve taken debate classes. I could’ve done things to gain confidence that don’t require getting the experience in board rooms.

 

Looking back, that would’ve been a critical skill I would’ve learned ’cause that’s a soft skill. I think the other skill that I would’ve learned would’ve been committing to making money.

 

‘Cause I tend to be a generous guy. I like to give to nonprofit organizations I like, both my time and money. I like to be generous with my employees. I like giving gifts to people, friends and family. That’s great, but later in life I realized what allows me to be generous is by doing good business and making money.

 

It’s not bad to make money. I know that might sound silly, but I gave too much away in short selling myself. Again, this goes back to the earlier conversation. I just gave too much away. I sold too cheap. I didn’t stick to my guns, I didn’t sell the high-margin managed services I needed to sell.

 

What I realize now, too, it wasn’t only me doing a disservice to myself, I did a disservice to our customers and our employees. Which sounds strange, because you’d be like, “Well, your customers got a better deal because they paid less.”

 

That’s not actually true, and this is part of why I’ve been able to gain confidence in selling higher-margin managed services. When you sell lower-margin services, you stress your team more, you stretch them thinner, you stretch your systems thinner, and you don’t provide the same outcomes and the same quality those people are expecting for the price.

 

You’re selling that level of managed services, whatever that level is for you, no matter what you’re charging. The key is charging enough to deliver it. With managed services, you can’t provide great service to your customers or treat your employees well so that they provide great service to your customers if everybody’s stressed and running around like chickens with their heads cut off all the time.

 

You have to have space to do managed services, which means you have to be charging enough to have people in their seats, thinking and doing things proactively. So, yeah, you can’t run on the edge; you can’t run on razors and margins if you wanna provide great, quality services. You’ve gotta make money. You’ve gotta charge enough to have margins and you’ve gotta make money.

 

Ryan  Goodman: I think that’s great advice, and you’re right; there’s not gonna be a phone number or an e-mail active to contact if money’s not being made inside of the business. I think wise business owners understand that, but it doesn’t mean you don’t still have to sell through that in a competitive market.

 

Chad Lauterbach: Yeah. Yeah, definitely.

 

Ryan  Goodman: And you really nailed, again, on the last question I have as we wrap up here. I feel like you gave a great point. I’ll let you answer this one, but, what’s the number one point or message that you would drive home to any of your peers listening to this podcast?

 

I think it’s gonna be tough because I think you hit some really … several just key issues and very key business points inside of the conversation. But I’ll leave you with that What’s the number one point or message that you would drive home to any of your peers?

 

Chad Lauterbach: I would actually give a peer of mine two tips, especially somebody younger in the business, or getting started in the business, or interested in getting started in the business. These could probably be applied to multiple industries, ’cause they are high level, but I think they especially apply to ours.

 

The first one is a strategic one, and it’s a big-picture one, but you need to be able to do it to run any business. That is, know your strengths and don’t just rest on them, but develop them, and know your weakness, and don’t try to push through them; hire amazing people to do those things for you and do them well.

 

That would be my biggest big-picture thing for any entrepreneur in any industry, really, but especially in ours. If you’re a great salesperson, for example, go sell managed services. Get your sales pitch together and go ring up a zillion dollars of business, but you will have tons of mad customers and tons of terrible reviews online if you don’t deliver the services.

 

If you aren’t an amazing service delivery person, you need to hire an amazing CPO. And don’t skimp on their salary. Figure out a way to make it work from the beginning. Hire the right person to start and build on them. If you need to give ’em equity, if that’s your thing, give ’em equity. If you need to build some long-term vesting schedule or whatever …

 

Do what you have to do to get the people underneath you committed to helping you build the company, and just find those really, really good people that wanna partner with you to do that with your weaknesses.

 

And then develop your strengths. Don’t just say, “I’m a great sales guy. I can ring up as much business as I want.” Actively work to develop that stuff. Read sales books, figure out how you’re gonna develop your website, and your SEO, and your SEM, and your marketing, and all that stuff. You have to work at your strengths to be good.

 

I’m a runner, for example, and one of the most amazing things that I’ve experienced in running was hiring a coach. It’s not that expensive, actually, if you do it online, so I have an online coach. Not a coach that meets up with me every day or every week or whatever, but somebody that’s helping me building my schedule and I can talk to.

 

I was amazed, ’cause I worked really hard in my 20s. I ran some marathons, ran some half marathons, and I ran track and cross country in high school. I thought, “Oh, this is so cool. I’m doing well.” But I was frustrated because I wasn’t improving, so I went to run the Chicago Marathon and I trained so hard and I barely ran faster than I ran in LA and I was really frustrated.

 

Got a coach, and that coach took something that was already a strength for me … I’m a naturally somewhat good runner; I’m not Olympic level or whatever, but I’m decent at it. That coach took me from being slightly above average to a Boston qualifier and running a sub-three-hour marathon in three years running less than I did training by myself for Chicago.

 

That’s amazing. That just goes to show that, if you develop your strengths and don’t just rest on your own laurels but work on them with somebody that can help you do it, you can knock it out of the park without even more effort. It’s pretty amazing what you can do with honing your strengths and skills in the right way.

 

That would be my big strategic pitch, and then on the tactical side … And this would be more related to IT services specifically. The number one thing I would tell people is, “Overbuild your systems.”

 

From the beginning, or as early as you possibly can, it is very hard, and I know this from experience, to turn the ship. Not impossible, but … I mentioned earlier [inaudible 00:41:52], we’ve changed multiple times. It is so painful and very expensive to shift, and you’re not gonna pick every single thing perfectly.

 

But pay really close attention when you’re choosing your vendor-partnership relationships and when you’re building your systems and developing your systems. Build them to be bigger than you think you need them to be for your current state.

 

I failed to do this. I chose poor backup solutions, I chose poor PSA solutions, and we suffered because of that. We have great solutions now, but it was way more painful to build them later than to have started to build and develop them earlier. So, as early as you can, start to flesh out those systems and overbuild them for your size so you can scale into them.

 

Ryan  Goodman: That’s awesome advice, and especially backed up with all of those examples.

 

To wrap up, where can people connect with you? Where can they find you online?

 

Chad Lauterbach: Sure, yeah. You can find me, personally, on Twitter, @chadl2. C-H-A-D-L-2. I also have that Instagram handle, although I don’t use it very often. You can find Be Structured @bestructured. That’s the Twitter handle, or bestructured.com. That’s B-E-S-T-R-U-C-T-U-R-E-D.com. So, it’s not just the B, it’s B-E structured.com. Or you can google Be Structured Technology Group and we come up.

 

Ryan  Goodman: Before we end today’s episode, we’d like to thank our sponsors, 5 Step Marketing and BVoIP. Don’t forget to take advantage of your free one-hour marketing strategy session with Josh and his team. That link, again, is 5stepmarketing.com/audit. That’s the number 5. 5stepmarketing.com/audit.

 

And check out BVoIP if you’re looking to improve your telecom strategy. You can find BVoIP online at BVOIP.com.

 

Chad, it was a pleasure. I wanna thank you for joining us, and spending the time with us today, and sharing your wisdom with us not only how you started, but how you’ve become successful and sharing some of those struggles and successes with us and that advice.

 

Chad Lauterbach: Yeah, that was great. Have a good one.

 

Ryan  Goodman: Thanks again for joining us today on the Confessions of an IT Business Owner podcast, where we believe that healthy cashflow is critical for your IT business, automation is paramount, and building trust with your clients by looking professional will help you grow your business.

 

A special thanks, again, to Chad Lauterbach from Be Structured Technology Group. Be Structured Technology Group can be found online at B-E structured.com.

 

To download the full podcast or listen to some of our previous episodes online, check us out at connectbooster.com/podcast.

 

Thanks again for joining us today on the Confessions of an IT Business Owner podcast. We’ll talk to you soon.

 

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