Do you have the right mind-set to lead a successful MSP business?
Not everyone can lead a Microsoft or Apple.
Nevertheless, many MSP owners are working hard to scale up their businesses – some very successfully, as evidenced by the ‘trailblazer’ MSPs I heard speak at recent events.
This got me thinking about what makes the difference between successful MSP leaders and those that are just ticking over.
From my own experience of partnering with MSPs, as well as from industry commentary, the MSP leaders who are most successful seem to share a number of common traits.
The first was covered in my last blog How well do you know your MSP business in numbers? Successful MSPs ‘know the numbers’ that underpin all areas of their business and can therefore make better informed decisions.
This blog focuses on a further ten characteristics that successful MSP leaders often have in common.
- A clear vision
They know exactly what they want to achieve and can articulate the value of this to staff and customers. They are also prepared to commit the resources required to achieve this.
Sometimes this vision is the result of time spent working for big IT service providers – and deciding that there is a better way to do things.
For example, the founders of one of our own MSP partners, US-based Dynamic Strategies, realised that the larger global service providers they were used to working with were often inflexible in terms of meeting client needs. They therefore imbued their own new company with a strong focus on customer satisfaction, combined with a willingness to ‘deviate from the cook book’ when necessary. This ethos has stood them in good stead over the years as they have brought large client experience to SMBs.
Another of our MSP partners also wanted to ‘shake things up’ in IT service delivery. His vision was to take a ‘Fortune 500’ approach to managing technology and apply it to SMB customers. His aim was to offer ‘true value’ that would have a real impact on the SMB’s business.
Successful MSPs are also likely to set high goals. They don’t just settle for doing what every other MSP is doing – they aim for something higher.
It’s a crowded marketplace, with many MSPs jostling for SMB attention. Successful MSPs find ways to differentiate themselves from competitors and can articulate their USPs to prospective customers.
They may do this by specialising in a vertical sector that is particularly complex or challenging – Healthcare, for example. Or, they may build up a reputation as a provider of a particularly valued IT service such as BDR.
Geographical focus can also be a good way to carve out a clear niche – and it is a strategy that has worked for a numbers of our MSP partners such as Shackleton Technologies in Scotland and centrexIT in San Diego.
Focussing on a certain size/type of customer can also be a useful differentiator – and makes sound business sense too, as in (4) below.
- Strong company culture
When you first set up as an MSP, your company culture is based on the vision you set – and the type of people you recruit to help you achieve it. It becomes a more formal process much later.
I asked one of our MSP partners about what makes a good company culture and he stressed that you have to build a company that people will thrive in. That means you have to keep growing to create upward opportunities. If you don’t, your staff will find their opportunities elsewhere.
- The right customers
As a new managed services business, it’s tempting to sign up as many customers as you can. After all – who in their right mind would turn away business?
Well successful MSPs seem prepared to, becoming more selective about the customers they take on as they grow. They start by identifying their ideal client profile. This can depend on many factors, including company size, complexity, budgets, level of IT expertise, willingness to change and growth prospects.
One of our MSP partners expresses this very clearly. Over time, he has shed clients who are “just noisy, not able to pay for changes, not making the right changes. For every $10k a month client we would bring in, we would get rid of a $1500 a month client that just wasn’t budgeting for technology the way that we wanted them to and it wasn’t a good partnership.”
At Inbay, our ideal partners are MSPs who are committed to scalable growth. This is essential to our business model: if our MSP partners don’t grow, then we don’t grow either. Sometimes you have to shed the ‘wrong’ kind of customer to focus on those who are contributing to your growth.
- The power of people
MSPs work in a relationship business. Successful MSPs recognise this and make sure they have the right people in place to develop these relationships. For many, this means hiring people who are good communicators, rather than focussing uniquely on IT skills.
A rule of thumb applied to potential hires by one of our MSP partners is: would I (or my customers) want to have a beer with them? His aim was to hire a team of talented IT people who were also extrovert, sociable and committed to client success – rather than “introverts focussed on bits and bytes that don’t get the big picture”.
- Network, network, network
Successful MSPs tend to enjoy networking.
Joining a peer group is one way of doing this. I have always found involvement with CompTIA particularly useful – as an invaluable source of channel information and an opportunity to exchange views with other MSPs and vendors from different regions. And there are other groups, such as HTG.
Networking is important to keep abreast of what is going on in the industry – and to sound out your own ideas. It is also useful to promote referrals – from customers as well as your technology partners.
One of our MSP partners successfully extended his networking activities to include regular meetings with the “centres of influence” that have a business relationship with his customers – lawyers and bankers, for example. The aim was to extend his referral network, and get a “warm introduction” to prospective customers.
- Keep learning
Successful MSPs keep on learning – from peer and industry groups as outlined above, as well as using more formal channels.
And they are not afraid to seek help when they need it. For example, one of our MSP partners hired a business coach and saw a significant growth in revenues as a result.
- Know when to let go
Inability to delegate is a common trait of MSP owners – largely because in the early days they wore multiple hats: CEO, sales, account management, service development…
As the business grows, this is not sustainable.
By way of example, five years ago, one of our MSP partners was acting as Virtual CIO to more than 60 companies. He was so focussed on that, he couldn’t concentrate properly on growing the business. Recognising this, he hired two additional CIOs to free up his time.
It’s hard to resist delving into the detail, but successful MSP leaders must be prepared to hand over responsibility to someone else and move on to the next challenge.
Sales is one area where many more MSP owners could benefit from handing responsibility to a professional team.
- The importance of processes
Successful MSPs realise the importance of having strong processes and procedures in place – right across the organisation.
When you start your MSP business, it is relatively easy to deliver a quality service: as the MSP owner you are likely setting the standards and personally ensuring they are met.
It is difficult to scale that model though. You need defined roles and accountability, supported by detailed processes and procedures that are written down. So the way things are done is not just a matter of opinion – it is set out as a fact.
A process-driven business also makes it easier to ‘let go’ as in the point above.
- Setting up an effective sales and marketing lead generation machine
Initially, your sales leads came from your personal network and you, the company owner, would be the principal (probably only!) sales person. These leads, combined with referrals from industry partners and customers would keep you ticking over.
For successful MSPs, ‘ticking over’ is not enough. They are scaling up for volume growth and this kind of growth relies on having a deep sales funnel, with enough leads going in at the top to deliver the requisite number of new signed contracts at the bottom. (For more information, see Do you know where your next sales leads are coming from? )
This means investing in an effective lead generation process; one that has been carefully planned, properly resourced and is supported by a range of marketing activities.
The managed services recurring revenue model depends on continually adding new customers and on retaining existing accounts. Successful MSPs know they have to invest in the sales and marketing infrastructure needed for this to happen.
This quick trip through some of the traits that are seemingly shared by successful MSP leaders will hopefully encourage you to review your own managed services business in this light and identify areas that could be improved.
Successful business leaders are not born; but many seem to share a similar mind-set. That’s not to say you can’t develop this mind-set. One way of doing so is by learning from other MSP leaders who have been there, done it and done it well.
Read about MSPs we have helped to grow successfully.
Contact us to find out how we can help your managed services business.