Karl’s 14th Annual State of the Nation Address for SMB IT

Hit play for quick report on 2022 and some predictions for 2023. Then I’ll introduce my company theme for the year – and how it fits in with helping YOU to be more successful in the year ahead.

I’ll give you a hint: I think 2023 will be a great year for IT consultants. And I’ll tell you why.

Topics Include:

  • Highlights and low-lights from 2022
  • Technology Updates 2022 . . . and what’s next
  • The Economy
  • Speculations about 2023
  • How to Guarantee Future Success

2022 was another strange year, but but getting back to normal and pretty good for many IT providers. 2023 looks good as well, although with a bit of inflation. As always, I’m going to spend the year committed to helping IT service providers build successful businesses that look to the future of technology and guarantee their success moving forward.

Full Transcript:

[00:00:00.410] – Karl Palachuk
Good morning to all of those in, at least in North America. And I guess it’s afternoon on the East Coast, evening some places, and a couple of people are here from tomorrow, which is awesome. Thank you for being here, as always. And I am grateful to be able to put on a webinar and have so many people sign up. I continue to be extraordinarily thankful for the support that I get from the It community.

[00:00:33.740] – Karl Palachuk
This is my 14th Annual State of the Nation Address for SMB IT. Last year. One of the things we talked about is after this stupid pandemic and world economic problems and on and on and on, it’s time to reboot. Well, I think we need to finish the reboot this year, and so we’re going to talk a bit about what that means. But also I think we’re going to have a very good year ahead, and I will tell you why.

[00:01:09.830] – Karl Palachuk
First, a little bit of background for those of you who are new to me. My name is Karl Palachuk and I have written many, many books. And I guess I’m a little arrogant in that I’ve written many real books, which is to say that they’re thick enough that you can actually put the title, you can print it on the spine of the book. Lots of people have written very short books, which are basically calling cards, but I’ve written some of the books that have had a huge influence on this industry, and again, I’m grateful to you for that support.

[00:01:46.130] – Karl Palachuk
I started out as a computer consultant. Actually, I started out as running an operations for a very large corporation and then went out on my own and started taking jobs, doing one employee or one contractor at a time. Worked at HP and ran their internal tech support for computer services, software services at HP’s Roseville plant, and from there went from one client to another, until finally I decided to become the kind of consultant that has multiple clients. So in the late 1990s, I became the kind of consultant that most of you are and have really enjoyed the trip. And along the way, I helped this industry stop pretending that we’re amateurs and stop pretending that we don’t need to document what we’re doing.

[00:02:45.450] – Karl Palachuk
As recently as yesterday, I was in a conversation with somebody about why we need to not only document our networks, but give that documentation to the client who paid for all of it. So our industry continues to evolve, but we have literally, in the last 30 years, gone from a lot of people who were amateurs working their way to being professionals to today when people literally get into this industry, it’s got its own name, it’s separate from other kinds of It, and we have grown up. We have a lot of vendors besides Microsoft. In fact, Microsoft may be one of the least important vendors, where 30 years ago is one of the most and we have to pay attention to it. It’s the 800 pound gorilla.

[00:03:36.430] – Karl Palachuk
But we have many, many vendors who help support us and make us strong and powerful. So we’re grateful to have this entire ecosystem that has brought us to where we are today. And that ecosystem is going to get us through not only the next year, but some very difficult employment years ahead. Probably my way out, just wild guess, is five years of employment problems and maybe forever. We’ll talk about that little housekeeping.

[00:04:11.050] – Karl Palachuk
I noticed I didn’t put on here to turn up your speakers. This is the first year I haven’t had to do that. If any of my staff get an email, just ask them to turn up their speakers because that’s often the problem. I am not using chat. You are welcome to use chat.

[00:04:28.090] – Karl Palachuk
And actually, I have a couple of folks on here who are going to put up some links as we go along. I think chat was invented by aliens trying to take over the Earth, so I don’t participate in it. But do put your questions in the Q and A module and we will get to all of those. I am a huge advocate of not being interrupt driven, and the only time I violate that is when I’m giving a presentation. So if you want to chat about us on social media, I’d be grateful.

[00:04:59.720] – Karl Palachuk
Hashtag, small biz thoughts. And with that, away we go. This is being recorded. So the first question is going to be, is this recorded? The answer is yes, we’ll be posting [email protected].

[00:05:16.170] – Karl Palachuk
And there are some other resources you’ll see there. Last year’s State of the Nation address is up there. But I also have a great end of your checklist, which, if you haven’t looked at it, it’s a pretty good beginning of the year checklist. I also have a sample security training that I put together that’s now like about a year old or something. But basically it is an exact client facing training that you can take.

[00:05:41.680] – Karl Palachuk
Download the PowerPoint, take out my logo, put in yours, put in the latest example from whatever hits the news in the next 20 minutes and make it your own. It’s not perfect, but it is a place to start. And as I do with all of my books and all of my checklists and everything, I have this philosophy that it’s much easier for you to edit something than it is for you to start from scratch with a blank page. So there’s just some great resources there and that’s where I post things like this webinar. These are all my brands.

[00:06:18.220] – Karl Palachuk
Take a screenshot of that, visit all of them. Spend all of the money that you have in the bank. That would be great. Thank you. All right, quick note.

[00:06:27.440] – Karl Palachuk
Mark your calendar for May 17 and 18th. I have a two day online conference. We do this about every three years and we did it in 2020, which just happened to be odd bit of luck. I almost feel guilty saying that we were lucky in 2020, but we had planned an online conference and it went over very well. We have a format that basically turns it into an all day conversation.

[00:06:55.510] – Karl Palachuk
So we have the speakers talk to each other and have a nice little break system. And we’re going to ramp it up to the next level of the Zoom Conferencing tool this year. So check that out and don’t worry, you will get an email about that. Today’s agenda is very simple. We’re going to have a couple of announcements, which we just did, so you’re past that now.

[00:07:23.890] – Karl Palachuk
Some thoughts on last year, some thoughts on this year and then kind of an approach to moving forward. And I think one of the things that folks need to be aware of is that a lot of people in our industry, and it’s not just our industry per se, it’s small business, find themselves focusing on the wrong thing. And so we want to talk a little bit about how to stay focused on the things that actually matter and stop wasting time, effort and energy on things that really can’t bring you a return. And of course, questions and answers at the end. So I’m going to go roughly 100 miles an hour so that I can try to finish all the slides by the time we get to the end and have time for questions.

[00:08:09.870] – Karl Palachuk
So in 2022, I did one, what I would call not a road show. So we did, I think, four cities, two countries, and I had nine live presentations, which means the world is getting back to normal. Visited eight different cities for business purposes in four countries on three continents, had three different cities and one more continent for personal travel. And it was a very normal pre pandemic, normal year for me. Over at It service Provider University, we produced ten live, five week classes last year.

[00:08:52.080] – Karl Palachuk
We will do the same this year. Lots of blogs, lots of videos, lots of podcasts, a few webinars, not as many as as pre pandemic, but that’s okay. I have other things going and 76 newsletters. So if anybody asks me what I do for a hobby, I write. And it’s a little bit humorous that people in my local mastermind group always joke about that.

[00:09:20.370] – Karl Palachuk
Oh, Karl sneezed another blog post. But I love to write, and I’m grateful that many of you continue to read what I write after all these many years. One thing that kept me super busy last year was the National Society for It service Providers. So this is a new organization that we founded in 2021. I cajoled some of my best friends and the smartest people I know to be on the board of directors and to serve on committees.

[00:09:54.900] – Karl Palachuk
And again, just super grateful for the turnout and the support we have almost 1000 members at this point. And we have vendor supporters and we are continuing to grow. The amount of work, the amount of things accomplished last year is amazing. It’s quite startling actually, when you sit back and look at how many meetings and how many hundreds, if not thousands of hours were put into defining the organization, the mission, vision, values, the goals for the year, the budget, the marketing, the branding. It was literally one of these things that no human being could have done alone.

[00:10:40.670] – Karl Palachuk
And so if you have not checked it out, please check out the National Society of It. It service provider have an absolutely brand new membership program that has just been launched. And so you can find out all of that by visiting itsp.org quick note, this is the only actual advertising in this presentation. I run an online community called Small Business Thoughts and membership in that is only 1100. It’s going to go up in July, so if you’re interested, now is a great time to join.

[00:11:20.390] – Karl Palachuk
It includes all of the online classes, so there’s $6,000 worth of classes this year we’re going to add three classes. So it’ll be about $6,800 worth of online classes included. With that, plus free access to the SMB online conference. So I think it’s the best deal going. My goal is not to take all of your money.

[00:11:41.800] – Karl Palachuk
My goal is to stay in business and give you more value per dollar than anybody anywhere in the SMBiT community. All right, so today’s theme, we’re going to talk about continuing the reboot. And I want to say keep moving forward, embrace the change, and then stop doing stupid stuff, right? So a little bit of background. First, I always go over some of the kind of the economic world that we live in.

[00:12:12.240] – Karl Palachuk
And I will note because there’s one guy who gives me shit every year. I’m not an economist, I don’t pretend to be, I’m not an accountant, blah, blah, blah, insert long legal stuff here. I have been running businesses for myself and for other people since 1993. And so I know a few things about this industry, I know a few things about business. So this is just my very biased opinion from my little point in the universe.

[00:12:42.920] – Karl Palachuk
Take what is useful and discard the rest, but please don’t ignore it because I think there’s some reality here. And I’ll point to this little chart and I’ll guide you to the US chamber of Ecommerce that the labor force shortage is quite real. And as we’re going to talk about in a minute, it is going to last a long time. The demographics, at least for North America, which includes all three, Mexico, the United States and Canada, the demographics are such that we are going to have to rely on labor from other parts of the world for a long time to come. And currently it’s not getting better, it’s getting worse.

[00:13:31.770] – Karl Palachuk
So we have to live through a bit of a bubble, and you have to have a plan, and you can’t ignore it, and you can’t say, that’s somebody else’s problem. I think 2022 was the year that many people realized, oh, this is my problem. I can pay $60,000 for a tech. I can pay 70 for a tech. I can’t compete with large corporations who have private equity and hiring up, snapping up techs for, you know, an extra 20 or $30,000 over what they’re actually worth and removing them from my market.

[00:14:04.030] – Karl Palachuk
So that’s something you can’t ignore. I’ve stopped following the Dow because I think the Nasdaq is well, first of all, they go up and down a lot, very similarly. But the Nasdaq is really our industry. And the highest point of the year for 2022 was the first day of trade, which I think was January 2. And this is where we’ve been now.

[00:14:30.570] – Karl Palachuk
We’ve been going up, don’t get me wrong, it’s been going up for years and years and years. And I think I spent three years in a row saying, is it time for us to have a little correction? Is it time? Is it how about now? How about now?

[00:14:42.810] – Karl Palachuk
Well, 2022 was the year. Now, I will say, as somebody who’s been looking at this for a couple of weeks, this is not necessarily a bad thing. If you didn’t sell, you didn’t lose any money, and this is going to go up, and I think it’s going to go up in 2023. And I think we will have new record highs, and I think we’ll have those in 2023. Now, the employment scene, and again, this is something I recommend, that not only do you follow the ADP report, but they have a way you can subscribe to these reports and get regular updates.

[00:15:18.080] – Karl Palachuk
When you look at this, you’ll see 2020 was exactly what you expected. A lot of people went home, some people retired. Some people left their jobs to take care of their kids. Many people who were on the borderline just decided to take early retirement. And you’re seeing that that is having echoing effects in the airline industry, in the restaurant industry, in many areas of our life.

[00:15:45.390] – Karl Palachuk
And it’s even true for some elements of it. So when they divide all of the companies, you know, one to 50, you know, 50, 51 to 100, 100 to 250, everybody had better employment numbers in the December numbers that were just released last week. Everybody except companies with 500 or more employees. So the SMBiT market, you’re seeing that there’s great opportunity here. Unemployment is about, I think, maybe three and a half percent is the official unemployment.

[00:16:22.970] – Karl Palachuk
Full unemployment. Full employment is 5% unemployment. So we have many, many Vacancies, and the number of Vacancies is growing all the time. So unfortunately for you, this means there’s a very tight labor market, and you need to just sort of figure out what you’re going to do about it, I did do in December 2. Webinars on this one is at that MSP webinar site that talked about some ways for you to think about getting employees from tech adjacent businesses and getting tech employees from other businesses and broadening the pool of people that you look for for employees.

[00:17:10.070] – Karl Palachuk
So if you haven’t seen that, go to Mspwebinar.com and take a look at that. It’s just a different strategy that I think is going to be useful for about the next five years. So in 2022, I made a few predictions. I didn’t make many, and actually one of my favorite predictor friends, Dave Sobel, gave me a bad time because he was like, yeah, you were kind of light this year, but I’ll give you my scorecard and then I’ll try not to be as light for 2023. So the easy stuff I said that Eminem was going to continue and actually to the detriment of good quality service, and I will take a complete win on that.

[00:17:49.030] – Karl Palachuk
I think that at some point we all love money. Don’t get me wrong, I’m a fan of money, and I plan to spend it for the rest of my life. But there’s a point at which when your business is about money and widgets and counting endpoints and it’s no longer about service, that you have a serious problem. And I think we’ve been moving in that direction for a long time. And so when I say it is to the detriment of quality service, I think the larger a company gets, the less capable it is of giving good customer service.

[00:18:23.460] – Karl Palachuk
I’m a firm believer that the indicator that you have bad customer service is that you have a customer service department. If you have a department designed to lose money so that you can help your customers overcome the problems with your service, something is wrong and you need to fix it. And large companies just get to a point that they can’t fix things anymore anyway. So that’s that the great resignation. I said it was going to end about summertime.

[00:18:54.470] – Karl Palachuk
I will take a big loss on that. Many people have just decided it’s not really a resignation, it’s a reshuffle. They’re going to work somewhere else. They’re going to work on their own time. They’re going to work on their own schedule.

[00:19:07.510] – Karl Palachuk
This may actually be something of a more permanent element that we’re going to deal with maybe for the next ten years or so, I will say background to all of this and for all of you people on the call who are employees and not owners, owners day will come. This is a cyclical thing. Sometimes it’s a buyer’s market and sometimes it’s a seller’s market. There will be a time when unemployment is high. There will be a time when you will scratch and claw for any job you can take.

[00:19:38.170] – Karl Palachuk
And there will be a time when you are sending out your resumes in the thousands instead of posting up one little thing and getting ten offers. So just remember that the people you pass on the way up are also the same people you’re going to pass on the way down. So be a good human being, treat people well, and be a good person in your career. And I can’t tell you whether that will happen in five years or six years or eight years, but it won’t be ten years. So be a good person as you work your way up the ladder.

[00:20:15.430] – Karl Palachuk
I also said that standards such as CMMC and NIST will become stricter. Again, pretty easy stuff and I expect to see more of that as we go forward. I mentioned that the legislation will continue to grow. The interesting thing, I’m going to take a win on this just because it’s my webinar, but I didn’t anticipate so much of what has happened with regard to regulation without legislation. The Texas State Department of Banking decided just in a whim with a memo.

[00:20:51.570] – Karl Palachuk
We will regulate it it it service provider. You provide services to any bank, you are under our control. Have a nice day. We see governments at all levels, in all countries actually just deciding that they’re going to include us in their regulations. So there’s no denying that we are on their radar and they know that they need to regulate us now.

[00:21:18.250] – Karl Palachuk
Luckily, right now today, most of the people doing the regulating don’t know the difference between Microsoft, Facebook and you. And so their attention is on the bigger companies. But trust me, this will continue. So I would say it’s a minor win, but I was a strong believer, I still am a strong believer that outsourcing to each other is going to be a major business model of the future. I believe that small It, It, It, It It service provider say for example, I want to make money off telephony and signage and security, but I don’t want to become a specialist in any of those things.

[00:21:58.300] – Karl Palachuk
And so we’re simply going to offer each other services. And this is in some ways the next evolution of what’s been going on, where It companies develop a tool and they love it and they use it and it helps them make money. So they morph into small vendors who offer that tool to other It service providers. Some of them small vendors become larger vendors and some of them become huge. So I think that’s going to continue in a slight variation with regard to offering services as well as tools and software.

[00:22:33.650] – Karl Palachuk
So I also said that training opportunities are better than ever and I think that’s still true. But I think there’s going to be a lot more emphasis as organizations that are looking for it. It it service provider. Encouraged by CISA and other government organizations to be leery of small It consultants, be leery of managed it it it service provider, a document, the computer information security administration on how to be careful when you choose a managed service provider. They literally are warning your clients against you.

[00:23:15.330] – Karl Palachuk
And so I think that one of the responses to that is that beginning with government organizations, followed by people who get money from government organizations, we will see more and more requirements for some kind of training, some kind of certification. When you talk to a state legislature or even a federal member of Congress, the first question they want to ask is, so what are your credentials? Like, who are you to be sitting here talking to me? And if you say, well, I’m really good at what I do and I can install Microsoft Office better than anybody, and I’ve been doing this for 20 years, and I make a good living, and I probably make more money than you, so shut up. It’s not going to go over very well.

[00:23:58.220] – Karl Palachuk
They want to know what your training is. They want to know what your skills are. They want to know what your certification is. And so I think that that’s going to continue. So 2023.

[00:24:07.790] – Karl Palachuk
I told you I was going to go 100 miles an hour.

[00:24:11.870] – Karl Palachuk
Looking ahead. We have lots of things that some of which I think most people are aware of, but some of which you may not yet be aware of. Here’s the biggie this is the biggest area of unknown China. Just literally, in the last, you know, five or six weeks, reversed their position and is letting their people out to go infect each other. And I’m very sorry for the people of China.

[00:24:41.050] – Karl Palachuk
I am sure millions multiple millions will die. And so far, the government has reported two deaths. And that is just an indicator of how bad it’s going to be that they are completely denying what is going on, what you can watch on the news, even with their constricted media. But sadly, it’s good for a lot of the rest of the world. In 2019, the Tourism Tourists From China went Out To The Rest Of The World and Spent Almost $250,000,000,000 In Tourist Dollars.

[00:25:21.430] – Karl Palachuk
I don’t think we’re going to reach that in 2023, but we probably will in 2024. And most of that tourism is going to be to Southeast Asia, where they, for the most part, don’t have to take a test to get into the country. But money will begin to flow in gargantuan amounts. That is going to drive up inflation, which we’ve already seen a little bit of. But it’s also going to mean that a lot of the supply chain problems that we’ve had in the last three years are going to ease up.

[00:25:54.770] – Karl Palachuk
So while we’re building chip manufacturing plants in the US. That takes some time. We’re now going to see a flow of chips from China and some companies may be stupid and short sighted and stop their plans to build in the US. But I Think There Was Enough Pain From various supply chain issues that we will be having kind of a dual approach to that. But the bottom line is more chips are going to be available, which means there’s going to be a sudden boost forward in industries that you might not have thought of.

[00:26:31.940] – Karl Palachuk
Robotics has been held back. The evolution of the next generation of drones has been held back by a lack of chips. The evolution of electronic cars has been held back. And even old school cars, you’ve seen it in the news. We can’t ship the new Ford F 150 because we don’t have the chips to control this and that.

[00:26:54.050] – Karl Palachuk
And that’s going to be some new strategies as well. I think you’re going to see more of companies having more control over their chips and having a different kind of chip that’s more programmable. So a chip can be used for more than one function. So all of that is activity. That is going to be great for SMBiT.

[00:27:16.490] – Karl Palachuk
We’re not going to be the first ones to get the first dollar, but we are absolutely going to see many benefits from this. And again, I feel sad for the citizens of China, but they are a global economic power and they’re opening up will be good for the rest of us.

[00:27:41.810] – Karl Palachuk
Money in general. So I believe SMBiT is going to continue booming, in part because of the previous slide. But just in general, there are millions of small companies that come into existence every year, and some of the best companies come into existence, some of the most successful. During recessions, they come into existence and they grow and they get a foothold. And then when the recession is over, they skyrocket.

[00:28:11.730] – Karl Palachuk
So we are going to be in this era of people starting up businesses and times of pain for somebody are always times of goodwill for others. We just happen to be in the right place at the right time. And again, I think this is a trend that we will see continue for, again at least five years. Inflation, in my opinion, again, I’m not an economist, I think inflation will not exceed single digits. I think it’ll probably be, if I were to guess, at the end of December 2023, we will look back and say that we had about a 5% inflation for the year.

[00:28:53.130] – Karl Palachuk
Remember the numbers that they give you, the scary numbers you hear on the news. They are taking the last week or the last month or the last quarter and they are extrapolating to what it would be on an annual basis. So it’s ledger domain and not particularly good reporting in my opinion. But the good news is if you’re on this call and you haven’t raised your rates, you don’t even need an excuse. Just say, hey clients, we’re raising our rates.

[00:29:24.630] – Karl Palachuk
You have 30 days notice. So let’s say you don’t want to do it in February. That’s cool. As of March 1, our rates are now this and that and it’s okay. You’re not letting anybody down.

[00:29:37.920] – Karl Palachuk
You are not being evil or mean or disruptive of your clients. Their rent has gone up, the cost of their electricity has gone up, the cost of their gasoline has gone up, and everything in their business has gone up. So if you haven’t raised your rates, now is absolutely time. And if you haven’t raised your rates more than 10% in the last two years, it is also your time. So I don’t care if you raised your rates yesterday.

[00:30:07.450] – Karl Palachuk
If it was less than 10%, raise them again. So this is just really good advice. When I look back on all of the years that I was running It businesses, if there’s one thing I could have done, should have done, would have done, it would be to raise my rates more frequently. Every single time I raised my rates, I got busier. And I think in part that is who wants to hire the $80 consultant when they can have the $150 consultant?

[00:30:37.970] – Karl Palachuk
So when in doubt, raise your rates and then spend some of the money on my stuff. 23. So again, see the ADP report. I believe that we will be in a difficult market for, again, at least five years. I encourage you to check out the webinar that I had posted on finding and keeping great employees.

[00:31:03.670] – Karl Palachuk
So this one will return to next year, but also the year after. On legislation. Again, I happen to be involved and helped found the National Society of It service providers. We are seeing regulation and legislation everywhere that will continue and it will ramp up. I think that I just met with the Legislative Committee yesterday, and we kind of have this sense that on one hand, we feel like we’re moving as fast as we can, and on the other hand, at any minute there will be some kind of incident.

[00:31:44.120] – Karl Palachuk
Whether it is a cybersecurity incident or just a massive computer failure that the media don’t understand, the legislators don’t understand. And the legislature is going to say, by golly, we have to do something about this right now. They’re going to hold out their hand and the first person to put legislation in their hand is going to define that conversation. And you know what legislators do? They do something in response to a problem, even if what they do will have absolutely no effect on It and would not have prevented the problem.

[00:32:18.300] – Karl Palachuk
It does not matter. What matters is they pass legislation and they look like they’re doing something and this will be the Good Computer Consulting Act of 2023 or some such nonsense. We need to be involved in that conversation, which is why I’m involved in the National Society of It service Provider’s and you should be too. So we’re going to see this ramp up more and more and more in 2023. We will see some serious legislation.

[00:32:50.540] – Karl Palachuk
Now, the good news is the. Feds are primarily interested in privacy, which most of us are already governed by privacy laws. The states are more and more going to be involved in the cybersecurity side of things, which, again, they mostly don’t understand. And so we need to move as quickly as possible to be involved in that conversation and to help them and educate them and make sure that we have a seat at the table. And finally, education and certification.

[00:33:24.770] – Karl Palachuk
If you’re starting now, you’re late. The best time to get a good certification is a week ago. The second best time is today. I think you need to train your staff on the managed service model. I think you need to train on all your technology.

[00:33:43.190] – Karl Palachuk
We should never have, even in a tiny business, a silo of knowledge about how your brand of routers and switches work, your brand of security training, your brand of anything. So cross training and helping people within your own organization have the highest level of knowledge on these things is critical. And there’s lots of opportunities for education. I run the It service Provider University. Eric Simpson has training.

[00:34:18.050] – Karl Palachuk
Amy Babinchak has training. Lots of vendors have training, not just on their own stuff, but on the business model of managed services. And so there’s hundreds of organizations out there doing training. Put this in your budget and plan to do it. It is far less expensive than what most of you are spending on marketing and probably more effective on improving your service and your bottom line.

[00:34:46.090] – Karl Palachuk
The best vendors, in my opinion, are the ones who engage their partners in education, not just in the product, but on the business models of the future. And I don’t think that you should let a vendor determine what your business model looks like, but they can certainly educate you on what’s out there and what’s working and what they see. And it’s sort of like I wouldn’t call them coaches, but they’re at that position, like a coach, where a coach sees how ten or 20 or 50 different businesses are run. Vendors are the same way, and they have partners who are not successful, and partners who are successful, and they know kind of what they’re doing and what they’re not. So engage them.

[00:35:30.910] – Karl Palachuk
And again, thankfully, I don’t have any sponsors here. I’m a big advocate of moving towards vendors who are moving towards partners. And there are vendors who don’t care about you, and you probably know who they are, and there’s vendors who love you and embrace you and want to help you be more successful. I think the choice is obvious. All right, this really means take a sip of coffee.

[00:36:01.010] – Karl Palachuk
All right, so building Your Plan for 2023. So in 2020, I released the absolutely unbreakable rules of service delivery. And one of those rules is that you can’t control people, but you can control your processes. So when you think about all of the things that are out there. Don’t worry about the economy.

[00:36:25.270] – Karl Palachuk
Don’t worry about China, don’t worry about the Pandemic, the job market, employment. You can’t do anything about any of that. What you can do is embrace your clients, embrace your employees. Have a plan this year. What will you do in January?

[00:36:46.730] – Karl Palachuk
What will you do in Q One? What will you do in Q Two? Act with intention. Pick the conferences that you’re going to go to and don’t sweat that. You can’t attend every conference.

[00:37:01.600] – Karl Palachuk
Pick the education that your staff needs and slowly and surely make sure that they get that education. Plan the products and services that you’re going to adopt and make sure that you are trained on it. Those are the things that are inside your control. And you know my motto for life. I have it on a bulletin board 5ft to my left, and I have it again on a bulletin board 10ft to my right, nothing happens by itself.

[00:37:33.150] – Karl Palachuk
You have to make a plan and you have to execute it. If you just say, oh, I’m doing okay today, I did okay last year, I’m going to do okay next year, and you get up every day and you did what you did yesterday. That’s great, and you will be fine. And as long as you are happy to float on top of the water and let somebody else determine how high or low that water goes, you will be great. But if you want to excel, if you want to guarantee that you’re climbing and growing and moving in the right direction, you have to have a plan.

[00:38:05.530] – Karl Palachuk
You have to know what’s the first thing and what’s the second thing, and then you have to go execute. I had a poster that I stopped posting on the wall because my employees didn’t think it was funny. I have a poster that says, our success depends on your execution. And even though I think it’s funny, it’s also true. Next, I would encourage you, don’t look back.

[00:38:30.100] – Karl Palachuk
Don’t worry about the past. Most of you, thankfully, are young enough that you don’t remember. SBS Small Business Server was one of the greatest products ever in the history of our industry. But too many people spent five, and in some cases ten years looking back and saying, oh, how can we replace SBS? And what’s the new SBS?

[00:38:53.510] – Karl Palachuk
And how can we do this to replace SBS? Like, shut up. Stop talking about a product that doesn’t exist anymore. And we’re in the same position now. There is no 19 or 2019.

[00:39:07.170] – Karl Palachuk
There is no going back to 2019. There’s no going back to before the Pandemic. There is only going ahead. And so stop worrying about how we get back. There is no back.

[00:39:17.890] – Karl Palachuk
There’s never a back. And many people have wasted three years waiting for the day that they can go back to all the stuff that they did in 2019. This happens again and again. It happened. Same thing.

[00:39:31.530] – Karl Palachuk
With the cloud. There are people who resisted going to the cloud for ten years. I did annual seminars on getting to the cloud for eight years until I finally got bored with it and moved away from it. And in 2015, 2016, people decided to move to the cloud. And so I had to go back and refresh those seminars.

[00:39:57.710] – Karl Palachuk
People always want to go back, but you can’t. And it’s what you think was comfortable, but in the meantime, you’ve got three years of being comfortable with something else. So don’t say, I’m going to wait until this and that and the other thing. People wait. Oh, wait until I get my degree.

[00:40:14.840] – Karl Palachuk
Wait until I get married. Wait till I have kids. Wait until the kids are growing. Wait till the kids are out of the house. Like, this is your life and this is your business.

[00:40:22.660] – Karl Palachuk
So move forward. Invest in what you think is going to be able to be your greatest opportunity as you move ahead and stay focused on the right things. I think there are two of the greatest things where people waste money. One is paying attention to their competition, and there are people on this call who have they start an entire seminar with. First of all, you have to analyze your competition.

[00:40:50.630] – Karl Palachuk
I think that is in small business, the biggest mistake you can make, because every minute you spend paying attention to your competition is time you are not spent paying attention to your business, your employees, or your clients. So if you just take out a piece of paper right now, everybody on the call write down the average salary of your competition. Oh, you don’t know what that is? Okay. What are their managed service plans?

[00:41:19.010] – Karl Palachuk
You don’t know what they are? Okay, what do they pay their accountants? What is their accounting system? Where do they get most of their money? What percentage of their revenue comes from hardware?

[00:41:29.490] – Karl Palachuk
You don’t know any of that stuff. And guess what? It hasn’t had any effect on your business whatsoever. Go create the business you want to run and then go find clients who want to do business the way you want to do business. That’s why you can have a McDonald’s right next to an expensive steakhouse.

[00:41:51.290] – Karl Palachuk
You got Mortons on one side of the street and McDonald’s on the other. Right here in Sacramento, we have that exact situation. How can they both possibly stay in business? Well, because they have different business models, and they go find people who want to do business with each of those different models. Be you run the business you want to do, control the things you can control, and go find clients who want to do business your way.

[00:42:17.850] – Karl Palachuk
In my opinion, we are in a situation now, and we will be for a long time. SMBiT is swimming in a river of money. You just have to decide what is the shape and the size of the bucket that you’re going to use to get your share of that money. So focus on improving your business. Focus on every day responding to your clients being their first and only choice.

[00:42:45.510] – Karl Palachuk
Most of you have clients who love you so much that they would never consider leaving you. Go look at those clients, define them, write them down, document what they look like, and then go market to people who look like that. Imagine building a business where every client looked like your ten favorite clients. The last managed service business I built was exactly that. I went and got all of my favorite clients from my previous business and turned them into my managed service business.

[00:43:23.170] – Karl Palachuk
And they did everything I wanted them to do. They spent money when I told them to. They loved me. They invited me to their barbecues on both a personal and a professional basis. It was extraordinarily profitable.

[00:43:36.060] – Karl Palachuk
You can do this. You absolutely can do this. But again, it doesn’t happen by itself. You have to make a plan. You have to know what step one is and what step two is.

[00:43:46.410] – Karl Palachuk
And you have to execute another one of the absolutely unbreakable rules of service delivery. Don’t have both sides of the conversation. I can’t tell you how many people have over the years have told me, oh, my clients would never sign a contract. Okay, well, here we are 15 years later, and all your clients have signed contracts. My clients will leave me if I raise my rates.

[00:44:07.170] – Karl Palachuk
Well, no, they won’t. My clients won’t do this and they won’t do that. And they won’t put up with cloud storage, and they won’t put up with a delay in the telephones because it’s voice over IP and blah, blah, blah, blah, blah. Go have a conversation with your clients. And in fact, I call it the roadmap process.

[00:44:27.900] – Karl Palachuk
Do at least annually, if not quarterly meetings with your clients. Sit down and say, so, how’s your business doing? What are you expecting with regard to inflation? Is there new software in your industry that I need to be aware of? Are there major changes in your business that we can help you with?

[00:44:46.570] – Karl Palachuk
Are you going to be laying off, okay, let’s make sure that we put the right the newer equipment on the right desktops, right? Are you going to grow during the recession? Are you going to ignore the recession because you’ve got a recession proof business? Is there something we can do with technology to help you be better? Have that conversation that never ends and your clients will love it.

[00:45:10.150] – Karl Palachuk
You become a true business advisor, and, yeah, your bent is towards it, but you run a business. You know what the tax situation is. You know the environment that your clients live in. You know which laws are coming down the road and what the employment situation looks like in your area. You know lots of things that business owners know and you can have an intelligent conversation with them about it.

[00:45:33.920] – Karl Palachuk
So don’t paint yourself into a tiny little corner that’s called it. Be a business consultant and engage your clients in roadmap so that when something happens, you can say, oh, remember when that backup failed? We were going to move to cloud backup. Here’s what that looks like. Here’s a quote.

[00:45:53.340] – Karl Palachuk
Here are the options, and we will help you work through it. You will have already had that conversation because you’re having an ongoing conversation with each of your clients. This is one of the greatest habits you can possibly have within your business. And for the most part, it costs nothing except a little bit of time per client. That always pays for itself.

[00:46:16.960] – Karl Palachuk
Because even though you say that this is not a sales meeting, it results in new equipment, new switches, new routers, new Internet connections, new signage, new everything that you have to offer. Because clients, they want to spend money. They want to improve their business, they want to invest in what matters to them. Excuse me.

[00:46:43.060] – Karl Palachuk
All right, finally, I want to make a note about sales and marketing. Again, some people on this call are going to argue with me. Most people in this industry confuse sales and marketing. Most people in small business, most people in the world think that they are buying sales when they’re really buying marketing. I can’t count how many times I’ve had a conversation where somebody is bragging about their SEO, like, oh, okay, so now I call it snake oil.

[00:47:16.570] – Karl Palachuk
So it’s so it’s snake oil engine. SEO is awesome and it’s amazing, and you should check the box, but it doesn’t actually do anything. What SEO does is it’s the bare minimum you need to be on the Internet. But it’s not going to make the phone ring and it’s not going to bring in clients. Clients come from sales, not marketing.

[00:47:42.160] – Karl Palachuk
Marketing cannot have a return on investment. Marketing is an expense. And so sales has to have an ROI. And here’s what I mean. People will say, oh, I spent all this money.

[00:47:58.140] – Karl Palachuk
I got new business cards, and I got a wrap for my car, so it looks awesome. We redid our website where we are investing and having somebody go on Hootsuite and post stuff on social media on a regular basis. We got squeezy toys and pens. All of that is marketing. None of that is equal to emailing a client and saying, may I meet with you and show you a product?

[00:48:28.090] – Karl Palachuk
May I put you in the top of my sales funnel? May I ask you to buy a new laptop, a new presentation system for your office? May I help you make extra money by having you invest in my products and services? Sales happens when you ask somebody for their money. And what happens in our industry is that people say that they are investing in it, but they’re not.

[00:49:00.630] – Karl Palachuk
They’re investing in marketing. And I think marketing is important. And you go look at that last list, you see me on the Internet. I do all that stuff. And I don’t do squeezy toys, but I do have branded pens.

[00:49:16.040] – Karl Palachuk
They sit in a box waiting for me to go to a conference. I have business cards, and I have all that other stuff. I do all the social media, but that’s not sales. I literally divide my budget between marketing and sales and all that stuff that involves online tools and toys. That’s marketing.

[00:49:36.240] – Karl Palachuk
I know that will never, ever, ever get me a sale. It’s funny. We always ask people, how did you hear about us? Or why did you decide to join the community? Or whatever.

[00:49:45.730] – Karl Palachuk
And they always say things like, oh, I read Carl’s blog and I bought one of his books, and so forth. But the reality is, there’s this massive market out there where I have tried to be present, but it’s the day that they saw an ad that they decided that they’re going to join, and then, oh, how did you hear about it? Oh, I’ve been reading Carl’s blog for years, okay? But I didn’t buy until he asked me to. And you’ve seen this think about elections.

[00:50:14.520] – Karl Palachuk
I had somebody come and knock on my door and ask me to vote for her for the local school board. And I did for no other reason than the fact that she was the only one who asked me for her vote. Sales is the same way you can have the general presence in the universe, and people can say, oh, I see your car all the time, but that doesn’t mean they’re going to think about your car on the day that their system fails. You need to be out there selling as well as marketing. And most people spend money on marketing and think they are buying sales.

[00:50:56.040] – Karl Palachuk
It is not true. If you buy a system that helps you market, none of them lie to you. They tell you, this is a marketing system, and that’s all good, but then you have to combine it with action. I love Robin Robbins, and I got to tell you, she is super honest about this. Look, you spent this money in marketing, but if you don’t open the envelope, if you don’t send the mailing, if you don’t ask people for their money, they’re not going to give it to you.

[00:51:24.590] – Karl Palachuk
Nothing happens by itself. You’re not going to wake up tomorrow, and there’s a mailbox full of checks from people who said, please give me your managed services. No, you would have to do your part and actually go ask them for their money. So everything you do with regard to how you show up in the world is your brand. Everything you do in hiring and the first day on the job is a brand.

[00:51:51.280] – Karl Palachuk
The way that you talk to your clients is your brand. The way your technicians install something is part of your brand, and part of your brand needs to be asking people for their money when the time is right. So make sure that you divide your budget. Don’t say sales and marketing. Stop using that term.

[00:52:11.560] – Karl Palachuk
Put things that are related to asking people for their money under sales and put all the stuff that has to do with name recognition and all that, put that under marketing. Because at the end of the day, if you go to the bank and you try to make a deposit of goodwill or name recognition, there’s no place for them to keep it for you. But if you do sales and you get money, they will take your dollars and they will put them in the bank for you. So you have to have a process. You have to have a stumbling.

[00:52:45.680] – Karl Palachuk
And I’m not selling it here today. I’m not selling anything. I don’t actually sell a sales process, but you have to have one. You have to define how you’re going to get money in the next year. Because even if I’m right and there’s a massive river filled with money, if you don’t have a bucket, if you haven’t defined how you’re going to get money out of that river, then you’re going to sit on the side saying, for yet another year I spent all this money on marketing and I didn’t get any new clients.

[00:53:16.890] – Karl Palachuk
I spent all this money on marketing, and nobody decided to write me a check for a million dollars. I spent all this money on marketing, and nobody wants to sign up for my program. Well, had you asked, at the end of the day, if you don’t go ask people for their money, they’re not going to just pick you out of the universe and say, there’s somebody who needs $10,000.

[00:53:41.900] – Karl Palachuk
So in general, for the year, I would remind you, nothing happens by itself. Education is great, webinars are great training. All of these things that we do that we think are building our business, they’re good. They’re good to have those conversations. Go to a conference, have a hallway conversation, but when you come home, take action.

[00:54:03.840] – Karl Palachuk
Don’t come home with a notepad full of notes that never get executed. At the end of the day, your success does depend on your execution. And so as you go forth in 2023, I think this is a year of tremendous opportunity, and I hope that you take advantage of it. But again, you got to have a plan. And if you need help with a plan, I will be happy to have a 20 minutes zoom call with anybody on this call.

[00:54:34.170] – Karl Palachuk
So just find me on the internet and actually don’t do that. Send me an email. So I’m at [email protected], and I will give you 20 minutes of free advice. I promise I won’t try to sell you anything, but I will help you if I can. And my passion is to make everybody in this business as successful as possible.

[00:55:02.360] – Karl Palachuk
It is literally the reason that my company exists. And I’m going to be fine. I got, whatever, 30 or 40 more years left on Earth. I’ll be fine. But I want you to be fine as well, and I want you to be as successful as possible.

[00:55:18.220] – Karl Palachuk
So if I can help you, let me know if you have any interest in the slides. I think this QR code works. If it doesn’t, life is rough. I will send you an email and a follow up with a point to the slides. But they’re going to [email protected] along with the recording.

[00:55:39.120] – Karl Palachuk
And now, my friends, what questions do you have of me? We can stay past the four minutes that’s left, but I’ll stay as long as you want. So I’ll take a sip of coffee and you can type your questions in the Q and A module, please.

[00:56:06.630] – Karl Palachuk
I’m not seeing any questions. I’m assuming that means everybody just believes every word I say, which is awesome.

[00:56:24.190] – Karl Palachuk
I’ve never met an It consultant who didn’t have questions. Come on. There we go. Steve, what do you think about Comanaged or Midmarket as an opportunity? I think those are both spectacular opportunities.

[00:56:37.330] – Karl Palachuk
Bob Kapiche has a book on co managed it. We’ve had, over the years, only a handful of clients who are over 100, but they were all great co managed opportunities. If you get somebody at a client’s office who is open to the concept of actually calling in an expert to help them with stuff, it is awesome because they never call you to install easy printer installations. They only call you when they’re like, okay, we bought nine printers, and we need 130 people to be able to know where their jobs are and keep them secure. And we’re overwhelmed.

[00:57:17.480] – Karl Palachuk
Can you help us with that? Of course. You say yes, and then you go figure out how to do it. But those opportunities are amazing, and the in house it will take care of the easy stuff and you take care of the more expensive stuff. That’s always a great opportunity.

[00:57:36.390] – Karl Palachuk
How important is specialization or having a vertical? I think it’s great. I personally, I think many people probably ignore this advice and have for decades, and they’ve been just fine, so they just continue to ignore it. But your business will be better if you have at least one or two verticals. That doesn’t mean that you have to only focus on that vertical.

[00:58:00.250] – Karl Palachuk
But once you focus on a vertical and I’ll use my friend Mark in Las Vegas as an example. So Mark spent years focusing on car dealerships, and it started out with just doing their It, and they have very complex It. But then the higher end car dealerships, they’re like, oh, but we also need to do dry cleaning, and we need to offer free WiFi, and we’re going to do some child care while you’re getting your car fixed and this and this and this. And so he started helping them design their new stores. And one time I went walk through with him at a dealership in Phoenix where he was just literally walking through saying, I want two lines there and one line there, and don’t finish that conference room until we get this wall set up for the TV, and blah, blah, blah, blah, blah.

[00:58:51.640] – Karl Palachuk
And it was all like, literally the conversations became more and more expensive every time he found a new way to help car dealerships. My friend Mike IDA, right, he focuses on veterinary clinics, so he’s developed a branded system for their backups that is his tool, and he sells that along with all of the consulting that goes with it. And it’s completely focused on vets. Right. So you have many opportunities.

[00:59:24.730] – Karl Palachuk
I loved a lot of people argue with me on this, but we had attorneys and accountants, and I had a minor medical, but for the most part, attorneys and accountants enrolled agents. They were huge for us because I knew what their schedules were. I knew when they would let us work on their systems and when they wouldn’t and what kind of tools they needed and what kind of software they were using and what kind of software they were not using and what kind of levels of security they needed. I knew more about those two verticals than I did about others, even though we had lots of clients and lots of verticals. So I would say you have a great opportunity.

[01:00:02.680] – Karl Palachuk
The other thing you have to remember is that every industry has its own language. And so one of the things that happens with a vertical market is that you learn their language. You talk to accountants. There’s a certain way that they just talk to themselves, to the world, to each other. Right?

[01:00:24.430] – Karl Palachuk
And if you begin to learn the language, you begin to be an insider and not an outsider. There’s a great association, the dental integrators association, and they learn the language of dentists, and then that literally helps them be more trustworthy to dentists. And dentists understand the words that they’re using because they’re using some of the words that dentists use. So I’m a huge advocate of verticals. End of Tirade.

[01:00:54.550] – Karl Palachuk
Richard. I feel like my sales pitches are missing something, because closing on sales calls is not nearly as effective as it could be. What are the most common mistakes you see salespeople make? Well, the most common mistake is to not have a funnel, not have a process, not walk people through it. I will say this about sales pitches.

[01:01:13.370] – Karl Palachuk
Some of the worst sales pitches in the world are still effective. In fact, the worst sales pitch in the world is more effective than not making any sales pitches at all. I often tell the story. We got a client one time that was, I think, 75 users, and they grew to be 130. But when they were 75, this guy came to me in my local user group, and he said, I got this big client, and they’re too big for me, and I need to you know, I need some help with moving them to a new system.

[01:01:45.540] – Karl Palachuk
And I said, oh, how did you get this big client? Because he was tiny. He was literally just starting out. And he said, oh, I went door to door in the business park. And when I talked to the receptionist, I asked, is there anybody here who wants to talk about technology?

[01:02:03.950] – Karl Palachuk
That was it. Is there anybody here who wants to talk about technology? And he got a 75 user client with that quote unquote pitch. Now, clearly the pitch is really about sitting down and getting in the room. And so I don’t know, Richard, I don’t know your sales process.

[01:02:20.760] – Karl Palachuk
I’d be happy to chat with you about it. But I think for most of us, if you can get in the room, if you can get the appointment, if you can come across as being trustworthy and somebody who’s willing to have a conversation, that’s the way sales are made in small business. Most of the sales programs that you pay large amounts of money for are too high pressure for small business. Nobody wants to be sold. They want to buy.

[01:02:46.440] – Karl Palachuk
Everybody wants to buy, nobody wants to be sold, right? So that’s why going in and saying, I love the network analysis as a sales tool, because you go in and you start with a questionnaire that is I call it the roadmap questionnaire, but it starts with how big is your company and what are the problems you’re facing? And why am I here today? And just letting them talk about themselves for an hour. And that’s the first meeting.

[01:03:17.290] – Karl Palachuk
My sales process. I don’t want anybody to talk about money until the third meeting and sometimes the fourth, because we’re going to say, okay, now I’ve learned about you. Okay? So let’s come back and talk about your problems and some of the services we offer, right, and to have a conversation. And don’t try to go in and say, do you need managed service?

[01:03:39.560] – Karl Palachuk
Here, sign here. That is not going to work, right, but having a lengthy conversation that results in them saying, so what is this going to cost me? Those are perhaps the the sweetest words I’ve ever heard in my life. So what is this going to cost me? Because sometimes the answer is 1000 a month and sometimes at one time the answer was $300,000.

[01:04:00.530] – Karl Palachuk
But it’s just a sweet thing because what is this going to cost me? Means that unless you do something weird, you’ve already got the sale, right? So you just have to have a conversation where you become an advisor before you get a nickel and eventually you get more than a nickel. Brett, your thoughts on Microsoft and the channel. Well, let me.

[01:04:25.230] – Karl Palachuk
Just start with just a capital UG, okay? Nothing specific, just a huge part of our workload. Well, here’s the deal with the Microsoft 365 and the future partnerships and whatever, I would give a nod to my good friend Amy Babinchak who points out that it may be impossible for truly small It it service provider partner with Microsoft anymore. And as you know, Amy is a Microsoft MVP, has been for 20 years. But Microsoft has chosen a different business model and there’s nothing you can do about that.

[01:05:07.750] – Karl Palachuk
Make money off of them where you can. But at the end of the day, you have to make money the way you can make money. And Microsoft is not the only alternative in the world. Many of us, and I know that you’re not as old as me, but you’ve got a couple of gray hairs. Many of us have grown up engaged with Microsoft.

[01:05:27.770] – Karl Palachuk
We have loved Microsoft, we have been loved by Microsoft. But again, you can’t look backward. If those days are gone, give it up, move on and find the next great thing. I do think there are alternatives. The funny thing is Word Perfect is still around.

[01:05:50.150] – Karl Palachuk
Nice, good Canadian company, right? They have a spectacular product and they will let you buy either a license or an actual install product. It’s roughly 7 billion times better than Google Docs. But there are plenty of people who are happy with Google Docs, right? I use it for one very specific purpose on two podcasts.

[01:06:14.340] – Karl Palachuk
But for the most part, I think Google Docs, they are featureless compared to Microsoft Office. But Word Perfect, it looks like when Microsoft Office was good 510 years ago. So there are alternatives. And if you decide, well, I don’t have any choice. I have to be Microsoft because my clients are Microsoft.

[01:06:40.080] – Karl Palachuk
That’s cool too. Just put that relationship in its place, know what its limits are. Know that Microsoft has no interest in you being successful. It’s not their job. It’s nowhere in their business plan is to make Brett successful.

[01:06:54.470] – Karl Palachuk
Right? So I would just take it with a grain of salt and say it was a good relationship while it lasted. But there’s a saying I heard once, so I have no idea what the source of it is. Somebody says, well, things didn’t end well and somebody makes the observation they never do, otherwise it wouldn’t have ended. Right.

[01:07:19.830] – Karl Palachuk
So your relationship with Microsoft might not end well, but it’s ending for a reason. And the reason might be that Microsoft no longer thinks they need you. I think that will turn around, but it’s just one of the cycles that happens in our industry. So I’m not sure that’s particularly useful, but that’s my observation. So other comments or questions?

[01:07:47.050] – Karl Palachuk
Again, please use the Q and A. I appreciate that.

[01:07:58.440] – Karl Palachuk
All right then. Well, I’m not seeing any more questions. So the plan is I will get this recording up as quick as we can it’ll [email protected]. If you registered for this, you will get an email that basically says, here’s the downloads and here’s where the recording is. My staff is amazing, spectacular.

[01:08:21.100] – Karl Palachuk
So this will be up in short order, and I thank you for your time and attention. And as always, I thank you for your support. I love being in this community and I love participating in the never ending conversation that we have with each other. So thank you very much and I will see you online.

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