Looking to scale your MSP network monitoring business this year?
Maybe you’re new to the game and still wondering how to write an MSP business plan. Maybe you think the answer is a vCIO. Either, way, here are five tips from the experts at the MSP Growth Summit on how to craft and optimize your MSP business plan.
1. Get creative to capture more cybersecurity budget
As phishing campaigns get more sophisticated and ransomware attacks more frequent, it’s safe to say that cybersecurity is keeping many MSPs up at night. But even with countless cautionary tales, it’s difficult to get clients to actually do anything about it.
To overcome inertia and build urgency around cybersecurity, you may need to get a little creative. Here are two suggestions from the MSP Growth Summit stage to help you get started:
- Use a dark web scanning tool to pull reports of compromised credentials at your prospects’ organization.
- Conduct a live hacking demonstration to give prospects a behind-the-scenes look at how hackers could target their organization.
These tactics accomplish a few key things: first, they have a “wow factor” that catches prospects’ attention. Secondly, they provide a jumping-off point for productive conversations about security that ultimately drive revenue for your MSP.
2. Plan ahead for more (and better) referrals
Referrals from existing clients are the top source for how to grow an MSP, according to Datto’s State of the MSP survey. If you’ve set your sights on growth, you can’t afford to just sit back and wait for them to happen.
There are lots of ways to encourage client referrals, but the bottom line is that you have to ask. And asking for referrals can be awkward.
Michael DePalma offered up a strategy for your MSP business plan gleaned from his early career selling life insurance: Go into every meeting with a list of five connections that you’d like to be introduced to. To come up with this list, use LinkedIn to research your existing clients’ networks and strategically identify five people whose businesses fit your ideal client profile.
Here’s why this works: It’s easier for clients to agree to a specific request to introduce you to one of their connections, rather than a general request to refer you to others. An added benefit is that you can increase the referrals you want, helping you close more of the right kind of business.
3. Structure your sales team for continuous growth.
One key characteristic that sets high-growth MSPs apart from the rest is how they segment their sales teams. According to Paul Dippell, CEO of Service Leadership, Inc., the best sales teams understand the difference between “hunters” and “farmers” and segment their teams accordingly.
In sales lingo, “hunters” are salespeople who thrive on chasing new opportunities, while “farmers” excel at nurturing long-term relationships. Even if their resume says they do both, most salespeople naturally gravitate towards one role or the other. That means that once your “farmers” have secured enough clients to hit their targets through upsells, they’ll stop hunting altogether. Likewise, when your “hunters” are off chasing the next client, they risk neglecting their existing accounts. This leads to missed opportunities for revenue growth on both sides.
Segmenting your sales teams between these two roles ensures your salespeople can play to their strengths, and you can properly incentivize your teams to drive continuous business growth.
4. Stop relying on “unicorns” to grow your vCIO practice.
The team structure is also an important factor in building a consistent and scalable business. The mistake many MSP business plans make is defining a so-called “unicorn” to fill the vCIO role. They’re looking for individuals with deep technical expertise, who are also highly detail-oriented, personable, good with managing budgets and schedules, and always available to pick up the phone.
These multi-talented people are out there—but in today’s tight job market, that approach doesn’t scale. Instead, Simon Marcil of Propel Your MSP recommends splitting the vCIO role into two: account manager and vCIO.
Every client gets one of each, and they work as a partnership. Your account managers are responsible for understanding the client’s business needs and handling logistics and client communications. Your vCIO is responsible for building long-term strategic plans, consulting with clients about their technology needs, and building project proposals.
Here’s how this structure helps you scale your vCIO practice:
- Improved service delivery for clients, as vCIOs aren’t bogged down by client communications and logistics.
- Simplified recruiting and training—you’re no longer waiting for that needle-in-a-haystack candidate to grow your team.
- Less disruption and risk in the event of employee turnover, because more than one person in your company has a strong relationship with your client.
5. Realize the opportunity in co-managed IT.
We often think of growth as a zero-sum game. In order for you to grow your business, the MSP down the street has to lose theirs. But that’s not necessarily the case. Datto’s annual survey of SMBs says 71% of SMBs are not using any managed services—representing a vast, unexplored market space that business experts call a “blue ocean.”
Increased complexity of the IT environment, internal skills gaps, and cost-effectiveness are the top three reasons that in-house teams employ IT outsourcing, like network monitoring, to an outside party. It’s not just for one-off project work, either: The Datto survey says 84% of SMBs using a co-managed IT model want their MSP to drive the IT strategy of their business. MSPs have a role to play as trusted partners to in-house IT teams, representing a huge opportunity for upmarket growth.