Q: I’m running a growing MSP business, and as this year comes to a close, I know I need to budget and plan for all the changes that I’m expecting in 2016. In the past, I’ve never formally documented my annual business plan, but I know it’s something I really should do, especially if we want to keep growing. How should I get started?
You’re right on track. Many other MSPs and small businesses are reviewing their annual budgets and preparing for the upcoming year, so it’s the perfect time to nail down your financial and business goals for 2016.
We recommend formalizing your business plan into a one-page document, making it easy for your employees and other stakeholders to understand. Having this document for quick reference will help everyone stay focused on your company-wide goals and expectations throughout the coming year.
At Intronis MSP Solutions, they have a one-page business plan displayed prominently in their kitchen area, so all employees have visibility into where they’re headed as an organization. It also helps everyone stay focused on reaching their department-specific milestones that will contribute to the over-arching business goals. It’s a resource everyone finds valuable, and as Rick Faulk, VP and General Manager of MSP Business here, put it, “A well-thought-out business plan is key to the success and survival of any business.”
Follow these three steps to develop a one-page business plan for your MSP:
Step 1: Define your business values and priorities
An effective business plan includes the values, priorities, and vision you have for the company in the coming years. Write out a brief description of your company’s values to make sure that all of your employees are on the same page. For example, values for an MSP could include responding quickly to all tickets, working with customers to identify their needs, and collaborating as a team. It’s also helpful to explicitly state the priorities for the business, so your team understands what projects and goals are most important.
It’s important to note the strengths, weaknesses, opportunities, and threats (SWOT) you see for your business as well. Spending the time to think through these parts of your business, especially the industry trends and potential threats, will better prepare you to handle market changes.
Sharing your business’ values, priorities, and SWOT in your business plan will help motivate your employees, letting them know exactly where your business is headed, and how they fit into the plan.
Step 2: Identify key metrics
Next, figure out the high-level numbers you’d like to achieve in the next year, including things like revenue and profit. Once you’ve determined these numbers, you’ll need to set a few key performance indicators (KPIs). These indicators will help you to stay on track for meeting expectations and having a successful 2016.
Some examples of KPIs that MSPs would want to track include metrics like the number of new customers, revenue per account, cost of acquisition, and close rates. It’s worth noting, though, that your business’ KPIs will depend on your business model, values, and goals. So, you’ll need to choose the metrics that matter most for your business and its growth.
Step 3: Document short- and long-term goals
Finally, you should document the short- and long-terms goals that will guide you through a successful 2016 and beyond. Think about where you want your business to be in three years, and that perspective will help you figure out where your business will need to be in two years, in the upcoming year, and even in the next six months.
Is your focus on winning new business or growing your services offering to your existing customer base? Maybe you’re determined to convert the last of your break-fix customers to managed services. Either way, you need to know what your long-term goals are so you can set short-term objectives and chose the key initiatives that will help you reach those goals.
One thing you can also include is a Big Hairy Audacious Goal (BHAG) that you’d ideally like to reach but will require considerable effort. In Rick’s sample MSP business plan, his example of a BHAG is, “making break-fix services account for less than 10 percent of annual revenue.” It’s good to include a goal like this because it will inspire your employees to think differently about their work, hopefully sparking new ideas and discovering creative solutions to business challenges.
Once you’ve identified your businesses’ values and priorities, key performance indicators, and short-term and long-term goals, you’ll have a comprehensive one-page business plan that will help you keep your MSP on track in the coming year. For more details on what to include in your business plan, check out Rick’s one-page business plan template for MSPs.
Ask an MSP Expert is a weekly advice column answering common questions from MSPs and IT service providers. It covers topics ranging from pricing and selling to marketing and communications—and everything in between.