Sustainable growth

The estimates vary by source, but the managed services business has been growing at 5-7x GDP over the past several years in the US, as we reported at our user conference last year. This is a strong growth industry, and there are reasons to believe that this trend will only continue. First, small businesses are predicted to double their IT spending in the next couple of years. This is driven by increased security spending, as well as movement towards cloud applications. These small businesses are not in a position to manage their own IT. Even if they wanted to, finding the talent to build an in-house team is a major challenge in a lot of markets. Small businesses need IT service providers, and will need them more in the coming years.

Managed services is more profitable – for everybody

In the 2018 Global MSP Benchmark Survey, we learned that the greater the percentage of your business is managed services, the more likely you are to see revenue growth. On average, everybody is growing, but it’s just more likely for managed services firms, and they tend to earn higher margins. When you think about, it just makes sense. Instead of earning margins on responding to tickets, your objective is that your clients don’t even send you tickets. There are one-man shops out there that almost never have tickets, and those are some of the most profitable MSPs in terms of margins out there.

What’s more, the managed services model is profitable for your clients, too. They have to weigh the cost of a monthly fee for MSP service versus the cost of downtime + the cost of fixing problems. If you’re in a position to take downtime and problems to a minimal level, you’re adding value for the client. This is another reason why the MSP business model is gaining steam.

Your MSP is your asset

Ok, so that’s a pretty reasonable case for making the transition from break-fix to MSP: the industry is trending in that direction. But here’s an entirely different way to think about it. Let’s assume you’re making a decent living still, in the break-fix business. How much are you saving?

Therein lies the key to making the MSP shift. It’s not that easy to expand a break-fix operation. That is an inherently mom-and-pop business. So what happens when you want to retire? A managed service provider can definitely be a lifestyle business, but many MSPs are also structured to scale. Such MSPs are highly competitive in their respective markets, able to compete on service, price, or any other dimension. More importantly, this growth provides some equity for their owners. If the business is strong enough, it can be sold, and this can provide the sort of payoff that makes working for thirty or forty years all the more worthwhile.

So maybe we’ve given you something to think about. Is now the right time to transition to the MSP business? It sure seems like it.

Find out how IT Glue can help as you make the MSP shift in your own business. Sign up for a demo below or get in touch with your Account Manager.

Yes, sign me up for a demo!

IT Glue is a proven, best practices-driven IT documentation platform packed with features designed to help you maximize the efficiency, transparency and consistency of your team. With so much of your business productivity lost each day in search of vital information, let IT Glue secure this information and start Freeing Minds

The post Now Is the Time to Move from Break-Fix to Managed Services appeared first on IT Glue.

Choosing the right pricing model

Break-fix businesses tend to rely on an activity-based revenue model. Your clients come to you with a problem, and they’re charged based on that circumstance. As an MSP, you’re likely going to shift towards focusing on your monthly recurring revenue (MRR), and thus be charging on a monthly basis.

The key to remember here is that you’re no longer simply stepping in when it’s time to solve your clients’ problems (though your job will still involve some element of that). Rather, you’re preventing problems from happening in the first place. The service you’re providing is uptime, and for that, you’re able to create a more stable flow of revenue.

The further you get into what kinds of services you’re going to offer, the more your pricing model is going to develop. For example, you might offer an a la carte model, where different services are individually priced, or where some are bundled. On the other hand, you might focus on price per user, rather than per service, where every user receives the same service for the same price. There’s a wide variety of opportunities to hash out here, and they’re not going to come together overnight. Take your time looking into what models are best for your clients and for you.

Mastering your service level agreements (SLAs)

Transitioning from a reactive service model to a proactive one completely alters how your business operates. Your SLAs are an integral part of establishing what your clients can expect from you. They include items such as uptime, how many tickets you might solve per day, or ticket response time. Making these agreements is what holds you accountable for your services. Plus, when you’re achieving great SLAs, your clients are going to notice, and not only is that going to solidify your relationship with them but it might also draw in new business.

Keeping up with quarterly business reviews (QBRs)

If you think QBRs are a hassle, think again. They’re an opportunity. QBRs offer you the chance to sit down with your clients and discuss what’s working and what isn’t – your success, and how to combat your failures. Be wary of treating it anything like a PowerPoint presentation. Instead, treat it as an opportunity for you to extract value and deepen your relationship with your clients.

When preparing for the QBR, and yes, you should be preparing, avoid making the discussion entirely on your success story. It’ll come across as a sales pitch, and won’t bring you anywhere near the kind of value you’re looking for. On the other hand, when you go into it prepared to listen and respond to your customers’ needs, you’ll be in a better position to help them grow, and in turn, help your overall business grow.

Focusing on process

Process, and more specifically, documenting your processes, is how you meet your SLAs, and it’s how you deliver an exceptional quarterly business review. When you’ve got concrete processes in place and documented in one central, secure, and accessible location, your entire team is in a better position to boost your operations. Not only can you develop reasonable SLAs that you actually meet, but you can show (rather than simply tell) your clients how you’re going to hold up your end of the bargain, or better yet, how you’re going to go above and beyond.

When considering how you’re going to tackle your pricing and your operations, don’t underestimate the value that documentation holds. In fact, it’s the one tool you can count on that’s going to assist you every step of the way as you transition from the break-fix business model to building an exceptional MSP.

Interested in learning what IT Glue can do to increase efficiency and fuel growth in your MSP? Sign up for a demo below or get in touch with your Account Manager.

Yes, sign me up for a demo!

IT Glue is a proven, best practices-driven IT documentation platform packed with features designed to help you maximize the efficiency, transparency and consistency of your team. With so much of your business productivity lost each day in search of vital information, let IT Glue secure this information and start Freeing Minds.

The post Transitioning from Break-Fix to Managed Services Part 3: Pricing & Operations appeared first on IT Glue.

Differentiation

Your sales and marketing strategies depend largely on understanding what differentiates you from other MSPs. In some cases, this might surround what verticals you focus on or a specific area that you excel the most in. On the other hand though, differentiation might often feel like a real struggle to achieve. If you have the time and resources, it’s best to work on developing a skill set, tool, or approach that is genuinely different from your competitors and will provide value to your clients.

Even if you aren’t differentiated, always present yourself as being unique and avoid falling into the trap of differentiating based on only price. Your sales and marketing tactics help with this.

Building a successful sales team

You’re going to need a designated sales team. We get it, most IT folks aren’t jumping up and down at the thought of sales or marketing for that matter, and that’s fine, as long as you have someone in place who is. Start by hiring your first salesperson, and go from there.

Whether you’re hiring internally or bringing in new talent, there needs to be a widespread understanding that selling services as opposed to a product, requires a different approach. There’s a good chance you’ll lose some business during this transition – not everyone is a fan of change, but hang tight because your designated sales team will make up for it.

Prioritizing your customers’ needs

When your sales team starts hitting the phone with prospects or current customers, their conversations should be framed around how the prospect or customer can benefit and find value in your services. This seems pretty straight forward, right? But no, discussing all of your fancy features is far from the point. They need to be able to explain how specific features will solve specific pain points. It’s not just about what you offer, it’s about how what you offer provides value for the client.

Getting started with marketing

Between getting a solid website up and running, ensuring you’re populating your social media apps on a regular basis, crafting email newsletters, and offering customer testimonials, you need a good strategy. While I can’t possibly run through all the important pieces your marketing strategy should include, here are a few key tactics to consider.

Testimonials
Customer testimonials are an awesome way of building trust with current and future clients. When you’ve got specific customers that you know are a huge fan of what you’ve done for their business, these won’t be hard to get either. Start by reaching out to a few key customers that perhaps have a unique story to tell based on your services. This will help not only throughout the transition process but as you continue to bring in new clients.

Email
Email is still alive and well in the marketing game. For capacity sake, and to ensure you’re not bombarding individuals with emails, start with considering offering an e-newsletter. This could be bi-weekly or monthly and allows you to keep your partners and prospects up to date with what’s going on. Whether it includes special deals, dates of important webinars, your latest content from your blog, features releases, or anything else for that matter, it keeps your audience informed.

Social media
Yes, MSPs should have a social media strategy. The key here is to figure out what social platform works for your business. As an MSP, Instagram probably isn’t going to be the spot where you rein in all those prospects. It could be however, an excellent way for you to showcase company culture and bring in future employees. In our experience, LinkedIn and a Facebook business page are excellent starting points for creating and maintaining an interactive space with your audience, and Twitter is a perfect spot for keeping things current when it comes to updates and responding to customer inquiries.

The transition from the break-fix business model to MSP isn’t going to happen overnight. It’s going to take time, dedication, and strategy. While sales and marketing may not be your forte, don’t let their importance hit the backburner. Next week, we will tackle the transformation in your pricing and operations.

Interested in learning more about how IT Glue can help facilitate success as you transition into your MSP business? Sign up for a demo below or get in touch with your Account Manager.

Yes, sign me up for a demo!

IT Glue is an award-winning documentation platform that allows for efficient storage and retrieval of all the documentation you need to help your MSP run better. By integrating PSA and RMM data, we can help increase your efficiency, and reduce onboarding times by even more. By eliminating wasted time from your business, IT Glue gives you more time to focus on what matters – growing your business.

The post Transitioning from Break-Fix to Managed Services Part 2: Sales & Marketing appeared first on IT Glue.

Before you take the plunge and get into the nitty-gritty of transitioning into your own MSP business though, you need to start with a shift in your mindset. Running an MSP has a lot of differences in comparison to break-fix, like how you tackle your pricing, operations, or sales and marketing, but by far one of the most key elements surrounds the change in your overall role.

Relationships

As an MSP, your role has less to do solving your clients’ technological issues on a case-by-case basis as it does making sure you’re consistently preventing them. In other words, your role is preventative rather than reactive. Keep in mind that when your clients start to notice that they’re not consistently coming to you to fix stuff, they’re going to wonder what they’re paying you for. Of course, that’s exactly where their money is going. So they don’t have to be running to you every other day with a new problem. (Ok, you’ll probably still have a few tickets, but that’s not the heart of your business anymore).

Your relationships with your clients are going to change. Which is to say, you should be paying attention to how you can foster valuable relationships with your clients in the long term. As an MSP, you step into the position as a trusted and strategic advisor, working with your clients rather than simply working for them.

Opportunities

Whether it’s artificial intelligence (AI), automation, or anything else for that matter, there’s always going to be new and exciting developments in technology. This also means that your customers are always going to be demanding new services. The awesome part is that this lends itself to some excellent growth opportunities for you. It also means though, that you have to stay in the loop with what’s out there, not just in terms of what new tech your team might be interested in, but what your clients are looking into.

Lean

Break-fix options tend to be very small shops with a focus on carrying out specific and individual tasks. An MSP opens up the door to start focusing on multiple tasks associated with running a business. To do this, MSPs are built to operate in a lean matter, creating a business that is designed to scale. The lean methodology itself requires a shift in your mindset, one that will make your business more efficient and profitable.

Suffice it to say, the transition towards managed services depends heavily on how well you understand your new role. Don’t simply start by throwing out a new pricing model (though we’ll talk about how to tackle this in the coming weeks), start by shifting your mindset.

To learn how IT Glue can help you achieve MSP excellence through solid documentation practices, sign up for a demo below or get in touch with your Account Manager.

Yes, sign me up for a demo!

IT Glue is an award-winning documentation platform that allows for efficient storage and retrieval of all the documentation you need to help your MSP run better. By integrating PSA and RMM data, we can help increase your efficiency, and reduce onboarding times by even more. By eliminating wasted time from your business, IT Glue gives you more time to focus on what matters – growing your business.

The post Transitioning from Break-Fix to Managed Services Part 1: The Mindset appeared first on IT Glue.