Times are changing, and so are your clients’ needs. MSPs are making the same mistakes and wondering why they’re not growing. I’ve boiled it down to three common problems I constantly see stunting MSP growth and how to avoid them.
1. You’re Not Scalable.
What can happen is that your customers will want to pick and choose which service offerings they want and what they don’t want to pay for. Then all your packages get carved out. So at that point you’ve let the customer define your managed services agreement. This is a bad idea! You want to lock in standard packages because otherwise how are you going to scale? How are you going to build? How are you going to keep track of this customer?
One of the reasons that Southwest Airlines was so successful and is still successful today, is because one of the decisions they made when first starting out. They decided they were only going to have one type of plane. Most other airlines have 30 different types of planes, which means they’ve got to have 30 different pilots and they have to have 30 different technicians who know how to work on 30 different types of planes. Then they would have to have spare parts for 30 different types of planes. That type of complexity would increase cost. So Southwest decided to keep to only the one type of plane, resulting in a scalable business.
They could properly staff for it. Because they only had the one type of plane, they always knew what they were dealing with. In the case of owning an MSP, you must understand that when you design your programs, you have to make sure you have them clearly defined. YOU are the only one in charge of telling your clientele what your offerings will be, and this is what will keep your managed services business scalable.
2. You Take Cheap Customers.
It’s better to walk away from a deal than to take a customer at less money than your services are worth, because all they will continue to do is suck up your resources. Eventually, you’re going to paint yourself into a corner. So let’s say you have a cheaper competitor in your area and they keep undercutting you. Let them get all the customers they want. Because what’s going to happen next, is that the competitor will eventually get to a point where they can’t handle the workload. They will be forced to hire somebody because it’s either that or they can’t take on another customer.
All because they became so burdened and saddled with cheap customers. At that point they may not even be able to hire. The cheap customers will start to stall their IT services business growth. They won’t have the money to invest in automation. They won’t have the money to invest in people. That is definitely not the way you want your MSP growth either. You’ve got to make sure you have correct profit margins.
3. Your Offerings Aren’t Competitive.
You have to be able to compete with the market. You have to offer services like cybersecurity, managed services, and compliance. If your target market is medical, or CMC, you
better have compliance. Companies that have compliance in areas their competitors do not, are taking clients away from other MSPs like candy from a baby. Their competitors are not even talking about compliance much less offering it. You will either get to the point in your business where you are forced to do compliance work, or lose your customers to MSPs who are doing it.
The great opportunity for you now is that there are less than 15% of all MSPs out there selling compliance as a service. This will help you not only be competitive, but it will 100% help you to differentiate yourself.