Owning and managing a business can be difficult. From setting up and overseeing operations to billing and collections, it can be unfathomable to novice entrepreneurs how many hardships they may encounter when opening a new enterprise. No one can anticipate everything that could go awry, especially when that process involves building a managed services firm with many variables and complexities. Of course, that undertaking pales in comparison to the effort required to keep a business open for years after the celebratory ribbons have been cut.
Most MSPs can recount multiple stories of those struggles. From expanding the client base and hiring the right people to scaling operations effectively without weakening support levels, providers must simultaneously focus on various matters. The hardest part is not dropping the ball on any of those activities while preventing the inevitable fires that come when managing IT systems for many different businesses.
The good news is MSPs are natural problem solvers. Constant challenges are a common reality for anyone running or considering owning a managed services business, which means the road to success can be paved with numerous obstacles. Triumphing over adversities will make an MSP and its team members even stronger.
That’s the reality of running a managed services business. The key to success is anticipating what challenges may come their way and developing proactive response plans to mitigate, if not eliminate, any potential harm.
Identify the Pain Points
Knowing what things could go wrong or may already be impeding growth is critical to an MSP’s success. Providers must understand current and potential problems in order to develop proactive steps to mitigate, if not eliminate, those concerns—as should every business owner. Managed services providers should incorporate those realizations into organizational plans and build metrics, actions and checkpoints to ensure the firm is on the right track.
Current pain points for many MSPs include:
- Managing the chaos. Between digital transformation, escalating remote workplace demands and the rising threat landscape, a number of dynamics are at play for IT services providers. Today’s IT ecosystems are more complex than ever, and the number of activities that MSPs need to manage continues to rise at an alarming rate—a frightening concern when it’s so difficult to find qualified employees .
Efficient processes and controls are key pieces of the solution. MSPs must continually streamline, optimize and automate (when possible) internal and client-facing procedures to minimize the chaos. Aligning with channel-oriented vendors with multi-tenant solutions and centralized management portals eliminates much of the stress for managed services business owners.
- Securing the entire IT ecosystem. The days of slapping anti-virus software on computers and shipping them out to end users are long gone. Today there is no rest for MSPs as they constantly assess internal and client system risks and respond quickly to the latest threats. Controlling and limiting access to scores of networks, devices, and cloud applications is not just a major responsibility but a tremendous liability, with cybercriminals putting providers square in the crosshairs. MSPs can minimize those risks by implementing industry-best policies and practices, obtaining the appropriate cybersecurity insurance coverage, and employing effective backup and disaster recovery plans.
- Enhancing cash flow. With all the economic and supply chain uncertainties, some reports suggest an economic softening this year with an upturn in 2024, meaning some businesses may delay supplier payments and trim expenses, especially in the first two quarters. Those actions could negatively impact cash flow for MSPs. The tactic of slowing accounts payables during uncertain times is nothing new to the SMB community, allowing companies to pad their bank accounts in case revenue drops while expenses remain constant (or grow). Now is the perfect time for MSPs to tighten collections policies and contracts, implement autopay requirements, and automate those processes [learn how ConnectBooster can help].
- Retaining clients. Scaling a business can be difficult when customers go away. Pleasing clients and obtaining more of their annual budget dollars is a significant challenge but a normal objective for any successful organization. In periods of economic uncertainty, MSPs need to pay close attention to customers’ needs and regularly engage with key decision-makers to gauge their company’s financial health and viability (and ability to pay in the future).
- Innovating portfolios and operations. IT services professionals must lead by example. Clients look to MSPs for insight into the latest technologies and operational efficiency best practices, which should be a cornerstone of their own businesses. That requires time and energy to streamline and automate processes with channel-centric management tools. By implementing innovative services and solutions, MSPs can increase innovation, proficiencies, sales and margins.
Construct and Execute the Plan
None of these challenges are insurmountable. With a well-thought-out plan and continual evaluations and monitoring, MSPs can recognize and neutralize many of the problems associated with running a managed services business today.
Accountability and clear timelines are critical parts of those strategies. MSPs must assign qualified people to manage each particular activity and monitor progress with various objectives, giving them authority—as individuals or part of a workgroup—to change course if the need arises. The caveat is ensuring responsible people are in the right positions.
Hiring and training personnel to fill skilled IT positions can be difficult. However, it is typically much harder for MSPs to delegate critical planning and decision-making responsibilities to employees—and be actively supportive of their actions. The reality of running a managed services business today is it takes a team to make it happen. MSPs need more comprehensive support than ever to successfully scale their operations, revenue, and profits.
