Most MSP owners obsess over net profit and ignore the number that actually determines the health of the business: gross profit. In this Don’t Be That Guy session, Josh Peterson and former MSP owner Ryan Alter unpack why net profit can be completely distorted by G&A decisions, tax strategy, and owner perks—and why disciplined leaders run the company on gross profit, not what’s left at the bottom.
Ryan and Josh walk through the BMK model for 42% overall gross profit, 55% service department gross profit, and a tight service salaries–to–service revenue ratio that protects both margins and morale. They also explore the balance between recurring, hourly, and project revenue, how agreement gross profit fits into the picture, and what changes when you’re building for a future sale versus optimizing for long-term profit protection.
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What We Cover in This Episode
• Why net profit can mislead MSP owners into thinking they’re “fine”
• How G&A and tax strategy turn net profit into a lie on the P&L
• The three revenue buckets and why 42% gross profit is the real goal
• Service department gross profit and the 55% target for healthy MSPs
• Using service salaries / service revenue ratio as a staffing and burnout gauge
• How project work and hourly work complement recurring revenue
• Why agreement gross profit must be measured, not assumed
• Growth vs. exit: how investors look at recurring vs. project mix
• How to assign true P&L responsibility to your service manager
• Practical first steps to start managing the business by gross profit
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Guest Links
Ryan Alter is a former MSP owner from Missoula, Montana who grew a one-person break-fix shop into a 25-person MSP before exiting successfully. He now helps MSP leaders interpret their numbers, align operations with the P&L, and avoid the myths that stall growth.
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Host Links
Josh Peterson is the CEO of Bering McKinley and host of the BMK Vision Podcast. Through the Don’t Be That Guy series and the BMK Vision Operating System, Josh helps MSP owners gain financial clarity, mature their service operations, and build companies that are both profitable and sellable.
Host LinkedIn: https://www.linkedin.com/in/joshdpeterson/
Bering McKinley on LinkedIn: https://www.linkedin.com/company/bering-mckinley/
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