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Is Your Managed Services Business Running Into These 5 Problems?

Posted December 13, 2016by Ray Vrabel

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The managed services market is predicted to grow from $145.33 billion in 2016 to $242.45 billion by 2021 at a 10.8 percent CAGR! With such an outlook, it's no wonder so many MSPs are seizing this opportunity.

Whether proactive IT management has been your primary business model for years or you're exploring the managed IT services advantage for the first time, the potential for revenue growth is significant. Yet, maybe you've struggled to capitalize on this growing market. You're not alone. Here are five of the most common problems MSPs encounter and how you can avoid these pitfalls in your own business.


1. Steadily Increasing Sales

If you want to grow your MSP business, you need to find a way to steadily increase sales and monthly recurring revenue (MRR), be it through new client acquisition, upsells or cross-sells. Although many MSPs simply rely on referrals in order to generate new business, this is not a sustainable model. To help you break out of that mindset, we continually develop content designed to assist readers in transitioning from referral only in order to sell more managed services. Here are a few key themes typically explored: 

  • Lead with something the competition doesn’t. You can’t afford to be a "me too" seller in an increasingly crowded market. Find a way to differentiate yourself, your service offering and/or your outsourced approach to stand out from other providers.
  • Hire professional sales people. Yes, it can be a pain to identify real sales talent, but there are ways to find the right people. While it takes an investment in time and resources, hiring strong sales personnel will benefit you in the long-term and help you consistently win new business.
  • Stop planning and start selling. It’s important to be strategic when selling your IT services, but don’t paralyze yourself by over-engineering everything. Like all things in business, it takes time to learn and evolve your strategy to fit the market you’re selling to. Don’t be afraid to get started! Just be sure you’re tracking your successes and failures so that you can learn from your experiences. 

2. Marketing Your Business

Marketing goes hand-in-hand with selling. Having a sales team with no marketing counterpart is like having wide receivers with no quarterback. You need someone to throw the ball so that your sales team can start catching it.

Many MSPs struggle with building a marketing program because they simply don’t know how to get started. Marketing does not need to be a foreign concept just because you consider yourself a “tech guy.” Here are a few ways to begin effectively marketing your IT services:

3. Staffing

Staffing is difficult for any business. Are you utilizing your tech staff to the fullest? Are they working on the right projects? Is it possible to stay ahead of the curve and predict where you might need staff in the future?

Consider the following best practices:

  • Outsource portions of your business which can be more difficult to manage and keep appropriately staffed. Perhaps you offer service desk services that don't scale and overburden talented employees. 
  • Don’t get caught short-staffed. Having an influx of new business can be a good problem to have because it means you're generating additional revenue. But if you can’t adequately support each client, service delivery will suffer and customer satisfaction will likely decrease, leading to more critical problems in the future.
  • Build a road map of employee needs. This may seem tedious but planning beats reacting any day.

4. Finding the Right Vendor

Simplify IT management by finding the right vendor to help facilitate your growth. Besides avoiding these red flags when evaluating platforms, look for a provider that: 

  • Aligns with your business model.
  • Fills the most important gap in your business and that scales with you.
  • Offers flexible pricing.
  • Focuses on continuous innovation to accommodate new technologies. 

5. Achieving Operational Efficiency

The right vendor should offer the technology and support needed for you to empower staff, achieve operational efficiency and grow your business. It can't be understated that your provider should be held responsible for helping you scale service delivery profitably. Additionally, keep the following in mind:

  • Don’t become complacent. The MSP space is very fluid and you will need to be aware of and adapt to the shifts occurring in the industry.
  • Experiment but be sure to "do it wrong quickly." This concept is critical and has been used by successful players in the Internet space for many years already.
  • Seek guidance from those who have also faced operational inefficiencies. If you're not currently speaking to other MSPs or if you prefer to keep your own business challenges private, consider finding leaders at similar, noncompetitive businesses to consult online or in-person.


We realize that MSPs face many more issues than just these mentioned here, but we hope this post helped you identify solutions to business areas that need improvement. And if marketing, in particular, is a challenge for you, check out the following introductory eBook! 

The-Complete-Guide-to-MSP-Marketing-eBook

 

Ray Vrabel is Continuum's Director of Technical Account Management and participates in product and service growth initiatives, and also manages Continuum's Technical Account Management team, which supports over 3,500 partners worldwide. Prior to Continuum, Ray joined Zenith Infotech in 2005 and held several positions including Service Desk Manager, Sr. Technical Account Manager and Sr. Manager of Service Operations. He currently has over 15 years of experience in the IT industry, specializing in Managed Services, Disaster Recovery, and Cloud Solutions. Prior to Continuum and Zenith, Ray worked at ANH Refractories, a world-class provider of Refractories products, in their Service Desk Department supporting 53 locations and 1,500 employees. Ray also worked for a startup venture at Body Media a pioneer in wearable body monitoring systems as a technical lead in their Technical Customer Support Department. Ray holds a Bachelors of Science in Business Technology Support and Training from Indiana University of Pennsylvania.


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