Picture the ideal state of your business …
It’s thriving.
Your employees are happy, loyal and easy to retain.
Your company has achieved financial independence, and so have you.
This is what operating a World Class MSP looks like.
And, while all of that may seem too good to be true, it’s not. Many managed service providers just like you have taken their operation from average to World Class. So, what’s stopping you from being next?
Before you unravel the specifics of how to become a top MSP, it’s essential to evaluate where your company currently stands. Most MSPs fall into one of three categories: Average, Best-In-Class and World Class.
Average MSPs
- Secure monthly recurring revenue inconsistently
- Charge $100/month/seat or less for AISP (all-in-seat price)
- Lack leverage, generating only $100,000 of annual service revenue per employee in their company
- Create very few new jobs
- Have a net profit margin of less than 10%
Best-In-Class MSPs
- Bring in some recurring revenue each month
- Charge an AISP in the range of $100-110
- Have some leverage, generating about $125,000 of annual service revenue per employee in their company
- Create some new jobs
- Have a net profit margin of 14-16%
World Class MSPs
- Consistently bring in a healthy amount of monthly recurring revenue
- Command an AISP in the range of $120-160
- Have great leverage, generating $150,000 or more of annual service revenue per employee in their company
- Create many job opportunities
- Have a net profit margin of 25-35%
Which of these three categories sounds the most familiar to you? If you fall into the Average or even Best-In-Class group, there’s progress to be made.
Check out the following five characteristics of every World Class MSP to find out what you should be focusing on.
1. They are business planners.
It’s one thing to have a MSP business plan, but it’s another to be a business planner. Top MSPs put actionable plans in place that generate regular improvement and follow a sound business planning process.
A truly effective business planning process accomplishes the following:
- Turns your vision into an actionable plan
- Aligns your actions with goals
- Ensures that your team has clear priorities
- Provides a framework for discipline
If you’re buried in reactive work and struggling to stay ahead of a seemingly endless stream of IT tickets, it’s time to make a change in this area.
2. They’ve nailed down pricing and packaging.
Without the right MSP goals and strategies for packaging and pricing, you’re apt to suffer from overworked employees, insurmountable surges in IT tickets and a low profit margin.
Having the right strategy begins with understanding your value proposition. When clients feel like they’re getting something of real quality, they’re willing to pay a premium for it. If you can deliver rave-worthy results through an enhanced business model, you can charge appropriately for your efforts.
Are you packaging and pricing your services to achieve maximum profitability? World Class MSPs don’t undersell their services to get business. They charge what they’re worth. Your MSP pricing model must accurately reflect the quality of your services if you intend to generate more leads and increase revenue.
3. They’re sales-focused.
World Class MSPs aren’t just interested in sales. They’re focused on sales. They develop a process that generates leads, engages prospects and closes deals.
MSP sales require one thing: discipline. You don’t need extensive sales experience, a bloated sales team or a giant investment in marketing tactics. You need a structured approach to acquiring monthly recurring revenue, including:
- A repeatable process
- Focused resources
- Accountability
By investing in sales training and process development, top MSPs are able to maximize their potential for triggering IT leads and sales.
4. They’re process-driven.
From business planning and finances to sales and service delivery, top MSPs outline, optimize and adhere to a process. They are process-driven in all areas of the business.
To increase your efficiency as an IT service provider, you must develop a culture of process with the goal of achieving a regular rhythm. At the end of the day, your MSP processes impact your bottom line in a big way. It’s the only way to prevent the downward spiral of reactive support services and realize the level of revenue you’re seeking.
5. They have command of their metrics and KPIs.
Top MSPs have a 360-degree view of their IT solutions business. With transparency into the data of their operation, World Class MSPs know where improvements are needed and can take the necessary steps to protect profitability.
What do you need to do to gain command of your business? After all, it could mean the difference between generating $100,000 and $150,000 in annual revenue per employee. Unless you make the metrics and KPIs of your business a priority, you’ll never truly be able to determine your company’s unrealized profitability.
