MSP Tips: Balancing Contractors and Employees (EP 801)

[Uncle Marv]
Hello friends, Uncle Marv back, continuing with day two at ASCII Edge in Orlando as Josh Liberman walks by and gives me a weird stare. We are out here in the lobby area and enjoying the festivities. I've got somebody with me who we had dinner last night.

And we got invited out to a group function with Rhythms and Super Ops and Channel Hunters. But I got to sit next to David Geiger with Spur IT Services and we're going to chat a little bit today. Dave, hello.

[David Geiger]
Hey, good morning, I guess. Good morning. We got up, got in pretty late last night after dinner, so I'm still in a fog a little bit.

[Uncle Marv]
Yes, yes. And a bit of advice, folks, don't let Juan and Steve order you a party bus.

[David Geiger]
I swore to my wife that if this thing goes past then, I'm getting an Uber and going home.

[Uncle Marv]
I was so ready to go, I was so ready to go, but I couldn't leave. Yeah, I couldn't either. Well, I could've.

Yeah. It would've reflected bad on me today.

[David Geiger]
It was honestly really good conversation and it was not what I expected. So I expected some kind of pitch and they joked at the beginning like, oh, there's a contract for four years under your seat, just go ahead and sign that. But it wasn't like that at all.

What I did see was people who have been in the business a long time, have been successful, have sold and now are doing something else for fun, apparently. And now they're just giving back, which I thought was pretty amazing. So we got some little nuggets during that and really we just got to see a lot of the industry leaders, in my opinion, with just their hair done and having a good time.

[Uncle Marv]
Yeah, that is one of the things. So even though I don't use the Super Ops platform, I've stayed with my original RMM. Super Ops, Juan Fernandez in particular has been a great champion of the channel.

Just simply providing value, letting people know, look, do what you got to do for your business. And if our tool works, great. If not, you still got to run your business and we should be helping each other instead of tearing each other down.

And he's done that. Steve with Rhythms, I'm still judging him.

[David Geiger]
So he's a trip, man. I really enjoyed Steve. He has a million stories and has done a lot of cool stuff.

So I'm looking forward to making some further connections with him.

[Uncle Marv]
So let me get to let our listeners know you a little bit. So I chatted with you a little bit last night. You are here in Florida from the Newport, Ritchie area, again on the other coast, as I call it.

Tell us how long you guys have been in business and kind of what your core client looks like.

[David Geiger]
Yeah, absolutely. So we technically started way back in 2012 and even a couple of years before that, I was doing some consulting when I didn't know Active Directory from a hole in the ground. So people just took a chance on me.

So I said, OK, let's do it. But I worked at a call center at the time when I first started and did some IT schooling and then it broke into IT like a real IT job in 2013, finally, which is which is awesome. So it was an enterprise that I didn't realize I joined this enterprise.

So two enterprises later, I took an epic nine day motorcycle trip with some friends of mine and I decided I got to go on my own. So I'd already had some clients and things were brewing and we had some cash. So I said, OK, let's do this.

So I quit my job in June of twenty twenty one. And here we are now, not rich, but we're making it. And now we've got I got three technician.

One is very part time. I got an office administrator. She's pretty cool.

And that's pretty much where we're at. So we're in a historic building in Newport, Ritchie, which is awesome. And our core clients.

Well, one of the speakers said, you better you better specialize, you better niche down. And I've heard that forever. We have to go look at our clients and see who really we would be the best on because we unfortunately are kind of generalized.

We don't tell anybody. No, at this stage, we kind of need the money. So we're telling people, yes, but we have had a lot of success selling true managed service plans in the last few months.

So we're real excited with that direction.

[Uncle Marv]
All right. So let me ask this, because you did part time for such a long time.

[David Geiger]
Yeah.

[Uncle Marv]
What was it that actually got you to the point where you said, OK, I can quit? Because if you're saying twenty twenty one, that was after the year of our COVID. Yeah, I've never heard of a good time to quit your job.

[David Geiger]
Yeah.

[Uncle Marv]
And go do this full time.

[David Geiger]
Well, yeah. So it's so funny because I got a friend who still works at that last job. And this was, you know, almost five years ago.

And he said to me, they said, you know, part of the reason that I quit him, me was because of our manager, which I don't I don't totally I don't totally disagree with you. But I really had a strong pull. I was kind of seeing what other MSPs were doing and tech businesses.

I'm like, man, I really could do this. And that trip really just sort of crystallized for me. I'm like, I don't want to go into this office anymore.

I mean, we actually were full timing in an RV at the time. So I didn't have to go in the office, but I just I got tired of punching the clock for somebody else. And maybe that's a blessing.

Maybe that's a curse. But here we are.

[Uncle Marv]
OK. All right. And you've you say you've got employees.

So how has the journey been adding on staff? Terrifying.

[David Geiger]
Absolutely terrifying. So we started out I was alone until June of twenty three. OK.

And for whatever reason, I said we need some people. So I ended up bringing in a Will, who's a technician with me now. He's like my longest running guy.

I'm super excited to have him. And we brought an intern at the same time. And then we were doing business in the conference room at my brother in law's place.

I'm like, this is not this is not enough. So a month later, we got our we got our building. And but it's been it's scary because you have to make sure like there are times that they get paid and I don't get paid, you know what I mean?

And I'm like, I don't like that feeling. But my responsibility is to them first to make sure that they keep coming back. So it's been it's been a little scary.

We brought them on as contractors because that gives us a little bit lower loaded costs and overhead. And we give them flexibility. So they kind of because they're contractors, they command their schedule.

According to Florida law, we can't tell them when to be where exactly how to do things, but we give them the tools and say, here's our ticketing system and let's work together and make some magic.

[Uncle Marv]
Yeah, that was one of the reasons I wanted to chat with you more because for the longest time, I felt like I was the only one that for all practical purposes, solo tech, you know, full time. But I had, well, right now I've got three, but I've had up to as many as five subcontractors. But I wasn't using them as much as you use them.

You're almost using them as an employee, but they're 1099.

[David Geiger]
Yes. So I talk with my HR consultant friend and we created a document called a memorandum of understanding for contractors. So it lays out.

It's not a legal document, but it says, hey, you understand and we understand what this is about. So they don't have the strings in terms of, you know, there's no there's a disciplinary process is really there's no there's no attendance policy and they can command their schedule and say, I'll be here these days and that's fine. And if they have to make a quick change, whatever, we just roll with it.

So that's been very good. But so the upside for us is we don't have to worry about, you know, all these taxes because they're technically they're all their own businesses. So that's worked out pretty good.

I don't want to be that way. I mean, I'd much rather bring them in and W2 capacity. I think we're tracking toward that.

Totally. This year. That's a goal.

But that memorandum of understanding really helps us on our first day. Like, this is how we work. This is how this this goes.

They get their freedom. We get our flexibility. It works out pretty good.

[Uncle Marv]
I tell you, that is a very good formula because especially now, I think there are a lot of people that are just not wanting to be tied down. And if they feel like, yeah, I don't have to work 10 hours, I don't have to work six hours, you know, they can work when they want. That works well for our business.

That's excellent. You know, I call out my subcontractors and say, hey, can you do this job? And yeah, they tell me yes or no.

And I'll move on to the next one if they can't. No fuss, no muss. Yeah, they understand it.

[David Geiger]
Yeah. Do you have like an order of priority, like at least in your head where you prefer this guy than this guy, than this guy, than this guy? How does it work?

[Uncle Marv]
Well, I have certain jobs for certain. OK, so that makes sense. And I've actually kind of the reason I say I went from five to three.

So now I pretty much have because I've got clients across the state. I've got one sub in Orlando. I've got one sub in the Tampa area.

So I just do that.

[David Geiger]
Awesome. And it works out great. Do you have them brand with your logos and stuff or do you just have them go and whatever?

[Uncle Marv]
Actually, I don't in those locations. The customers know that that is the case in Fort Lauderdale. My main subcontractor there.

Yeah, he's got shirts. OK, so whenever we do something, he shows up.

[David Geiger]
I think that the shirts are smart. They my clients, I don't know if they know if they're subs or not, but they just think of them as my team. And I really call them my employees.

I don't say my employees, I say my team, because I don't want you to know, I don't want to lead anybody down a certain road. And I think it works out pretty good for us that I would love to co-brand if I was having people remote, though, I would just are not co-brand but have them wear our stuff just because I don't want to be there to be any confusion. And you do something with non-circumvent or non-disclosure agreements for your guys.

[Uncle Marv]
So we've got a subcontractor agreement that my attorney wrote for me. And it's got it's got a couple of lines about each of those. They're not super explicit.

Again, you mentioned it earlier. Florida is one of these tough little states where the at will portion makes it really tough to lock down people. Right.

Yeah. So I know that there are people that have extensive contracts. I don't.

It's really just I think it's one and a half pages. It does say there is a line about non-compete, but it's really geared more towards them not trying to poach my customer or you and I talked about the fact of non-disclosure, you know, not taking that information and trying to use it in any form or fashion. So we've got all that in there.

However, I know that if push comes to shove and they really tried to take my customer and they did, I really can't take him to court.

[David Geiger]
Yeah, not much you can do about it.

[Uncle Marv]
And if that happens, it's really more my fault. Right.

[David Geiger]
Yeah. I guess managing that customer relationship is really important when it comes to that. Right.

Yeah.

[Uncle Marv]
The biggest thing is to talk to the customer and let them know that, hey, I've got somebody coming out. This is what they're supposed to do. If you need something more, let me know.

Don't ask them. And I have the agreement with my subs that, you know, you're going out for this test. If the customer asks you for something, you call me as well.

And I do remember having that one conversation with the one guy where he's like, well, I want to make sure they're happy. Why would I have to, you know, to take care of them and blah, blah, blah. Why should I have to contact you?

I'm like, my client, my rules.

[David Geiger]
Yeah, that's good. That's good.

[Uncle Marv]
Huh. And it's one of those things where I say, look, I can find somebody else. And it's not to be mean.

Yeah. Yeah. But it's like, look, we're working here.

I'm helping you by getting you, you know, some stuff. You're helping me. Why can't we just be friends?

[David Geiger]
You pay him a flat per item or do you pay him like a like hourly?

[Uncle Marv]
No, I pay him hourly.

[David Geiger]
Yeah.

[Uncle Marv]
So we do too. And I've only had really one incident where we had to. And this was before we engaged them where I had a situation where I needed them to be like on site X number of hours per week for like a month.

And I just basically had to sit down and say, look, can you do this? Because I think I can only charge the client this. And he said, yes.

And so I think it ended up being six weeks. He paid, you know, he charged less for that time. But it was something where he knew where he was going to be.

It covered his costs. Right. And that worked out.

But most of the time, I don't really put any restrictions on it. I charge, you know, I pay them per hour. It's an agreed upon rate.

And if it goes beyond what, you know, I will normally charge, that's again on me for not preparing.

[David Geiger]
Oh, yeah. Well, I have one right now. So we, you know, so we're transitioning from mostly break fix to we've got a good number of managed service clients now.

But so we still have this thing where for hourly clients, we'll charge them of some items or flat fee like to do a transition or deployment of a laptop is like one not one dollar figure. And then, you know, we charge markup on our computers and we do a lot of refurbs actually through Griffin IT, which they're pretty great. And I think we have 16 hours on one of these transitions, you know, and I'm joking with them.

I mean, it's probably not 16, but it was like I was there for three hours and this is before the conference. And then they were dealing with this client for like four hours yesterday. So I'm like, dang, you know, so, you know, their hourly rate is sufficient where at least I'll break even and we'll make some profit on the laptop.

So not a big deal. But it's like it's that's a little scary. But part of that also, I understand I had to eat some of that for to get the people to learn how kind of how we operate.

We have a very and maybe I'm wrong for this, but we have a very high touch, very high service, high service level arrangement. Our client, we really want to give them like go beyond their expectations. So I do I do pay for that sometimes.

But in the long term, you know, playing the long game here, the clients love it because, you know, you know, if you're talking 200 bucks an hour for six or seven hours, that's a freaking ton load of money to deploy a laptop. So we just sort of deal with it.

[Uncle Marv]
So, yeah, that is true. Now, your wife is here with you as well. And I could tell by the way that she was talking that she is she is heavily involved in the business or at least she portrays that she's heavily.

[David Geiger]
Yeah, so she's she is very savvy. She does a lot of our community outreach. She's on some boards and that has joined some boards, guys, because that has gotten us a lot of business.

Now, when you say boards, you talk like chamber boards, chambers, community charities. It's awesome because, OK, so when you know, we talked earlier about it's not all about when you first meet someone, you can't be like, gimme, gimme, gimme. Right.

It's got to be what can I provide you first? And when you join these community organizations, like I'm a Rotarian, too, and I joined Rotary at first, I thought I was going to make money, but then I realized it's a service club. But when you join these organizations and you turn up for things and you volunteer and you're not asking for anything, these people quickly realize that this person is the real deal.

They're all in it for themselves. And then your trust goes through the roof. And it's not a play.

It's not it's not a manipulation. It's just how we want to be. We understand that.

You know, we're awesome being I and some people malign that. But whatever givers gain, you know, or you reap what you sow, all these different things. So that's worked out really well for us being on boards and joining these different community things, because I can trace most of my clients back to it's a referral from a networking group.

It's a referral from a friend from church or from somebody that my wife ran into at Walmart or something crazy like that. So that community involvement is this quarter our business now. That doesn't scale super well, but, you know, we have some plans to do some SDR stuff down the road.

But for right now, where I'm so busy, we can't take on. I have two clients I could probably sign today and I just I can't take them on to like the beginning of April, probably.

[Uncle Marv]
So, well, I can tell you this. I've I'm in my 28th year of business and all of my business has been through referrals or networking, which I was involved in a networking group. It was similar to B&I in the beginning and the community involvement, but it's all been referrals.

It's a slow growth, but it's rough.

[David Geiger]
Yeah.

[Uncle Marv]
And to me, it's better growth because the clients that I've gotten have been with me forever. And the only reason I'm losing clients is because either they get acquired or they retire. Right.

Although I may have one that's going to die soon. Oh, my God. That's not the way you do that.

But it's rare to actually lose a client that you've gotten through a very good referral.

[David Geiger]
Yeah, you're right, because they basically you're trading on the trust of the first person and that trust the first person has with this with that referral. What are you guys doing with. Lots of transfer.

I have a good question for you. Say something else. Oh, man, I had another good one for you.

[Uncle Marv]
Well, I am going to say this. So the area that you're in, I know several people over there, Tampa, Clearwater, Newport, Ritchie, Tarpon Springs. Yep.

The business side over there, it's a little it's not as rushed as I have it down in South Florida. Yes. And it's nice to hear that, you know, you can charge, you know, two bills an hour because I'm still fighting with South Florida.

What's the best way I can do this without sounding political? I'll just say this man in the van trunk slammer rates of trying to do managed services at thirty five dollars an end point. Yeah, it's interesting.

[David Geiger]
Yeah. Oh, and I remember my question. But we can talk more about that, too.

My question was, are you doing any networking with other managed service provider owners locally in in South Florida? Like true ones. I'm not talking about I got a guy, a friend of mine.

He's like he's he owns a computer shop and it's like 90 percent residential and a little bit of business. I'm talking about that. I'm talking about true people who are on the same plane in terms of MSP work.

[Uncle Marv]
The short answer is unofficially, but not officially, if that makes sense. Kind of the same deal as the referral. A couple of these people started around the same time I did.

And we my very first peer group were other I.T. business owners and there were five of us. And when we needed help, we helped each other and we've all grown. One actually has moved away.

So there's now four of us. OK, we don't get together as much, but we still help each other. That's good.

And if you know, I know that there are times where if there's a client that calls and it's really not in my wheelhouse, meaning I've limited the types of service I will provide, the types of clients I will have. I'll refer them to my other friend. Good.

So, I mean, we do. It's just it's not official.

[David Geiger]
Yeah. OK, I got you. Well, I've been thinking I want to get to know all the I.T. people in my area, especially when they start to turn gray, you know what I mean? Because if they're going to retire, I'd like to be able to help them transition their clients to us as appropriate. So I have to figure out the right mechanism for that. But I really feel like it's a good strategy.

Again, everything for me is like the long game. I'm not looking to snake anyone's client. I'm looking to help support them, help them build up.

And then I just want to be the first guy that they think of when they're like, OK, now I went out of this.

[Uncle Marv]
Well, I'll tell you a way to do it. Recently, I've had two events where I had a group of ASCII folks in the area that we've all known each other with. You know, if you join ASCII, because we'll probably should have disclosed that you're not a member.

But we're all friendly. And, you know, we've all been on the monthly Zoom calls together. So they know me and we know them.

We've I've had them to my office a couple of times just to hang out and say hello and stuff. And then when we had the there was an IT expo in Fort Lauderdale. And so there were a lot of people that came in from out of town.

And I said, hey, come by, we'll do a lunch and stuff. So that's probably a good way to start. Just do a little mixture together and at least get to know each other.

Don't talk about business, talk about business, whatever. Yeah. And that's a good start.

OK. And see where it goes.

[David Geiger]
Yeah. We'll have to try some of that. We started a Facebook group, but it's only got five people in it, you know, of local IT folks.

And I'm really looking to expand that.

[Uncle Marv]
Yeah. I know, like, for instance, Miami area has what they call the South Florida Tech Hub. So there are organizations, at least down there.

But again, they all fight with each other.

[David Geiger]
Yeah, I don't see that. I don't see a use for that. There's so much business.

And I think there's bad business out there. But there's just so many people that are underserved. And if they will get the right person to guide them and help sell them on the correct solutions and just take care of them, give them some technology leadership, then they can go from being a person who pays nothing except for when they have a crisis to a person paying monthly every month for somebody.

[Uncle Marv]
Well, there are a ton of asking members and vendors in the Tampa area. So you'll have no trouble.

[David Geiger]
Yeah, I'm sure of that. Once I sign the dotted line.

[Uncle Marv]
All right, my friend. Well, David, thank you for hanging out. Yeah, it's been a pleasure, man.

Pretty good. So this is trying to judge us. Now, do you do you judge your anniversary date back on the 2012 or 2013 date or the 2021 date?

Man, when did you sign up to be a registered business on SunBiz?

[David Geiger]
So 2012 was the first one, registered business. Then that LC is defunct now because they let it go. Just be transparent.

So we have a new one that we did in February of 2020. I don't remember where the 2019, I think that's when I got the itch. Like I really started to understand what MSPs were about rather than just like some kind of theory about what it was.

So, no, this is actually what they do in 2020, 2019. But 2020 is when I said, yep, new LLC, let's go. OK.

And that's kind of where they came out.

[Uncle Marv]
So then officially you're coming into year five.

[David Geiger]
Yeah, I guess it would be year five.

[Uncle Marv]
That's a good, nice number, around year. Yeah. Sounds like you've made profit before then, because most businesses down here, three to five years is that you're making a break in time.

[David Geiger]
Yeah, I mean, we're definitely profitable. Well, the first year we were not profitable. We burned.

You shouldn't be. We burned stacks of cash the first year, but it was just me and we were in a transition because we had traveled for four years from 2016 to 2020. And in 2020, of course, the world fell apart.

We had this RV and we swore we were going to take off again. But about the time about that time, I decided to quit my job, take that trip. We decided to go and sell the RV and just go all in.

And we spent a lot of money.

[Uncle Marv]
You know what? I did have another question. I remembered that I was going to ask you earlier.

You said that your building is a historic building. Yeah. So to me, that just basically means old.

[David Geiger]
Yes, it is old.

[Uncle Marv]
But I know that also it's truly on the historic register. There's things you've got to do to preserve that. So how are you in a historic building running a tech shop?

[David Geiger]
Right. Good question. So it is not on the historic register yet.

We have been kicking that idea around. It's not my building. We're just renters, but we're very close with the landlord.

She's our client, too. And if you get on the historic register and you change too many or if you try to get on, but you change too many original things, they won't let you on, essentially. So it's really her building, her money, her decision.

So we're not we're not pushing that too hard because it's really she's got to make a profit and do her things. But the building is cool. It's a landmark.

When I used to drive by it, I was in it, been in Newport since I was 13. And I would drive by that building, walk right by at that time. And like that looks like an old jail because it was like it's a two story rock building, limestone rock from the river.

And it has bars like these on the fences, on the windows outside. And I obviously figured out that it wasn't an old jail, but it's been owned by many doctors, all kinds of crazy businesses, an international arms dealer in the 80s. It's been owned by a lot of a lot of crazy people.

And it's a cool building. And it's right when I say the building is here, the sidewalk is literally like touching the building. So people are always walking by our windows and they don't peek in because we have blinds.

But they start a will in the other office quite frequently. But it's cool. It's we had there's some cabling in the building, but it's not great.

It's kind of ugly. We have a lot of Wi-Fi, right?

[Uncle Marv]
And I'm assuming it's got to be surface mount because those types of buildings, it's hard to go through the walls.

[David Geiger]
Ah, yeah, it's all surface mount. And there's nothing in it inside any wall in terms of jacks. It's really it's just cables hanging in the corners.

Yeah.

[Uncle Marv]
So I just wanted to ask about that. Yeah, I know a couple of people that have older and one building is actually on the historic register.

[David Geiger]
Yeah, they have to be careful with what they write and doing that cabling and stuff can impact that. And I yeah, I hate to see that. I'm not sure she's going to spend the money to qualify.

I know there's some incentives, but it's maybe not the direction she wants to go with the building. But we'll see if she said she maybe she'll will it to me one day when she dies. So we'll see what happens.

That'd be cool. I'll take that sucker. That'd be cool.

Yeah, man.

[Uncle Marv]
All righty. David Geiger with Spur IT Services out in Tarpon. No, Newport, Newport, Newport, Newport, Florida.

Another Florida man, folks. Yes, sir. All right.

That's going to do it here. I've got a couple more interviews coming up here on day two of ASCII Edge in Orlando. We'll see you soon.

Holla.