It’s time to get very clear on what your MSP business plan should look like.
In today’s world where there is such a big need for a well-crafted and managed IT infrastructure in order to keep your business running… You as an IT services business owner, or MSP, should know that it is time to start tightening up your MSP business plan if you want to become and remain successful.
Fear is an odd thing. I met a guy once who makes a living wiggling into tiny, dark crawl spaces under houses, where mold, feces, poisonous spiders, snakes, rats, and other unsavory things abound. He was impressed at my fearlessness in speaking in front of thousands of people. He said he could NEVER do that, yet he woke up every day and went to work in places that would give me a claustrophobic heart attack. Running a business CAN be really scary at times, but people are often scared of the wrong things.
Here are the top 6 pitfalls of an MSP business plan that SHOULD terrify you to the point of taking swift action on getting them fixed.
1. Not knowing what your employees are saying to your clients and prospects is a quick ticket to LOSING current clients and preventing the gain of any NEW clients.
Like the thrill of haunted houses and scary movies? Then allow me to suggest a totally free way to leave you unable to sleep at night: Eavesdrop on what your employees are saying to clients and prospects. A chill will run up your spine, guaranteed. Consider this recent interaction I had at the airport checkout when buying a little snack for the plane:
The salesperson says, “You know, this is $8,” with an incredulous look on her face and emphasis on the EIGHT DOLLARS. I reply, “Yes, I know.” (I actually didn’t but didn’t care.) She persisted, “Are you sure you want to get it?” At that, I replied, “No,” and walked out to buy it somewhere else.
Oh, but that doesn’t happen in YOUR company, right?
A friend of mine with a dental practice was told by a patient that she heard the receptionist telling a potential new patient that the doc was MUCH more expensive than other dentists in the area because he had three kids in private school. I have personally required clients to let me listen to inbound call recordings from Google AdWords and was utterly floored by what was said and how the call was handled.
On MULTIPLE occasions, I’ve heard techs say to a prospective client calling to inquire about whether or not the company could assist with an IT project, “We can’t help you. We ONLY do managed services,” then proceed to give out the phone number and website of a competitor.
For starters, you need a playbook, process, rules, and scripting for how the phone is answered, how a client is taken care of, how an upset customer is talked to, how an appointment is booked, how an appointment is confirmed, etc. But MORE important than that is checking for COMPLIANCE with those rules and scripts. Everyone likes to do the rah-rah team motivation stuff, but hardly anyone will do the auditing and enforcement piece.
2. If you are lacking a compelling reason for a prospect to actually meet with you, then you’ll never get your chance to even try gaining their business.
The other day, I had a client who is desperately trying to break into a new market as the first big step in their MSP business plan, and it is one that they said they have extensive experience and background in. I got on the phone to help assist in crafting their website copy and an offer to get them in and use throughout their marketing. When I asked them to give me a SINGLE (not multiple) reason for their defined prospect to meet with them, they came up empty.
I tried a different angle: What are the top three biggest problems you can solve for your prospects? Nothing … just vagueness. “We make their systems stay up and running.” Geez. How about ONE problem you can solve? Nothing. Okay, so tell me what you know about your competition and where they are failing. Who are these clients already buying from? No clue. Frustrated, I told them I could not help them and refunded their money.
I can’t work with someone who is that clueless not only about their chosen target market but also about what they bring to the table — then expects ME to somehow give them a magic pill to get customers to flood their doors waving checks. Look, this is Business 101: Money goes to perceived value initially (marketing), then REAL value after they buy. If your prospect cannot instantly see how working with you will greatly benefit them, you need to go back and work harder on your value proposition.
Bottom line: If your company and marketing are EASY to ignore, that should scare the crap out of you.
Further, a USP has to be in your DNA, not some tagline or sales letter I write. And YOU need to know your customers, market, and competition thoroughly. That is not my job, and it’s shameful for anyone calling themselves an entrepreneur to be and stay ignorant.
It’s a recipe for frustration, low margins, slow to nonexistent growth, slow sales, and price resistance. Yes, I’m a great marketer, but that doesn’t mean I can wave my magic wand and pull a USP out of my butt for anyone who shows up on the doorstep.
3. Failure to build, maintain, and farm a list of qualified, interested prospects will greatly stall your MSP business plan from being able to move forward.
Not having a good, productive list of prospects puts you at a MASSIVE disadvantage in new client acquisition. Not only is it harder to convert cold prospects, but it’s also more expensive and time-consuming. You also cannot know, with certainty, how your marketing will perform (with a house list, you get to know your averages). Further, you’re totally and completely flat-footed should you lose a major account or encounter some other sales disruption in your company because you have no pipeline of “getting ready-to-buy” prospects.
It’s much easier to maintain a relationship than to initiate one, yet I know of many MSPs who’ve been in business for 10, 20, or even 30-plus years and don’t have a list — and if they do, it’s some dusty old relic that hasn’t been touched in years! Your list, and more specifically your RELATIONSHIP with your list, is the single biggest asset in your company — yet for most MSPs, it’s awash with missing and incorrect information and ZERO systems in place to nurture the relationships.
4. Lack Of Accountability For Anyone Or Anything Important
Roughly half the salespeople I interview tell me they weren’t given a quota. No quota! How can this be? It’s because someone dumber than a box of rocks hired them. Even more common is no accountability or coaching; their managers didn’t monitor them in any way … just the two-part training of “good luck and hang in there.” (Where Have All The Good Salespeople Gone?) But it’s not just sales — ANY position in your company ought to have some accountability for hitting some metric, quota, number, percentage, or goal, INCLUDING YOU. You (and your team) cannot hit a goal you don’t have!
4 key items every sales rep in your organization needs to know:
1) What is their quota or goal
2) The minimum number of sales they need to bring in to keep their job
3) Backward numbers for specific daily and weekly activities they need to HIT their quota
4) The high-payoff activities they need to perform to maximize their time and productivity. (Otherwise, you’ve got an army of the walking dead wandering around, hoping to sneak up on someone — but it’s YOUR brains they’ll eat.)
5. Your MSP business plan MUST have a numbers-driven marketing plan in place as well.
I’m not talking about a marketing schedule of promotions, tweets, posts, and newsletters. I’m talking about a specific GOAL for new clients, sales, profits or all of the above, working down to the specific number of prospects you need to target to hit said goal. Money is not just sloshing around in the streets for anyone walking about to pick it up. Disorganized, random acts for client acquisition and revenue generation should scare you. It IS a weakness that needs to be addressed.
6. You cannot wait until your accountant finishes your tax plan to finally know if you have made yourself profitable.
The other day, a client asked, “What is gross profit?” I almost choked. Do I even need to teach this? Kevin O’Leary said, “One hundred percent of the successful businesses that come on Shark Tank know their business and their numbers cold. They know where break-even is, and who their competition is. It is clear how big the market size they have the potential to reach is. They also know their customer acquisition costs and the lifetime value of a client. Those who don’t get funded are easily stumped by those numbers.”
Kevin’s counterpart on the show, Robert Herjavec, CEO of Cyderes (a $1.2 billion MSSP) said, “If you don’t love numbers, you don’t love business.” The financial numbers — and sales and marketing numbers — are the heartbeat of your organization. They need to pulse on a regular, routine basis, not once a year when you listen in to find out the patient died three months ago! Yet, so many small MSPs don’t really know what their sales are today or will be this month or this quarter. They have no sales pipeline, no knowledge of inbound leads, appointments set, close rate, average sale, or gross margins.
Many people are beaten down by the requirement to really KNOW their business and numbers — they’re not excited by it. Personally, I don’t “love” all the numbers and tracking, but there are certain things you have to get good at if you’re going to run a successful business. My feeling is that if it has to be done, let me learn to do it RIGHT and put a system to it (tracking the numbers, reviewing the numbers), so it’s less painful to do.
If you want your MSP business plan to be successful, then you must fall in love with the numbers and tracking, but most MSPs will never get to that point.
They keep running their business, denying, resisting, and resenting doing the things that must be done (the tracking, training, and management) — doing it only when forced to do so when things get SO bad that they cannot stand it anymore, but then still doing it poorly, desperately seeking someone to just do it for them, outsourcing or abdicating the responsibility to incompetent and inexperienced staff or vendors, starting over again and again.
We all know you can’t manage (or improve) what you don’t measure and track. Your sloth in these areas is your burden to bear, a cost to pay. You have to either decide you’re going to get ’er done and figure it out or constantly be held back by it. If you’re a business owner, this IS your responsibility and your job. If you don’t like it, perhaps you might look to go to work for someone who will — now, there’s a scary thought!
In conclusion, if you really want to have a successful MSP business plan, you must avoid these 6 pitfalls.
You have to understand how your employees are representing your company, and have a very clear reason you stand out from your competition. Make it a priority to consistently build and maintain a qualified list of prospects, hold your employees accountable, and be aware of your numbers. You can’t afford to not know if your business is profitable until the end of the year, so knowing your numbers is crucial.
If you’re an MSP (or IT services business owner) that wants help tightening up your marketing plan so that you can start to focus on other areas of your MSP business plan, then TMT offers a FREE downloadable guide that can help you get started. Click below to download.