Scaling Your Managed Services Business: 7 Steps for MSP Success

A mentor of mine used to say, “If owning your own business were easy, everyone would be doing it.” Well, today, there are many factors that do make owning a MSP business easier than ever. For one thing, we’re living in a time when organizations are going through a massive digital transformation. Even the smallest of businesses are realizing they need to shift some or all of their business operations to the cloud. They need expertise, assistance, and guidance to make that happen.

Author: Nick Cavalancia
Author: Nick Cavalancia

Of course, the cloud is providing huge opportunities for MSPs, as well. Twenty years ago, if you wanted to provide offsite backup and recovery, you had to purchase all the hardware and host it yourself. Today, the cloud offers compute, storage, networking, applications, and more at (quite literally) the click of a button. Add on top of that revolution the explosion in MSP-centric platforms and solutions and aspiring MSPs have all the tools necessary to augment their services and get their own businesses off the ground.

But if all of that is true, why do MSPs still fail? The truth is getting started and gaining traction can still be incredibly challenging, especially as the market gets increasingly crowded and competition heats up.

If you’ve made it past that point and you currently have your sights set on growing, congratulations — that’s no small feat! Scaling your business will introduce new challenges, but many are challenges you can overcome with proper planning up front. That can be difficult to do when things are moving fast and you’re head down in work, of course, but it’s work that will pay off exponentially and save you loads of time down the road (things have a tendency to only get more complicated as you grow — better to do the hard foundational work now).

With that, here are seven key things you should focus on accomplishing before you attempt to scale that will help pave the way to your success.

1. Define what “growth” means for you

Do you want to turn your MSP into a multi-million-dollar business, or do you have your sights set on something a little less ambitious? Deciding what type of company you want to build and what you want your quality of life to be over the coming years is the first big question to tackle.

Once you’ve made up your mind in that regard it’s time to get more granular and pin down more near-term goals. They can be as simple as more generating a particular amount of new revenue or new customers. They can involve landing larger-sized customer organizations, moving into a new services segment, or a combination of those things.

Whatever they are, having clearly defined goals will help provide context around what steps will be needed to accomplish them. The important thing is to make your goals specific, realistic, tangible and time-driven. For example, your goal may be to “increase customer count by 10% within two quarters.” Without a specific goal and a specific deadline, you’ll never hit it.

2. Make sure you’ve achieved a good service/customer fit

Nearly every MSP has their customer sweet spot. It may be based on size, industry vertical, applications used, compliance mandates, or a variety of other factors. Whatever it is, understanding exactly what your ideal customers look like (size, # of locations, staffing, etc.), what their pains are (e.g., productivity, security, compliance, etc.), and how to connect with them (e.g., marketing channels, community groups, events, etc.) should inform every subsequent step towards growth.

3. Lay the groundwork for predictability

Predictability breeds profitability. But it also requires having the right systems and processes in place that can provide you with visibility into how your business actually operates. Scaling your services (and introducing new ones) requires coordinating many moving pieces and adjusting many dials. You may run into a host of requirements, from purchasing new software to adjusting your billing to hiring and training new techs. You need to have a clear picture of your current operations and performance so you can reasonably predict those requirements as you scale.

4. Break down the anticipated impact of growth on everything (and everyone)

From service delivery to the back office, scaling business operations means understanding how growing one part of the business (e.g., headcount, customers, services, etc.) impacts the rest of the operation – and planning for those repercussions accordingly.

More customers or services will impact service delivery. Be thinking about your billable labor (read: techs), software and cloud licensing, as well as hardware infrastructure needed to provide the same level of service delivered today.

In addition, no tech is an island. Mid-sized and larger MSPs will likely have folks on the backend handling accounting, administration, payroll, etc. Plan out how growing will impact these parts of the business.

5. Make sure you can measure customer service levels and satisfaction

The fundamental step here is to make sure the service levels you’ve been providing your current customers don’t drop. Since this is rather subjective, it may be necessary to use some metrics. Think about this in terms of tech hours, response time, meeting SLAs, and any other metrics that are used to measure service.

While metrics are one way of confirming if you’re still providing the same level service, however, it’s also possible for your customer simply not to “feel the love” coming their way. For that reason, it’s important to put additional emphasis on speaking with customers, directly. If you’re not already doing quarterly customer meetings to cover what transpired over the last three months and hear about their concerns and plans, now is a good time to start.

6. Plan for hidden costs and drains on resources

There will, no doubt, be costs you didn’t quite expect. Tech utilization will likely have some high and low points, which could cause turnover in staffing. New customers could want out-of-scope service provided, which impacts your capacity and predictability. Current customers could feel neglected, which may force you to provide additional service at no cost just to make them happy. It’s therefore generally a good idea to plan on more or less everything being at least a little more expensive and time-consuming than you initially think. Plan and budget accordingly.

7. Invite your team to review your plan and scrutinize it

Time for me to acknowledge there’s an aspect of all this planning that seems very hypothetical. That’s why, in addition to developing a growth plan on your own, you should walk through various scenarios with members of your team. It’s a great way of talking through how each aspect of scaling will truly impact the business, and you’re essentially guaranteed to uncover a few issues you hadn’t thought of.

Scaling is hard. But with sound planning and an understanding of everything your plan impacts it’s possible to avoid most pitfalls and build a larger business that is both more predictable and more profitable.

For more tips on taking your MSP to the next level, see NinjaRMM’s new guide, 5 Steps to Growing Your MSP Business.

Contributing on behalf of NinjaRMM, Nick Cavalancia has more than 25 years in the IT industry - with 10 of those years as a tech marketing executive – and is the founder of Techvangelism and Conversational Geek.

Sponsored by NinjaRMM

NinjaRMM develops a security-centric remote monitoring and management platform, designed to simplify the complex work day of MSPs and Solution Providers. Guest blogs from the NinjaRMM team provide business, sales and technology guidance to MSPs.