Case Study: Gary Pica’s Current MSP Business
Take a close look at Apex IT Group, a managed services provider (MSP) in the New Jersey/Philadelphia area. You’ll discover the co-owners include CEO George Mach and COO Howard Borochaner, along with TruMethods CEO Gary Pica and CTO Bob Penland.
First up, an apology: I realize George Mach runs Apex IT Group — not Gary Pica. So why put Gary’s name in the headline? Of course, for SEO reasons because the MSP world knows Gary’s background. But I’m about to pull a bait an switch — putting a brighter spotlight on Mach.
So why does Apex IT Group matter? Actually, the MSP is quite important. Pica and Penland previously built an MSP that mindSHIFT acquired. Then, they went on to build TruMethods — an organization that helps MSPs to prosper.
But here’s the thing. Pica and Penland could have lost touch with the market over time. They could have waxed poetic about yesteryear’s successes. Instead, they invested in Apex IT Group and remained extremely close to the market they serve.
Apex IT Group: Key Learnings
So how is Apex IT Group performing? In particular, what has the MSP done right — and wrong? Details about the company’s business model/performance are emerging today during TruMethods Schnizzfest 2016, a member conference in Philadelphia.
Indeed, Mach and Pica are on stage now. They said:
- Pica met Mach around the time Pica sold his business to mindSHIFT.
- They stayed in touch and Pica took a closer look at Mach’s business. The challenges for success involved a partnership buyout — Mach’s toughest business move.
- Also, the business in the early years involved $90,000 in monthly recurring revenue, with $39,000 of it from one client. Tickets were everywhere, employees weren’t very good, there was no cash flow, and the company was $400,000 in debt.
- Pica and Penland invested in the business, and Mach negotiated an exit for his business partner.
- The initial focus involved swapping out all customers and employees — but hanging on to that $39,000 per month client to support the near-term business.
- Also, Pica motivated Mach to STOP chasing shiny objects. For instance, Mach wanted to chase Office 365 incremental revenues. Pica took a stand and said the incremental revenue would note deliver the ultimate goals Apex IT Group was pursuing.
- Initially, Pica made Mach choose two of the following three items: Business planning, warm lead focus and Super Power development.
Apex IT Group: Today
Fast forward to present day. After employee swap-outs, customer replacements and staying focused on priorities.
Mach, for instance, said he’s had to focus on two priorities or so — rather than five priorities that would have stretched him too thin. The results are impressive:
- The company now has $220,000 in Monthly Recurring Revenue (MRR)
- And $65,000 per month in non recurring revenue.
- Projected $4 million in gross revenues for 2016.
- I don’t think they disclosed margins.
- During the first 18 months, MRR went from $90,000 to $80,000 because of customer swap-outs and a shift to higher-quality engagements.
- During the next 36 months, MRR went from $80,000 to $220,000 because the proper business processes, services packages and customer focus was in place.
Sales team: Next up, the Apex IT Group sales team took the stage. But instead of revealing all of their secret sauce in this blog, I encourage you to reach out directly to Mach…