A million dollar managed services business pays its owner $180,000 a year. The money arrives on the same day every month, the owner has stopped worrying about whether it will, and the company nets three percent. Nothing in that picture looks like a crisis, which is exactly the problem. The owner has solved for personal predictability and called it a solved business, and the gap between those two things is where a decade can go. Josh Peterson has watched it happen across hundreds of MSPs, and the conclusion he landed on late rather than early is that the comfortable owner paycheck is frequently the cause of the low margin, not a casualty of it. It is not a payroll line that needs trimming. It is a signal that the owner has stopped being paid like an owner, and once that happens, the ordinary discipline of accounting for every cost before declaring a profit quietly stops applying to the person best positioned to enforce it.
Raffi Jamgotchian has run Triada Networks since 2008 and spent the first ten of those years in what he describes as step up, flat, step up, flat. He was profitable enough to live on and never profitable enough to matter, and he bought a great deal of software and attended a great many conferences on the theory that one of them would break the pattern. What eventually broke it was smaller and less flattering than any of that: someone in a peer group pointed out that the money leaving the bottom line was not the company's money. It was his family's. That reframe costs nothing to adopt and changes the answer to almost every discretionary spending question an owner faces, which is why it belongs in the same conversation as pricing, staffing, and knowing your numbers before you decide whether to sell, scale, or pivot. Owner compensation is not an administrative detail sitting downstream of strategy. For most MSPs under five million in revenue, it is the mechanism that decides how good the strategy is allowed to be.
Josh describes the exercise he has now walked a couple dozen owners through, and it is deliberately uncomfortable. The owner drops their own pay from wherever it sits, $150,000 or $180,000, down to something like $50,000, and commits to taking the rest only from profit, when there is profit to take. Nothing about the company changes on the day that decision is made. What changes is the velocity and the clarity of every decision that follows. The third RMM tool that was going to be interesting to experiment with stops being a $1,500 line item on a statement the owner skims and becomes $1,500 that will not arrive at their house. The staffing level that was defensible in the abstract becomes a number the owner can feel. In every case Josh has run this with, the owner ended the year making more than the salary they gave up, and the profit line moved into the ten to fifteen percent range. The mechanism is not austerity. It is that an owner drawing a fixed salary has accidentally installed themselves as the one employee whose compensation is insulated from performance, which means the person with the most authority to fix the margin is the person least exposed to it.
Raffi did not arrive at this through a spreadsheet. He arrived at it in a peer group meeting, where someone put it to him plainly: every dollar he took out of the bottom line came out of his family. Not the company's reserves. Not next year's investment budget. His wife's pocket and his kids' pocket. He had been treating the tool he had just bought and the conference he had just flown to as extras, the kind of expense that is easy to justify because it sits in a business account rather than a personal one. Business accounts run more money through them than personal accounts do, which makes a thousand dollars look structurally different depending on which side of the line it leaves from. It is the same thousand dollars. The reframe does not add information, it removes a distortion, and Raffi describes it as the moment the switch flipped. What makes this worth taking seriously is that it costs nothing and requires no new reporting. It is a question an owner can ask in the moment a purchase is being considered, and most of the purchases that do not survive it were never going to earn their keep.
Raffi is blunt about what the first decade actually felt like: the credit card bill arriving each month against an account that could not cover it, and the growing awareness that this does not resolve itself with scale. The bill gets bigger as the company gets bigger. An owner running at low profit is not enduring a rough patch on the way to a better one, they are operating a structure that produces exactly the result it is built to produce, and growth applies a multiplier to that structure rather than a correction. This is the part that tends to get lost in the industry's enthusiasm for growth as a general-purpose answer. Josh's own version is that he spent years as a consultant taking the pressure off owners who told him they were feeding their families well enough, treating profit as a nice-to-have once the household was covered. He now regards that as the wrong trade. The owner who is personally fine and structurally fragile has bought a decade of calm with the entire terminal value of the business, and nobody presents them with that invoice until they try to sell.
When Raffi and his wife started Triada in 2008, the stated goal was to build an asset, something the kids could either step into or inherit the value of. He connects it to how he grew up, in a family where a marriageable person was expected to hold three keys: one to a car, one to a house, and one to a business. The distinction he draws now is the one that matters for any owner deciding what they are actually building. A job pays you while you do it and ends when you stop. An asset has requirements, and the requirements are unforgiving in a way a job's are not: financial structure that survives inspection, clients who belong to the company rather than to the founder, and margins that a buyer can underwrite. Raffi is careful not to disparage the owner who runs a good $600,000 business, takes a solid living from it, and hands the clients off at the end. That is a legitimate choice, and Josh argues it should be made with pride rather than backed into with embarrassment. What is not legitimate is performing the growth plan while operating the lifestyle business, spending on the programs and the tools and the conferences that signal ambition, and never doing the structural work that would make any of it pay.
Both, in a specific order. The approach Josh describes is to set the owner's salary low enough that it does not distort decision making, often around $50,000, and then take the remainder as distributions from actual profit. The salary covers household stability. The distributions are what tie the owner's income to the business performing. Owners who run it this way generally end up with more total compensation, not less, because the structure forces the operating decisions that produce the profit in the first place.
The owners Josh has taken through the owner-pay exercise typically move from low single digits into the ten to fifteen percent range. Three percent is not a margin, it is a rounding error with payroll attached, and it leaves no capacity to absorb a lost client, a bad hire, or a rate increase from a vendor. The specific target depends on the business, but any MSP whose net profit is lower than the owner's own draw as a percentage of revenue should treat that as a structural finding rather than a timing issue.
It is a problem when that predictability is the reason nothing else gets fixed. The salary itself is not the issue. The issue is that an owner receiving an employee-style paycheck no longer experiences the consequences of operating decisions, and the business loses its most motivated cost governor. If your company is at healthy margins and the salary is set off a real profit picture, leave it alone. If your company is at three percent and your pay has not changed in three years, the two facts are related.
Ask whether the business could be sold without you in it, and whether its financials would survive a buyer's inspection. An asset has clients contracted to the company, margins a buyer can underwrite, and operations that do not route through the founder. A lifestyle business pays the owner well and ends when they stop. Both are legitimate. The failure mode is spending like the first while structured like the second, which is where most of the wasted years in this industry actually go.
Only where you have real domain knowledge, according to Raffi, whose own business is roughly eighty percent investment firms. Having a handful of clients in an industry is not a niche, it is a coincidence. A niche means you can speak credibly to that industry's own concerns, and Josh offers a useful gate: could you take the main stage at one of their conferences and add something to the conversation? If not, you have more learning to do before you claim the vertical rather than a marketing problem to solve.
Because buying is a decision that can be made in an afternoon and implementing is a decision that has to be remade every week for a year. Raffi is direct that even a genuinely useful product does nothing sitting on a shelf, and that the switching costs of moving between tools he never fully adopted actively hurt his business. The spend feels like progress and substitutes for it. Before any purchase, the honest question is what will stop happening in order to make room for this, and who owns making it real.
Raffi Jamgotchian is the founder and CEO of Triada Networks, a managed services and cybersecurity firm based in Norwood, New Jersey that serves investment firms, alternative asset managers, and wealth advisors across the New York metropolitan area. He incorporated the business in November 2008 after a career in technology roles at Invesco and its predecessors, and has spent the years since building Triada around a single vertical rather than a general client base. He is the author of Guarding the Vault, a book on cybersecurity for investment firms facing regulators, client security requirements, and real-world attacks, and he hosts the Cybersecurity Cafe podcast. Raffi was Bering McKinley's first peer team client in 2013 and remains one of the longest-running relationships in the firm's history.
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Josh Peterson is the CEO of Bering McKinley and host of The BMK Vision Podcast. Since 2004, Josh has worked with hundreds of MSP owners to build operationally sound, profitable businesses through consulting, peer teams, and direct coaching.
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Owner compensation is one of the first things we examine with a new client, because it explains more about a company's margin than almost any operational metric does. The Vision Operating System exists to make that kind of structural question answerable with numbers instead of instinct.