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.