Starting a new business from the ground up isn’t easy. It takes a lot of time, hard work, and careful planning just to get the doors open, and keeping them open is an even bigger challenge. Depending on which industry you’re trying to gain a foothold in, what exactly you’re up against can vary.
When it comes to launching an MSP, there are a few things you should be keeping in mind. Spade Technology CEO Myles Keough spoke with MSPmentor.net as part of their If I Were Launching an MSP Now series, and shared three pieces of advice he would put to use if he were trying to start Spade Technology today.
Strive For Profitability Right Away – Turning a profit should be a priority for any business, but it’s important to make it a top priority for a few different reasons. Becoming a high-profit organization as quickly as possible gives you the financial freedom to build your business faster. As the saying goes ‘you need to spend money to make money,’ but in order to spend money, you need to have money.
Often, business owners will try to grow faster than they really should, figuring that while they might be losing money initially, bringing in more clients and more money now will make the business more profitable later. What actually ends up happening is that you’re not able to budget for the staff and resources needed to deliver on the promises you’ve made to clients, leaving those clients dissatisfied and potentially hurting your reputation.
The key is to grow your business at a pace that allows for your services to be consistent and gives you the time to properly train staff and bring things like automation and other solutions that boost productivity and efficiency into your operations before you start on boarding more clients. By building yourself into a high-profit business early on, you have the ability to bring in more clients at a faster pace, to have better overall results, to differentiate yourself from your competitors, to create a better workplace culture, and to attract better people to your team.
Bring On The Right Clients – The goal of any MSP is to grow your client base, but you shouldn’t let the need to pad your roster lead you to working with clients that you know aren’t a good fit for your business. There are A level clients, B level clients, C level clients, and D level clients. You want to focus more on your A and B clients, but the reality is you’ll spend just as much time focused on your C and D clients. C and D clients are quite often less profitable for you than A and B clients, which means you’re getting less of a return on the work your team puts in for a D client than an A client.
C and D clients might not necessarily be paying less for your services, but they’re the clients who tend to disagree with the way your team does things, push back against your recommendations and advice, and do little to no work on their end to help with projects. These “problem clients” distract your staff from your A and B clients, and drag down productivity as a whole.
These clients will end up affecting employees morale, all of your A and B clients, and your bottom line. Starting right from day one, focus on being a lot more selective as to whom you do business with, as opposed to doing business with anybody you can sell to at any given moment.
Jumpstart Sales Right Away – While rushing into building a massive client base isn’t smart, neglecting sales altogether until you need new clients isn’t smart either. Focusing entirely on service quality and ignoring sales creates a situation where your team isn’t used to the on boarding process, which leads to staff forgetting about existing clients while they try to get new one settled.
That type of thinking tends to lead to binge selling, where your team would spend a few months bringing in a ton of new clients, and then find themselves juggling resources between old and new clients for months on end and making no one especially happy – including your staff. By making sales a part of your routine, you can bring on new clients a few at a time on a continual basis and make on boarding a familiar part of your day-to-day.
Your goal should be to have a consistency to all aspects of your operations, including sales. Your business needs new clients to continue to succeed, which means that a new client shouldn’t throw a wrench into the works. An essential part of your business shouldn’t be an ongoing struggle for you or your team. If it is, you need to look at doing things differently going forward.
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