Is Offering Free Risk Assessments to Qualified MSP Prospects a Good Idea?

MSPs are getting creative with their sales conversations. For example, some MSPs are offering qualified prospects free risk assessments in an attempt to move their sales discussions along. While this is a potential strategic tool to use with qualified prospects, be careful making assessments a part of every sale, as there could be unintended consequences.

While I am in favor of anything that works, I have found that having the right pain conversation can oftentimes get you to the same place faster and without having to use so many of your valuable resources.

For instance, you can uncover common issues by simply asking a prospect a few questions. The next step would be to then have the prospect attach a value to the pain they’re experiencing and plan the next agreed upon steps. In this case, there is no assessment necessary.

Here are some of the pitfalls to avoid when offering free risk assessments to qualified prospects.

First, doing a free risk assessment for each of your qualified prospects takes up not only time but also resources, which takes resources away from adding value to your customers (you know, the people already paying for your services). Remember: Acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Being smart with your time keeps money in your pocket and your customers happy!

Then there’s the sales conversation itself. The goal should be to always shift the sales conversation away from technology, not toward it. By incorporating a free risk assessment into your sales conversation with a client, you could swing the pendulum in the wrong direction. Instead of talking about how you can help prospects with solving their business challenges, you’re evaluating security postures and assessing risk.

The key to leveraging an assessment is to be sure you have an understanding with the prospect on what happens after the assessment. “Mr. Prospect, I am confident the assessment will uncover issues and changes that we would recommend. What would happen next?” If the prospect has no intention of working with you no matter the results of the assessment, you want to know that upfront.

Offering free risk assessments to qualified prospects can work, but first, ask if there is a way to have the same conversation without having to deploy valuable resources.

MSP Business Planning – Measure Twice and Cut Once

I’ve found the saying “measure twice and cut once” to be so true throughout the course of my professional career.

We at TruMethods work with so many business leaders who put in a lot of effort for very little reward. This is why we at TruMethods put such a high priority on our members taking the time to create effective and thorough business plans, and the business planning process in general.

It’s now more important than ever before to have a business place in place. The MSP landscape continues to change at a rapid pace. While one of the hardest things to do in business (and in life) is change, you absolutely need to be ready and willing to make significant changes to your business model in 2022 if you want to survive for what’s coming next.

For instance, you need more dedicated proactive resources to address security, governance and management, a more disciplined vCIO process, and more tools in your stack. Also, your average cost per seat has increased significantly. In other words, our business has become drastically more complicated.

There are several changes you can make to change your business for the better in 2022.

First, you must gain command of your business by having a clear view of your current business. Do you know your numbers? If you don’t, you won’t be able to make the right decisions quickly and efficiently. Next, it’s in your best interest to plan, plan and plan some more. You need a well-thought-out business plan with the right priorities in place. Third, hold yourself accountable by always remembering to follow through on your plan. Lastly, rinse and repeat!

We focus on the business planning process every fall for a good reason. The likelihood of you failing is significantly higher when you don’t have a business plan in place prior to the coming year. Without a doubt, fall is the best time for introspection and reflection.

It’s in your best interest to have the best business plan possible in the new year. The bad news is the risk of poor business planning has never been higher, but here’s the good news: The rewards for a great plan also have never been higher.

I’m encouraging you to fully engage in the business planning process as we head into 2022. If you don’t, I can promise you this: You’re going to get left behind.

Always remember — measure twice and cut once.

You Can’t Make Good Financial Decisions For Your MSP Without Good Information

It’s nearly impossible to make good financial decisions without having access to accurate and reliable information, but gathering that information can be challenging at times, especially when you’re being pulled in different directions. Being that financial planning is an ongoing process, the sooner you begin keeping track of your business’s finances, the better you and your business will be in the long run.

So that begs the question: What financial information should you collect and how often should you collect it?

Whether you like it or not, proper financial planning is key to running a successful business of any kind. The data you collect should be accurate to ensure the decisions you make for your business are the right ones. Staying on top of your business’s finances can make a world of difference, especially when you’re under the gun. There’s always something you can do to put yourself and your business in a more desirable or advantageous financial position.

Some tasks are to be completed annually, quarterly, monthly, and even weekly. And if this seems like too much work to you, think again. World Class MSPs complete all these tasks successfully, and you can, too. You just need to get the ball rolling.

Here’s how often you should complete common financial tasks.

Annually. There are two types of financial planning you should complete annually: life and business planning. Even though these plans are slightly different from one another, they should align strategically with your vision for success (I’ll get into that more later). Both plans ideally should encompass your vision, core values, long-term plan, strategic plan, annual plan, and quarterly action plan.

Quarterly. Your quarterly action plan should be completed — you guessed it — quarterly. For your quarterly action plan, review past quarter’s goals and actions, set goals and action items for the upcoming quarter, and involve team members when appropriate. Also, evaluate your Macro Picanomics, Micro Picanomics, and MRR evaluator.

Monthly. Then there are your detailed financial review, cash-flow, and MSP Turning point, all of which should be updated monthly.

Weekly. There are also financial tasks every you should complete weekly, including assessing your cash balance, payables, and receivables. Even though you’re more than likely already aware of these numbers (at least I hope you are), staying on top of them allows you to make decisions more quickly.

Don’t forget about your personal finances! The above advice can and should also be applied to your personal finances. You must have the same kind of concept, discipline, and command to yield the same type of results with your personal finances. Remember: Your personal and business goals must align if you want financial success in your life.

At the end of the day, visibility enables you to make better business decisions, which is why visibility is so important when it comes to your finances. Basing your decisions on knowledge instead of feelings is how you can operate a financially healthy business in the long run. Let’s go people! Get started today.

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How to Structure Your MSP Sales Meetings

Operating your business at the seat of your pants is a recipe for disaster, as many of us can attest firsthand. But, the same goes for running sales meetings with your salespeople. Without a well-defined structure in place, a sales meeting will produce nothing meaningful and waste everyone’s valuable time. Nothing will get accomplished, nobody will be held accountable, and you won’t sell monthly recurring revenue (MRR) at the right price for very long.

While there are plenty of books about running effective meetings, many of which are well-written and actually pretty good, the sales meeting is a different animal altogether. It’s designed to help you with building and scaling a sales engine, one that produces consistent results — and that requires a different take on meeting structure.

The purpose of the sales meeting is simple — discipline, accountability, education, and positive coaching. You can apply this approach to your sales meetings no matter how many salespeople you have. I know from experience.

If you don’t know me well, you may not know this, but TruMethods isn’t my first business. (Surprise, surprise!) I’ve owned and successfully sold several MSPs throughout the course of my 30-year career in sales. And when I had my first MSP, there was a time when I was the only person at my sales meetings initially (and boy was I hard on myself). I eventually got the hang of structuring my sales meetings in a way that would produce my desired results.

Here’s the thing: The size of your sales team doesn’t matter; the same sales meeting structure applies.

But if you’re lucky enough to have a sales team, your sales meetings should include several other people besides you, including your sales manager, your inside salespeople, your outside salespeople, your marketing person, and possibly your vCIO (it’s good practice to keep your vCIO informed about the deals in your pipeline).

Before they attend your sales meeting, make sure they’re prepared. For instance, they should bring their TruMethods playbooks and be ready to discuss activities, and review first-time appointments (FTAs) and appointments for the week. Once all the right players are together (and they’ve come prepared), commence your meeting.

Understanding what a sales meeting is and isn’t determines the success of your meeting. Great sales meetings deliver structure, brutal honesty, positive motivation, and rhythm. You should hold them weekly (preferably early in the week), ask tough questions during them, and hold yourself and other accountable. Any sales meeting should result in a culture of success, higher expectations, attitude, self image, and self-discipline, and command of the process of building a sales engine.

Bad sales meetings are the opposite. And never, ever use a sales meeting to do the following: explain away poor results, paint a rosy picture of the future, reprimand your team, or complain.

Structure is necessary for meaningful sales meetings. Without it, you run the risk of leaving money on the table.

MSP Sales Mistakes

What it Takes to Build Your Warm 250

The goal of every MSP should be to have a list of “warm prospects” These are prospects that you know a lot about and they know something about you. You feel they are an “A” prospect that you are determined to do business with. Ultimately, you would like to have 250 of these types of prospects. We call this the warm 250! You can spend more marketing dollars on these high-quality prospects and work to build a business relationship with each of them.

Building your Warm 250 isn’t easy, especially if it’s your first go-round. There’s a lot to stay on top of when it comes to building and managing your Warm 250, but once you get the hang of it, closing more deals at the right price will become second nature to you and your salespeople.

If you don’t have a prospect database, build one today. (I’m not kidding!) Drop everything you’re doing and find some time in your schedule to start the process. Your prospect database is essentially a stockpile of market information at your fingertips.

In other words — your database is gold!

But your work isn’t done after you build your prospect database — not by a long shot. What many MSPs fail to realize is that simple and efficient prospect management is essential to closing not just more customers, but also customers at the right price. Categorizing leads is your next step, and it’s one many MSPs forget about.

Separating your leads is important because you need a way to focus and track the leads with the most potential in your database. If you’re unaware, there are basically four types of leads: Suspects, Prospects, Warm 250, and Hot. While all four lead types make up the sales funnel, your leads in the last two groups are ripe for signing.

For the purpose of this blog post, I’d like to focus on your Warm 250.

While your Warm 250 is only part of your prospect database, it’s an important one. A lot of blood, sweat, and tears go into building this category. It contains your best and warmest prospects, all of whom fit your ideal customer profile, in terms of size, location and MRR.

Additionally, you know a lot about the businesses in your Warm 250, for your centers of influences (COIs) and first-time appointments (FTAs) are typically your two primary sources of your Warm 250. Leads in your Warm 250 are an ideal fit for your client portfolio, aware of who you are and what you can provide, and have been reframed. They usually are also returning prospects. The good news for you? They’re in the market to buy. These are the accounts you should spend some of your marketing dollars on!

I frequently get asked, “How often should I follow-up with my Warm 250 prospects?” The simple answer is at least quarterly, but here’s the thing: World-Class MSPs follow up with their Warm 250 prospects more often, and they don’t just follow up with phone calls (so put those phones down!).

World-Class MSPs also send emails to their Warm 250 prospects to highlight client success stories and hold webinars to educate prospects about the benefits of working with an MSP. Most importantly, they seek to add value to their prospects and build business relationships in sincere ways.

Your Warm 250 isn’t something you can set and forget. Your goal should be to improve quality, not quantity once you hit 250 leads. You must update and clean up your list on a regular basis. If you don’t, your Warm 250 isn’t going to be of any use to you or your salespeople.

It takes a lot to build and manage your Warm 250, but once you commit, selling will become a whole lot easier.

MSP Sales Mistakes

Ready for 2021’s Selling Season? It’s Go Time!

If you’re a TruMethods veteran, you were probably expecting this blog post any day now, but if you’re new to the TruMethods framework, this year may be your first selling season. Either way, selling season is underway, and it’s time for you to add new monthly recurring revenue (MRR) at the right price.

“Selling season” is the timeframe between this week and the end of the year when the conditions are optimal to sell new monthly recurring revenue. This is the time of year when decision makers start planning for the rest of 2021 and begin thinking about 2022. They’re evaluating their businesses and making decisions. We need to be part of that process. I’m confident that this year’s selling season will be huge, based on the level of MRR sales that we’ve seen from our members so far in 2021.

Now, I want to be clear, it’s your job to achieve your sales goals every quarter. But during selling season is when we hit the accelerator. There’s something about the psychology of this time of year, as business leaders turn their attention to year end. I’ve seen the impact of selling season over several decades. Every SMB has a new business plan based on COVID impact.

All decision makers are more open to talking and listening. We have great wedges right now with security and collaboration. Our messaging of Technology Success is resonating even more with all these changes. Yeah, man, it’s go time! “Go time” means that you have to do something different. You have to increase time, attention, activity, and accountability around new sales.

Now, if you don’t have a daily plan, weekly activities start now. If you have a plan, relook at it and make sure it’s dialed in. New customers at the right price are the lifeblood of a profitable and thriving MSP.

When I owned my MSP, I had a self-instruction card that I read each day. On it, was the following: “Every day I stay focused on finding new customers. I don’t let busy work get in the way. Success is too important. If you’ve had a good sales year, this is time to make it great. If you struggled so far this year, you still have time to make your goals.”

Remember what I always say: 2022 doesn’t know when you sold the MRR. Q4 MRR may not impact 2021 revenue, but it will have a full impact in 2022. (It’s the bonus round!) Also, think about the same approach for current customers. vCIOs need to understand that their customers are planning for 2022. There are a lot of things they need to consider related to security, collaboration, cloud migration, and other business changes driven by economic changes, supply chain issues, inflation, and other factors.

Dig in now. This is a great sales call talk track for every customer. It’s selling season. Let’s go, people!

MSP Sales Mistakes

Bad MRR: What MSPs Can Do to Eliminate It

MRR is the lifeblood of our company. But is all MRR created equally?

Even though you may find it tedious and time consuming, evaluating your clients is the first step in separating the good MRR from the bad. At the end of the day, what you sell and who you sell to matters.

Another way to think about it is like this: There are good clients and then there are bad clients. While good clients are profitable and good to work with, bad clients are not. Good clients value you, buy into your process and fall into your technical sweet spot, while bad clients do not.

It’s as simple as that.  

But instead of getting rid of bad clients, many MSPs don’t. They unfortunately end up fighting bad clients for years (sometimes forever in some cases). They refuse to fire bad clients for the same nonsensical reasons I’ve been hearing for decades.

We have other important stuff to do! We have too many tickets! Our clients won’t go for that! We don’t want to upset our clients! This is too much work! I just lost a person!

These MSPs are waiting for what they believe to be the “best time to fire bad clients.” They’re awaiting the day when there’s nothing on the calendar, there are no support tickets to resolve, and the sun is shining bright. Well, I’ve got news for you — that day is never going to come.

The reality is this: The best time to fire bad clients is today.

Remember: Money isn’t always the problem. For instance, sometimes a client is an issue culturally. If a client treats your team members in a way that’s against your company’s core values, it’s time to walk away from that client.

Now, reevaluating your clients doesn’t necessarily always produce doom and gloom outcomes. If it’s possible to save a relationship, then do what you can, but my advice is this: Don’t go above and beyond. For instance, you may be able to get the client in question to pay the appropriate amount for the services you’re providing — and that would be a great thing. But don’t settle for anything less than you and your team members deserve.

Settling for anything less than you and your team members deserve puts you in the same predicament you were in before, as the amount of reactive noise that client will produce in the future (and there will be lots of it) will always take precedence over any proactivity.

You get stuck reacting or waiting for things to happen when your reactive noise is significant. And the last thing you want to see as an MSP owner is your reactive noise growing at a faster rate than your MRR. That’s why cutting ties with bad clients and pursuing good MRR is necessary.

All MRR is not created equally. Identifying bad clients is the first step to removing bad MRR. After you do that, you’re on your way to generating good MRR and becoming more profitable than you ever were before.

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Thinking About Switching Verticals? It May Be Time!

While there’s much debate over how many verticals an MSP should specialize in, the general consensus among IT professionals seems to be that specializing in one or more verticals is typically a good business decision for MSPs. But for how long should an MSP specialize in a vertical market? And what are the signs that point to the need for an MSP to reevaluate the verticals it’s conducting business in? Those are the questions that are typically left answered.

This goes without saying, but I’m going to say it anyway — only specialize in verticals you and your employees fully understand, and I’m not just talking about mastering an industry’s IT needs. For example, if you specialize in the restaurant industry, what challenges are restaurants facing? What are the regulations restaurants should be aware of? When you commit to a vertical, fully commit to understanding the ins and outs of it.

One of your top goals should be to become a well-known expert in the verticals you specialize in. So, what does that entail? It requires you to be a step ahead of your customers. You can accomplish that by attending industry conferences, reading industry trade publications and immersing yourself with the industry’s leaders.

But after a while, the vertical you’re in may get a little bit stale, as leads dry up and you begin losing money on your investments. That’s exactly the point in time when you should begin reevaluating where you’re spending your time and efforts. The verticals you’re serving may no longer be serving you.

Questions you should ask yourself include: 

  • Are you struggling with generating additional monthly recurring revenue (MRR) at the right price? 
  • Does the sales process need to be reworked? 
  • Are the margins too low?
  • Is the economy negatively impacting the verticals you’re in?

If you answered “yes” to the above questions, it’s probably time for you to seriously consider switching verticals. The longer you wait to evaluate your situation, the less likely you’ll be able to recover from the losses you may incur. It’s always better to fail fast.

After you’ve decided it’s time to switch verticals, assess your options. Are there other verticals that make sense for you and your business? For example, are there manufacturing plants in your area? Any of those factories in need of IT services? If so, do you have a center of influence (COI) who can put you in contact with a decisionmaker at any of those facilities?

Even when you’re not contemplating switching verticals, pay attention to emerging markets. You never know when they may come in handy. Jumping on the bandwagon too soon may impact your business negatively; however, a deep dive into some of these markets over a long period of time could help when the timing’s right.

Starting over and learning a new vertical isn’t easy, but it may be the right decision for your business.

MSP Sales Mistakes

So You Want to Add $7M of Revenue in Three Years?

I spoke to an MSP a few weeks ago that does about $3 million in revenue, and I would call it low margins. They have been in business for 11 years, and I asked the owner, “What would success look like in three years?” He replied with, “We want to go from 3 million to $10 million in revenue.”

Now, you may have guessed that the first thing I said after being told this was the following: “You should be setting profit goals first and revenue goals second.”

Next, I asked, “What makes you think that you can grow that rapidly when it took 11 years to get the $3 million?” And he replied by saying, “I’m at a place in my life where I really want to focus on my business and growth.”

So, the next question I had for him was, “Have you done the math?”

Let’s break down the numbers together.

Going from $3 million dollars to $10 million in revenue requires an additional $7 million dollars of top-line growth. Assuming 70 percent of his revenue is recurring, that is $5 million of annual recurring revenue (ARR), a little more than $400,000 a month. That means over the next 36 months, he’d need to add around $12,000 of net MRR each month.

Maybe he had a great year last year. His sales team killed it, and he’s now on track to have the greatest year he’s ever had, right?

How much do you think he sold last year? He told me he sold $32,000, minus some churn.

After hearing this, I realize he didn’t do the math. He also didn’t have a business plan in place to match his goals.

Here’s the thing: If you want to be a $10-million MSP, you can be, especially in the marketplace that we’re in right now! But, you need to break down your plan into smaller achievable goals and have command. If you don’t, you’re setting yourself up for failure when it comes to your goals.

To sum everything up: Start with profit first, then move on to your revenue goals, and finally do some of the simple math I’ve shared with you today.

Start by looking through this business plan template. Always remember to make sure your business plan matches your goals.

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Business Person First, Technology Company Second

We are at an historic point in the MSP and SMB landscape. There’s never been more opportunity or risk. I’ve had a consistent message this year: You need to be a professional businessperson as an MSP in order to capitalize on market opportunities that we are now presented with.

As we watch MSP leaders mature their command, business planning and leadership abilities, the results are coming in big waves. Many had their best trailing 12 months in terms of revenue and profits.

The pandemic and cybersecurity landscape overlay the SMB digital transformation. You need to be a business person first and a technology company second.

For example, MSPs are trying to solve their security issues with tools and security knowledge, when at their core, most have a business model issue.

Solving this problem is as simple as setting time aside every week, every month, and every quarter to work on your business. Scheduling this time in your calendar to keep yourself accountable is key. Use this time to evaluate where your business stands today. Ask, “What is my business lacking?”

For instance, do you have a business plan? If you don’t have one, set aside time to create oneWhat about a mission statement, core principles or a vision? What are your targets throughout the year and the next several years? What about a quarterly action plan? Is one in place or are you just winging it?

Even though you’d like it to be, technology isn’t always the solution to the problems you’re having. (In fact, it’s typically not.) By being a businessperson first and a technology company second, you allow yourself to think about problems with your business differently — and that’s for the better.

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