Are you building equity or just keeping a job?

Steven Covey calls it “Starting with the end in mind.” Respected Managed Services Consultant Eric Simpson claims that an IT services business that has transformed itself into a managed services business will get five times the value that a break/fix business will command at exit. Whether the value you will realize when it comes time to sell your business is three-fold or seven-fold, Eric’s point can make a dramatic difference to you and your family.

Without getting into overly complicated business valuation models, Eric’s assertion makes sense. In the case of a break/fix business model, revenues are unpredictable, and typically customers are retained based upon personal relationship. When break/fix businesses are sold, there is considerable risk to the new owner that the relationships developed by the former owner won’t transfer. This increases the risk to the buyer and may decrease the price they are willing to pay.

In CMIT’s Managed Services Business Model, customer relationships are based on multi-year agreements. Revenues and relationships are predictable and long term. This reduces the risk to the prospective buyer of your business, increasing the valuation and the price the buyer is willing to pay.

The transformation of an IT services business from the break/fix to managed services model is not easy. We know it because we’ve done it. Marketing, sales, messaging, support, product/offering development, service delivery, best practices, customer relations, billing, collections, customer education/training, and key partnerships are just some of the areas in the break/fix business that must be radically altered to convert your business into a managed services business.