"What gives you more value when you have less of it?"
This is a riddle that has confounded computer business owners and entrepreneurs everywhere.
The framework for this question and the ultimate answer dawned on me during an episode of Shark Tank.
The venture capitalists were making an offer of cash along with their business acumen to a new business that was seeking equity. The exciting part was that the entrepreneur's idea was liked by the VC, where many of the earlier guests simply got their heads handed to them.
You would think this show had a happy ending but, surprisingly, this guy passed on their offer because he didn't want to give up the amount of ownership that was proposed.
That should give you a clue for the answer to this riddle but if not, then just keep reading!
This business owner made a classic mistake because he lacked vision and the ability to think-out-of-the box or see the big picture. He had ownership of a very small pie and was worried about losing control over that small pie. However, the proposed cash infusion and access to business experience would soon give him less control but over a much bigger and ever expanding pie.
In fact I just saw a follow up on one of the businesses that accepted the venture capital and give up controlling interest. She said in the interview that because of the connections of the venture capitalist they were able to showcase their products on the Home Shopping Network. Now her monthly orders have sky rocketed and she is making more money now, even with a lower equity position.
This philosophy also applies to computer consultants who believe that by taking care of all the help desk issues internally means they make more money. In other words they want 100% ownership and control of these processes or small pie. The reason many techs feel this way is because if they did outsource management of the NOC and Help Desk to a company like GMS Live Expert then those outsourcing fees would eat into their monthly managed services pie. However, this attitude is the same as the guy above who turned down the capital because he didn't want to give up significant equity.
Both examples have one thing in common and that is the simple fact that often you can gain more when you give up control. In the case of the businesses seeking much needed capital they can only get that when they give up a larger equity share. Of course their overall pie grows larger with the investment and they can still make their millions even with a smaller stake in the company.
The same is true for the managed services companies that give up control of their NOC and help desk tasks to get more time! They now have control of more time that can be invested in IT marketing which will grow their business dramatically and give them revenues from a much larger pie!
Don't let confusion over this riddle keep you chained to a small business where you have 100% control of very small profits, when you can give up some of that control and get MORE!
John Black is the Marketing Director at MSP Telemarketing. His experience ranges from writing articles, blogging, telemarketing, sales coaching and speaking at events.