While growing your MSP requires a lot of work, the biggest challenges MSPs will run into aren’t so much using growth tactics but rather certain growth factors that aren’t being accounted for. Failure to prepare for these issues before they happen plays a big role in the fate of a growing MSP. It can very well be the difference between growing or staying stagnate.
Below are several common mistakes that MSPs make. By being aware of the issues, you’ll be able to prepare yourself accordingly and ensure that you can handle them or better yet avoid them altogether.
Growing The MSP Too Quickly
Growth is definitely a good thing, however too much of a good thing can be damaging.
Yes, there is some truth to the saying of “there is no such thing as growing too fast.” However, it depends on the business models that are used. For MSPs, there is more emphasis on the business being balanced between how many clients a company has and its capacity.
When you’re running an MSP, you’ll learn quickly that it takes time to hire capable techs and train them up for the job. If you’re gaining clients quickly and increasing the workload, you’ll stretch your team out thinly in order to cover ground.
This isn’t good because people can only work so much at any given time. Employees will get burnt out, start to decrease in performance and customers will experience delays.
If you’re not expanding your team to go along with a growth in clients then you can’t be expected to keep up.
An excessive efficiency drain that MSPs run into is the lack of standardization across their client base. Clients are delegated to various routers, printers, workstations, switches, and servers that make no sense.
By having standards in place not only will you be able to train new techs faster and easier, but you can process updates and configurations that are identical across various devices and software too.
Offering Too Many Options
Going back to what was brought up before, having too much of a good thing can be a bad thing. You can also see this in the options that customers are able to choose from. Instead of hurling dozens of options at customers, it’ll be easier for you and customers if you standardize your plans.
What this means in practice is offering customers three types of plans. Many people are familiar with the bronze/silver/gold archetype of plans and many will be fine with picking between those. Toss in an option for customized plans (that require you or a staff member to have a brief meeting with the potential customer) and you’re good to go.
When customers have too many options to pick, it can be difficult for them to determine what exactly they need or don’t need. It’s also harder to compare the various options as well.
Not Having A Marketing Plan
Because many MSP owners are technicians, many will lack the business savvy and knowledge. One core part of it is knowing that marketing is an important part of growing – if that’s your goal – and the other is being able to put together some sense of a marketing plan.
A marketing plan doesn’t only focus on advertising either. It’s a detailed plan that provides a formula for how you’ll be attracting new prospects to your business. Things like social media, cold calling, or advertising are all pieces of the plan.
If you’re looking to be growing your MSP farther, a marketing plan should be drawn up and tested repeatedly.
No Tools To Measure Success Or Failure
Also called key performance indicators (KPIs), these are statistics that measure the performance of your business. When starting out, an MSP should focus on some key numbers like revenue, profit, billiable/non-billable hours, and monthly recurring revenue. Those numbers should be measured as a percentage of your total revenue.
Doing this once every month or every week can help you make a better determination of whether your business is going strong or if it needs adjustments.
As the business keeps growing, those numbers will matter but it’s important to delve into more details such as adding employees into the mix.
If you measure marketing efforts, these should be measured based on dollars or time/effort per opportunity generated.
In sales, you want to measure it by percentage of closed sales.
Not Reviewing Liability
With more growth for a business, MSPs are bound to take more liabilities in various forms. As such, you’ll want to make sure that you are reducing the liability costs as much as possible.
Ensure that hiring practices are enforced and done properly can reduce turnover and keep employee costs lower. Checking on your insurance plans to see if you can find a cheaper alternative or discounts can help.
MSPs are liable for very expensive assets as well – such as client data – so ensuring you get the most protection at the best price will be a priority as well.
Now Working On The Business
The biggest reason MSPs make a lot of the mistakes mentioned above is because they are not working on the business but rather in the business. MSP owners definitely have a lot on their plate with managing a business and ensuring clients’ needs are being met, however MSP owners so often dwell on satisfying client needs or solving technical issues that they neglect scaling the business up.
They avoid hiring more staff or bring in more clients, and in the end the growth of the business becomes stalled.
You Can Avoid These Mistakes
With business growth comes new challenges and problems that must be overcome to proceed. Many businesses in this industry are ill prepared to handle these mainly as a result of lack of planning or spending too much time working in the business rather than on their business.
You can avoid all of these things by taking steps to test your activities, tracking your growth, and putting together plans. Doing these will ensure you have a better chance of succeeding.
About MSP Corp
MSP Corp understands you’ve worked hard to build your business and you want to protect it. With a mission to be a world-class business partner for MSP owners across Canada, we actively seek to acquire and partner with owners looking to secure the value of the business they have built and provide a seamless exit process that ensures business continuity and employee and client stability.
Contact us today to learn more about selling your business and maximizing its value.