How To Set-Up Your IT Business For Sustainable Growth
Failure is a key ingredient in every success story, not only in the IT industry, but in business in general. As you are trying to stay afloat within the “current” of the day-to-day operations, you will make mistakes. This is a natural occurrence and should not be looked at with a pessimistic point-of-view.
Our Managed Services company went through similar growing pains and there were time when we couldn’t seem to get out of our own way. Whenever we thought that we had found a clear path for growth, there was something waiting around the corner to derail our progress and strip away our profits. After awhile we decided that it was time to take control of the situation. From that point forward we put out an intense amount of proactive effort to correct our mistakes and set our company up for success.
Here are a few of the most important areas that we needed to drastically improve on, that you may need to address as well:
Refresh Your Branding
Let’s face it, IT companies are not known for their epic branding. Most company names appear to be some play on the words “tech” or “IT” with a clever pun mixed in between. We were guilty of this as well and in my opinion it is part of the “charm” of small IT providers.
Regardless of the name, one thing that is important to address before growth is your logo and branding assets. If all goes well, your brand will be well-saturated and become a well-known mark within the industry. For maximum effect, your brand must be consistent across all off these impressions that you receive. This requires that you have an updated logo with the appropriate file types, color schemes, fonts and images readily available whenever you need them.
If you do not wish to update your logo entirely, simply contract a designer to have it redrawn in vector and high resolution formats and provide you with a style guide. Having this on-hand will allow you to use various freelancers, designers, or agencies for different parts of your marketing all while maintaining a consistent image.
CURIOUS WHERE THE OPPORTUNITY IS IN 2021? LEARN FROM THESE 10 BOLD PREDICTIONS BASED ON INTERVIEWS W/ OVER 250 INDUSTRY EXPERTS, EXECUTIVES & ADVISORS.
Refine Your Bookkeeping
There is a Maya Angelou quote that reads, “you can’t know where you are going until you know where you have been.” I don’t believe Maya was referring to financial reports, but it remains true nonetheless. Keeping accurate records is imperative to execute on your growth strategy.
Unfortunately for some, having great technical skills in the IT industry and being able to read a Balance Sheet are two entirely different skill sets. This can become an issue as your business grows and you need to make decisions, but can’t trust your numbers with complete confidence. Our firm faced a similar problem and the solution was not a simple fix.
After several weeks and countless of hours of reorganizing our ledger to make better sense of our financial state, we were finally able to get a better understanding of where we stood. From there we hired a Bookkeeper to classify our expenses on and ongoing basis and make sure all future transactions lined up just the way we wanted. Once we could trust our numbers, we were able to design new reports that we ran on a monthly and quarterly basis to detail where we stood and what growth we could expect in the future.
Package Your Services
Selling “Managed Services” is all about packaging various solutions together to provide a valuable technology offering to businesses. As time passes, the needs of these businesses will change and your packaging must change with it. Think about this in the context of your home television and internet package. Rarely is this a static offering as channel lineups frequently change as well as new apps and faster speeds being introduced. As a customer, if you do not feel like your provider is keeping up with your needs, you will inevitably switch services.
When it comes to growth, your service packaging must be well thought out and flexible enough to be adapted to the future needs of the customers you intend to acquire. The last thing you want to do is bring on a herd of new customers with service packages that contain either the wrong solutions or the right solutions at the wrong price.
Instead, take time to meet with new vendors, seeing what is available within the channel, and put together a well constructed offering that you are confident will hold its value. Branding your package with a unique name will not only help to draw interest from your prospects but it will also differentiate the offering for existing customers that may need an upgrade.
10 IT-FOCUSED CONTENT IDEAS PER WEEK FOR JUST $7 PER MONTH. USE PROMO “SPRING” UNTIL 8/30.
Understand Your Costs
Circling back to the topic of bookkeeping, there is often a discrepancy between what an MSP believes their costs are for a specific product or service and what they actually are after the transaction takes place. When you provide a labor-intensive service such as Help Desk as part of your offering, your costs will vary greatly from customer to customer which makes it difficult to price your services at a consistent profit.
In addition to service costs, fluctuations in the cost of network appliances and hardware can create an even bigger nuisance. Most small-medium MSPs do not keep inventory and order parts and equipment as it is needed. With the lapse of time between when a quote is created and when it is signed being unknown, there are many occasions when the price of the products will increase by the time the MSP goes to purchase them. This can cut into their profit significantly and in my opinion is one of the more frustrating parts of the business.
The solution to this is to maintain a constant awareness of what your costs are and put standards in place to control them. For example, explore vendor options that offer consistent pricing that will not fluctuate in an “e-commerce” model. Also be tedious about tracking the cost of your workforce (including any and all overhead expenses) and keep these figures up-to-date in your PSA. This allows you to pull reports that detail labor costs on any contract and gives you more data to work off of when packaging your service
Establish Customer Fit
When your business is young, you tend to jump at opportunities that may end up being more trouble than they are worth. This is very common and having these experiences is what allows MSPs to learn what their best customer fit should be moving forward.
As your business grows these incoming opportunities will increase in frequency and you need to prepare yourself and your team to handle them appropriately. This means being able to spot a bad opportunity in advance and being selective about the prospects that make it all the way through your funnel to be quoted.
The best way to do this is to evaluate your existing customer base (we use a system called “the 5Rs“) and look for good and bad trends in your relationships. You may find that specific characteristics such as company size, industry, or territory can act as indicators into the quality of a customer. Once you have an understanding of who your best customers are, then it becomes as simple as narrowing your targeting to match your findings, thus bringing on more customers with beneficial qualities.