Since launching Benchmark 365 in 2016, we’ve talked with thousand's of entrepreneurs about MSP Growth. It’s also been a pretty interesting journey with our Benchmark 365 Partners. But what’s common for all is how often these MSPs are challenged by creating sustainable growth in their businesses.
It’s definitely a more and more competitive industry but it’s also more global than ever before and growing strongly. I’ve seen estimates of $250bn worldwide for pure managed services and Gartner states the IT services market is at least $1 trillion USD globally. Wow!
So the opportunity is definitely there – the question then is what do MSPs need to do to take advantage of it? Based on what we’ve learned from MSPs over recent years and my own experience growing a successful business myself – what follows is Benchmark 365’s view on what’s required to drive growth in an MSP .
You can also find some great tips and advice in our recent book Infinite Scale – the Ultimate Guide to Growth for Managed Service Providers.
Ready to drive your MSP?
Too often we speak with MSPs who seem to have lost their way. Years of industry change, difficult customers, hard lessons and personal challenges lead many to think “is this it?”. Some MSPs have developed what we refer to as an artificial cap on how big their business can grow. That is, they once believed that their business had infinite potential but now, they often settle for lower revenues and short-changing customers.
Mindset is SO important in business. Remember that HP started in a garage and is now two companies with a combined revenue of $60 billion dollars. Perhaps that’s not where you want to be but we also know that many MSPs reach revenues of $20m or more.
In Infinite Scale, I share my story of running an MSP and one day coming to realise that my focus was wrong. I was focusing on my relatively small customer base and stressing out about losing a client while I had this incredible opportunity to scale up and target thousands of companies right around the world.
It can be hard to get your head out of the day to day weeds and fret about losing customers that aren’t that profitable or consume too much of your valuable time. Growth does not come without some adjustments and perhaps even a little pain. But anything is possible! The key is to keep your eye on the bigger prize and believe it’s is possible.
In our interviews we came across many MSPs who felt that their local market was saturated. It doesn’t take long for a small MSP in a regional area to run out of people to talk to. But why limit your market to your town or city? Technology has radically altered how and where people can work from and buy from.
In Infinite Scale we frame the new opportunity for MSPs – as a global market place that transcends borders and allows MSPs to thrive in a trillion dollar market place. Focusing on a bigger market place could very well be the break through you need to grow your revenue and reach your goals and with a 24×7 team the possibilities are infinite. The choice is yours.
To grow a business you must have sales. Many MSPs we speak to say “I’m just not good at sales”. But that’s not true is it? Go back to the day you started your MSP. Back then you had all this time and motivation. And voila. You sold something. The next day you went out and you did it again. The next day again. And then – you got busy. You got tied up on the tools and all of a sudden you feel like sales is a big mystery.
MSPs who reset back to day one in their mind can experience a dramatic shift in their motivation to sell. Remember – you are the expert, that doesn’t mean you are also the implementer. There are many ways to deliver IT but often there is only one person in your company that can sell with passion and energy. You.
We think that, just like when you were starting out, you should be spending 80% to 90% of your time on sales and other growth activities. Building relationships with your clients by engaging with them regularly is key. Aim to become a trusted advisor and talk to them about their business and future needs. Elevate the conversations beyond the technical. If you position yourself as a key advisor for the business – it’s that much easier to upsell and that much more difficult for them to give you up.
Once you focus on sales you need to spread your wings with a solid suite of offerings which leads me to…
The most successful MSPs we’ve spoken to have a minimum of 10 revenue streams. They don’t focus on one concept (like Office 365 migrations), they have several revenue lines that they use to wrap up customers into a single stack or better yet, using a subtle offering such as a security audit or an after hours service as an entry point in to larger accounts.
Don’t settle for normal. Offering support and maintenance is just one of many ways to grow an MSP and the more products you have the more opportunities you’ll land.
Always available customer support is no longer a “nice to have”. Many of your clients don’t work 9 to 5, Monday to Friday anymore – so neither can you. Its almost impossible for a small growing business to plug this hole cost effectively if they do it in-house. Which is why so many MSPs end up sacrificing their weekends and evenings to keep their customers happy. This is not sustainable. It’s why we started Benchmark 365 – to provide quality around the clock care for your customers so you can focus on more important things like growing the business (and spending time with your family!
A sometimes hard lesson to learn here is the separation anxiety some of your clients will feel when you tell them you won’t be personally taking care of their support needs anymore. It’s worth investing time here to make sure the transition is a smooth one but ultimately if they refuse to let you go – you may have to let them go. No matter how long they have been your customer – your time is too valuable to spend on low value support work. We find this can be one of the toughest growing pains for MSPs – letting go of clients that get in the way of your growth. It’s a big part of the required mind shift.
Successful MSPs have scale. Easy to say. So let me explain what scale means to an MSP. Scale is where there is a primary go to person in each function of the company. Someone in sales, someone in marketing, a lead in tech, and redundancy in every role from dispatch to L1, 2 and 3 support. Once scale is accomplished the owner is in a better position to take time away from the business or even sell for a healthy multiple.
Scaling up can sound daunting – it can take a long time, requires hiring more people and spending a lot more money. Which is all true if you attempt to do it on your own. This is another factor behind the genesis of Benchmark 365. We are here to help MSPs scale up instantly.
Take an MSP like Jeremy Johnson of GoComputers. Like many small MSP’s, Jeremy put his clients first at the expense of focusing on growth. With Benchmark 365 he found a new way to continue to deliver awesome technical support while allowing him to focus on growing sales, get off the tools and provide 24×7 service.
Instead of fearing that they are too small, our MSP partners march into the board room knowing that they have a large team behind them to execute on every sale they make. The fact that Benchmark 365 is an outsourced team also means that each sale is delivered profitably without the considerable overheads of local, full time staff giving our partners a competitive edge.
It’s worth taking a look across all your different functions. What can you retool with a SaaS product or outsourcing service. From accounting to marketing to human resources – there a myriad of outsourcing options available that can fill your expertise gaps and save you time and money. It may take another mindset shift to get you there – letting go and giving up some control so others can help your business grow
What does a successful MSP look like? Is it making $300,000 on $2m in revenue? Is it 5 times that? What do you want? What are the key numbers to be looking at to get an indication if you are on the right track – not only your financials but also customer satisfaction, workforce utilisation and so on?
The only way to know whether your numbers are achievable is to take an honest look at your numbers and metrics. Having a dashboard you routinely check is critical and ask yourself, where is the bucket leaking? Where am I losing money? But make sure the mirror you hold up is one that shows the real truth. It’s easy to exclude the cost of your own time, for example, which only serves to underestimate your cost of doing business.
Taking a good hard look at your pricing model. Are you getting paid what you deserve? Are you accounting for all the hours spent on your clients? Yes they have been with you for a long time – but are they really worth it? Are you allocating quality client relationship time to your most valuable clients (both existing and potential) versus spending too much time on tech problems for problem clients?
A thorough audit of your important metrics will be quite confronting but its will help you lose the rose-tinted glasses and show you how important it is to make that mindset shift if you want to grow.
Whether you’re a new MSP or an established one looking to break through your growth cap, it’s time to shake things up and get real about your business. We think that by diving in on these five drivers you can position your business for growth.
So stay tuned. Over the coming months we will be exploring the 5 Drivers in more detail through our blog and an upcoming webinar series and podcast. We love to help MSPs grow
Looking for more information about Benchmark 365? Look no further. Open a chat or drop us a line. We’d love to hear from you.