Building Your MSP To Be A Heavyweight Company
Shane Swanson, ARRC Technology COO and CharTec operations trainer, answered Business Solutions’ questions about what steps are necessary for MSPs (managed services providers) to expand their businesses by maximizing solutions, automation, and processes.
BSM: For MSPs who want to expand from a micro- or small business, what are milestones they must reach before expanding?
Swanson: You need to focus on improving your efficiency and effectiveness of customer and technical service prior to considering growth. You can do this by creating, monitoring, and measuring against budgets, defined KPIs (key performance indicators), and a business plan. If you try to grow without shoring up these items, you will be missing a vital foundation. You’ll end up hiring the wrong people, sacrificing margins, and ultimately losing clients.
BSM: Does growing always mean adding more people or could it mean adding more services and automation? Please explain for our readers.
Swanson: Growing does not always mean adding more people. In fact, before you start writing that job ad, stop and consider whether you’re really ready to add another person.
- Do you have a full training program in place so that you set them up to succeed?
- Have you standardized your product offering? Is that offering consistent, efficiently deployed and serviced, and most importantly profitable? Effectively implementing your solution set and appropriately adding new innovations without constantly chasing a shiny penny can be the best way to grow.
- Do you have your processes documented? Whether it comes to sales or service, all of your employees should understand the expected SOP and be able to operate within it. By keeping all of the information in your head, you’re stifling most of your potential growth. As you assess these processes, consider what could be automated to cut costs. You ultimately will need to hire people to continue to grow, but make sure you’re maximizing solutions, automation, and processes first.
BSM: Which KPIs should MSPs watch as they expand their businesses?
Swanson:
- Cash Flow
- Profitability by product line
- Profitability by agreement
- Service Efficiency (SLAs on tickets, ticket management, inventory management, project management)
- Effectiveness (Accuracy within deadline)
BSM: How does a growing business require the business owner to take a different perspective and a different role?
Swanson: Most of us started our businesses as technicians, working in the business not on the business. Growing requires us to take a more overarching, analytical approach. This involves looking more closely at the numbers, driving decisions based on budgets, performance, and KPIs, and hiring the right people to fill the roles that you used to play, giving you the opportunity to be full time business owners, leaders, and a CEO.
BSM: What are goals MSPs can set today that will help them on the path to expanding their businesses?
Swanson: Focus on really understanding why you’re in business, not just that you’re there to make money. Define core values and instill them into your culture. This will guide your business no matter what phase you’re in. Without this foundation, things will fall apart.
Plan for the people you will need. The people that are in place today may not be the same people you need in five years. Plan your business around the roles needed, expectations and KPIs therein, so you don’t get stuck when you have someone that is on the wrong seat of the bus or decides to leave for another opportunity.
Anticipate that everything is not going to go according to plan. Be prepared to zig and zag when things change, and ensure that you have a mentor that will lead you down the correct path.