Depending on what website you look at (and the year the data is being pulled), there are roughly 30 to 32 million businesses in the US – and the number of businesses that are solo entrepreneurs without a payroll makes up roughly 76% of those businesses (think Uber drivers, real estate and insurance agents, Etsy sellers, etc.).
Therefore, if you have one employee, you are in the 2.3% minority of people walking around. If you have 10+ employees, you are in the 0.4% minority of the US population and in the top 18% of all businesses operating today.
This information aligns (roughly) with our own data, which shows that about 76% of all MSPs and IT services shops are sub $1 million in revenue. Most of them are what we call a “tech with helpers.” They usually have their spouse (wife) doing admin work, and as they pick up a few clients via word of mouth and lucky accident, they start hiring techs – not sales or marketing people. Nearly all of them are making less than $100,000 a year (one survey we conducted showed them making roughly $70K a year in income). Essentially, they are the “be-your-own-boss” crowd that is motivated primarily to make enough money to avoid having to take a job, NOT to aggressively grow their organization.
So, what should you make of this?
For starters, IF you are an MSP or IT services start-up and have genuine entrepreneurial ambition to grow profitably, you cannot do what you see the majority of your peers doing, nor can you afford to take advice from them. You cannot model their marketing, their pricing strategy or their approach to business. They’re working the J.O.B. plan – just over broke. And if you follow their advice and their recipe for “success,” you’ll end up getting the same results they get.
Yet SO often I see MSPs going on Facebook or Reddit to get answers regarding how to run their business – what vendors to use, how to do marketing, how to package and price their services, how to handle situations with employees or clients – and taking that advice to heart. They listen to the (very strong) opinions of complete strangers that aren’t making any money, aren’t growing profitably and aren’t doing much of anything. Trust me when I say the MSPs that are making a LOT of money aren’t trolling Reddit for answers on how to run their business, nor are they there dispelling advice for free.
When I started my business years ago, I adopted what I call my “pile” rule, and it’s a rule that has served me very well. If YOUR pile of money is significantly bigger than MY pile of money, I’m going to listen to what you have to say about business and making money. But if you’re broke, struggling and NOT achieving any level of significant success in business, the only reason I’ll listen to you is to ensure I do the exact opposite of what you’re doing.
This is based on a principle I learned from Earl Nightingale: if you don’t have a model of what to do to achieve a certain outcome or result, simply look around at what everyone else is doing and DON’T DO THAT. That’s because the majority is always wrong when it comes to making money and having true entrepreneurial success (see the opening stats I just shared with you). Yet what do people do when they start a business? They look for “industry norms” and “best practices.” These are fancy words for what the MEDIOCRE MAJORITY is doing. Should you be aware of this info? Of course. Should you adopt it to your own business? Only if you want to build a mediocre (failing) business.