Q: We are continually adding new clients to our managed service offering, but we aren’t seeing an increase in our profitability. How can we increase our profitability without bringing on more customers?
Every MSP business owner wants to increase their profitability. Unfortunately, adding new clients to your services won’t necessarily make that happen. Instead, it can add more strain to your techs and in-house resources, which can have some adverse effects down the road. In theory, bringing on new customers could increase your profitability, but that’s usually not the case because you need resources and technical staff to dedicate to that account to keep them up and running. To truly increase profitability in your organization, you need to find ways to increase efficiency within your MSP.
To help you truly increase your profitability, we created the MSP Profitability Playbook: Your Guide to Generating More Revenue and Making Your Business More Successful in collaboration with Gary Pica. In it, Gary Pica gives his advice on how to increase your profitability in the coming months, and the first step is efficiency.
Proactive measures you can take to increase efficiency
When it comes to MSP profitability, there comes a point where your profitability plateaus. However, finding efficiencies in your daily activities can help you increase your profitability without adding additional resources or finding new clients. Here are three areas you can look at to increase efficiency.
1. Find out how many tickets an endpoint is generating. The average endpoint generates between .75 to 1 tickets per month, but MSPs with the most growth have reduced their tickets per endpoint to .2 to .5 tickets per month. Start by examining patterns in ticket generation to see where your techs can gain some time back. Look for ways to eliminate tickets before they are generated. For example, if there is a ticket regarding backups and a backup set cannot be completed because of the client is shutting down computers at the end of the night, ask your client if there is a better time to run the backup set or if a policy can be implemented.
2. Standardize each process. Control the chaos by standardizing practices and procedures across the board. Implement checklists to help walk your techs efficiently through each and every process. Systems and processes can get complex, but having an easy how-to guide for different situations can help eliminate frustration and ultimately help them save time. By implementing the same policies for each of your clients—chances are you will eliminate some surprises down the road. For example, when a firewall is set up, ensure that the anti-spam filter is on.
Additionally, the more you standardize the offering you provide for your customers, the easier it will be to train your staff. Often, when you bring new managed service clients on board they have a solution set that comes with them. The next thing you know, you are providing support for four or five different solutions. By migrating clients over to your preferred solution when they sign on, you can properly train your techs on the ins and outs of that product set to offer seamless support to your SMB customers.
3. Assess internal productivity often. Your technicians have a lot on their plates, and often a task that you thought would only takes five minutes can easily turn into an hour. Look at some ways that your techs time is being absorbed. Are they getting frequent emails? Are they getting redundant or unnecessary alerts? Find ways to eliminate or streamline things that are eating time out of your employees’ days. While it only take a few seconds to delete an unnecessary email or check on an alert, the time can add up quickly.
While there isn’t a magic answer to easily eliminate your efficiency problems, taking small actions to improve business productivity every day can help your business become more profitable. To learn more about how to escape the profitability plateau, download the free e-book MSP Profitability Playbook: Your Guide to Generating More Revenue and Making Your Business More Successful.
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.