Setting up your own managed service provider (MSP) business and getting it off the ground is a difficult task in itself. But once you’ve successfully converted a few leads into clients, how do you grow the business beyond simply ticking over? Expanding a new MSP business requires you to focus on maintaining your existing clients and getting the most out of those relationships in order to maximise your gains. It’s no surprise that when your clients are happy, it’s easier to attract additional leads and build toward prosperous new relationships.
But before you attempt to grow your existing relationships, it’s essential to clearly define your policies and expectations for clients to ensure they understand what their part of the bargain entails. Client service agreements should be in place that outline your level of commitment and the services your clients are paying for. This will help minimise any confusion or unwelcome surprises regarding ownership and lay a solid foundation to expand the business.
Prioritising Client “A” vs. Client “C”
Once the roles and expectations are agreed upon and the relationship is in full swing, an important way to manage and prioritise your existing clients is by running regular “health checks.” Analyse the time you spend on their business versus the proportion of income they contribute, and if there’s an imbalance, don’t be afraid to let a client go. A relatively easy way to prioritise your clients is by categorising them as A, B and C clients. “A” clients tend to be the ones who pay on time, have healthy budgets, and enable you to have a seat at the table with senior decision makers. “B” clients often have similar attributes as your top clients, but slightly smaller budgets. On the other hand, “C” clients are simply a burden on the business, often slow to pay, and rarely bother to put you in touch with key decision makers. When “C” clients begin to drain your time and resources, don’t be afraid to break those ties.
With a healthy book of clients and the necessary resources in place to fulfill your service agreements, you can begin to focus on pumping more energy into your most promising clients and identifying more profitable clients to work with.
Advisors are key for your MSP
It’s important to keep in mind that as your business grows, you will reach a point where you can’t do it all alone. You’ll need a core team of advisers to help you reach the next level, including an accountant, banker, and insurance advisor.
These three figures will help ensure a solid framework to protect your business from loss and liabilities as you hire more staff to support new clients. Making the leap from being a one-man shop to having employees is a big one, and the responsibility and logistics can be overwhelming. However, your accountant can help reveal the true cost of recruiting to determine if your business can afford to employ more staff and which areas of the business you should prioritise. It’s important to hire an accountant that has knowledge of the industry you work in so they can offer more insight into your day-to-day business operations.
The second important advisor is the banker. Large-scale projects often require investments in new equipment, so having a source of reserve funds to work from will help you take on large-scale projects without additional stress. The ability to access a reserve fund when these opportunities arise will enable you to avoid delaying the project. It also helps improve your credibility with prospects as a business that’s fully equipped to take on big projects, which will enable you to land big contracts on a more consistent basis.
And finally, a business insurance advisor is vital for any MSP. They can help you put policies and agreements in place to help with damage control should anything happen with a client. Whether client data is compromised or their equipment is damaged in your possession, you need to have peace of mind that you’re protected. Additionally, with a growing workforce, insurance advisors can help ensure you’re covered in the event of an accident and equipped to manage any unforeseen medical bills.
Ultimately, when taking your MSP to the next level, prioritising your clients and deciding which ones to cut ties with is an important first step. But the future of your business can look far more promising with a team of advisors that can help make the road to success much less bumpy.
Also read:
Three key tips to jumpstart your MSP business
Nicole Tanzillo is director of product marketing at Spiceworks
