Starting a computer business on the correct Managed Service model

Robert Peretson

I've been doing a lot of forum participation lately where it seems every other post is from a tech asking how to start a computer business by running around town fixing all the neighbor's computers.

And ultimately, they all seem to ask the same question... "How much should I charge per hour?"

I can tell you, from over 16 years of personal experience running my own computer consulting firm that the fastest way to guarantee failure as an independent computer consultant is to:

A) Charge hourly rates, and

B) Serve residential customers

If you want to run a successful computer consulting business, then you must serve the small business market. Residential customers will typically be one-shot-deals, they will be very price-conscious and they will have technology ranging from Windows 95 workstations to machines so infected with spyware and viruses that there's no way to do an effective cleanup in a timeframe the client will be willing to pay for.

Tech-savvy business owners, however, will budget properly to have their systems properly maintained, they will desire regular monthly maintenance to ensure reliability and maximum performance and they will have standardized, up-to-date technology that will be a pleasure to work on.

But just because you start a computer business supporting small businesses exclusively, doesn't guarantee automatic success. You will still need to follow the correct business model.

1. You NEED to charge Flat-Rates for a Managed Service Plan

You must not charge hourly rates for break/fix support. It will be feast-or-famine. Some months you'll be busy. Some months will be dead. Busy months mean your clients are having lots of problems. Lots of problems mean unhappy clients. If you get a big check, chances are your client is writing it after experiencing some significant problems. Think they'll feel happy about cutting that check?

Every time you walk through the door, the client is getting billed. Think they want to see you often? Since they want to see you as little as possible, you're going to need more clients to keep yourself busy. If several of those clients have problems at the same time, it'll be hard to take care of them all. Again... you've got some unhappy clients.

And if nothing is breaking, you'll be calling around to propose some projects to get the income flowing... and they'll be saying, "Not now... cash is tight. Can we hold off on the upgrade till next month?"

It's a constant "You need to do more / They want to see you less" relationship. Very Win/Lose for both of you.

Moving to a managed services model will ensure:

  • You will get paid consistently and reliably
  • You'll know on the first of the month exactly how much money you're making
  • You will get paid to keep your client's systems running smoothly. The better they run, the better your income (less work / same money)
  • The less your clients see you, the happier they are to write you your check ("Things are working great! Let's keep it that way! Pay the man.")
  • You charge a fair, predictable rate, they get reliable, productive computing.

Now that's a Win/Win.

2. So if you're doing Maintenance Plans... how do you keep things running smoothly?

You monitor the systems around the clock using a remote monitoring and management platform. When users have problems, you log in remotely the same way and help them instantly. They get instant support (much better than waiting for you to make an office visit) and you can even work in your pajamas. With constant monitoring and remote access, you can definitely keep the problems in a small office environment to a minimum.

3. What happens if a problem occurs where you MUST get down there?

You go down there and charge an additional hourly rate for any calls that must be performed on-site. You want to keep these to a minimum (the bulk of your income comes from your flat rates. You don't rely on these extra hours to survive). They want you to keep these calls to a minimum too. The less they occur, the happier everyone is.

4. How many clients will you need?

One of the most important considerations you'll need to work out when figuring out how to start a computer business that charges flat-fees is deciding exactly how to structure your pricing.

Here's an example of what works for me; if you offer a maintenance plan where you charge a flat-fee of $149 per server and $49 per workstation per month, plus $125/hr for on-site work (these are the rates I charge in NY - scale for your area and needs accordingly), you're looking at a monthly income of about $1389 for each 10-workstation client.

For each client of this size, you should expect to dedicate about 3 hours work per week. That's about 1.5 hours on-site and an average of 15 min. per day remote work. Get yourself 4 clients, and you're looking at a salary of over $66K working around 10 hours a week.

If you learn how to start a computer business on the correct model of providing managed support to small businesses, you are setting yourself up for some very fast, enjoyable success.