When it comes to your MSP business, you can either be spending time creating income or wealth.
The difference between the two is not insignificant, and it’s important to spend some time teasing it all out.
That’s why we talked with Scott Hamlin on a recent episode of The Stride to Freedom podcast. Scott is a Sr. Executive Coach at Pax8 Academy and advises MSP owners on the financial intricacies of their business.
Here’s what Scott has to share about the distinction of building a business that creates income vs. wealth, and some key insights to take back with you as an MSP owner.
Income vs. Wealth: What’s the Difference?
Income is your salary, it’s the money that pays your bills. And even if you start a business, you might be operating as if it’s just another J-O-B that brings in some money each month.
But there’s so much more potential for a business owner. Your MSP business can build wealth. It can build equity. And this gives it more value and staying power in the long run. Wealth offers so many benefits to MSP business owners:
- Long-term security and sustainability
- Opportunities and choices for what to do in the future
- Resiliency through challenges
- Legacy and personal financial security
Wealth is something that can sustain itself and builds value beyond the income it brings in. This opens choices to you in the future—to sell, to pivot directions, to step back, or to continue growing.
Act Like an Adult: Get Your Finances Together
One thing Scott is passionate about is encouraging others to act like, well, adults. To him, this is all about managing your responsibilities and business when it comes to finances.
You can operate an MSP business as a hobby, a job, a business, or an asset. And a lot of people stay in that hobby-to-job phase, making just enough to get by or doing it for the love of the industry.
But once you take responsibility for your business and make mature financial decisions, you can scale up your business into something more.
The key here is to take time and effort to focus on the finances of your business. Many MSP owners don’t do this for one of two reasons:
- Lack of interest—they just don’t care to learn about finances because they don’t like it or get it.
- Lack of knowledge—many people just simply don’t understand the intricacies of finances and how it opens new paths and decisions for them.
But, in Scott’s eyes, neither of these are legitimate excuses to give up responsibility over your MSP business’ finances. Yes, we need professionals like bookkeepers and accountants to help you understand, but you cannot outsource your responsibility over the finances of your company.
Know Your Business: Key Financials
So, where does someone start? If you are not as knowledgeable about company finances as you want to be, start here:
- Build wealth outside your business: Your future retirement plan should not be to simply sell your business. Plan for another option so that you are prepared no matter what happens with the business.
- Commit to understanding the financials of your business by staying on top of important KPIs on a regular monthly basis.
- Manage your cash flow, revenue, and profits, and understand why it is what it is.
Remember—you are the mature adult in charge of your MSP business. So, Scott’s advice is simply this: get the processes in place, understand your numbers, and make intentional decisions around breaking through the next level.
If you need some support doing this, connect with Scott on LinkedIn or via email at shamlin.c@pax8.com. There was so much more to the conversation with Scott, so make sure to listen to his full interview on the Stride to Freedom podcast.
You can also learn more about Pax8, whose goal is to empower business owners and educated them in all areas of their businesses.
And if you want to know more about us at Stride Services, contact us today. We offer back-office accounting and CFO services, including stable and efficient bookkeeping, cash flow management, and actionable analytics for growth.
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This Stride Live Webinar is hosted by Stride Services. Stride is a comprehensive financial solutions provider, specializing in outsourced bookkeeping, accounting, tax, and advisory services for Managed Service Providers.
If you’re interested in being a featured guest on our Live Webinars or if there’s a subject matter expert you’d like us to interview, please let us know!
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Show Notes + Transcript:
Scott Hamlin: LinkedIn
Pax8: Website/LinkedIn
Scott Hamlin Email
