If you fail to plan, you plan to fail. That old adage has always rung true in all businesses, and managed services providers (MSPs) are no different. Yet successful planning all starts with one critical element: Your MSP business plan.
Despite the importance of this document, many MSPs operate without one, and subsequently operate without any kind of guidance or direction. An MSP might have acquired a few early customers from referrals and personal relationships, prompting them to formally set up their business, but the truth is that without a business plan to lay out the future, that MSP will have no idea where it’s headed in the future. Simply put, you need a sound business plan, codified and documented, to steer your MSP’s direction. Here’s how to write an MSP business plan, in eight steps.
Your Mission Statement
At your core, you must answer one question: Why are you in business? Answer that question and you’ll have your core mission statement. Making money is an obvious reason, but MSPs typically start their business with other reasons in their heart. Beyond making money, is your MSP’s goal to:
- Help small businesses adopt new technologies?
- Help small businesses run more efficiently?
- Provide the best server and desktop care in your state?
- Establish yourself and your business as thought leaders in the IT industry?
Once you have a clearly defined mission statement, share that with everyone in your company to ensure that everyone’s working toward the same thing.
This requires gazing into your crystal ball to project one, three or even five years down the road. Where would you like to be over that time span? How do you want your goals and business to develop? This can be defined by either tangible metrics (number of clients, monthly recurring revenue) or more intangible measures (having a sterling reputation within your local community).
You want to set short-, mid- and long-term goals for your MSP business, and make sure you frame those goals through the SMART framework. That means you want goals that are specific (clearly spelled out), measurable (distinct metrics for success or failure), attainable (realistically achieved), relevant (making an impact on your business’ growth and bottom line) and timely (able to be accomplished in a reasonable amount of time).
Objectives are your goals taken to the next step, with actual tactical plans for achieving those goals and how to measure your success of those goals. What are the markers or sales objectives needed to achieve your goals? What can you measure to help monitor the success of the plan?
Some good objectives to set include:
- Number of clients
- Monthly recurring revenue
- New customers per month
- Number of devices you service
- New devices added each month
- Services you offer to clients
- Number of employees
Structure of Operations
This should determine and define how your MSP business is run on a daily basis, and get down into the nitty-gritty of day-to-day functions. How will your company and office be set up? How will operations scale to handle your projected growth? What types of employees, and what types of skillsets, do you need to hire for to deliver the services you envision?
You can’t get new clients and grow your business if people don’t know about you, and that all starts with marketing. Many MSPs rely solely on referrals to find new clients, but that just isn’t very scalable at all. The best MSPs generate their own high-quality leads through a combination of inbound marketing efforts (blogging, social media) and more traditional marketing initiatives (print and radio advertisements). You want to make sure that you have a well-defined MSP marketing plan as you start your business, but don’t be afraid to tweak it as you go along.
Similarly, you need a plan to work leads generated by your marketing efforts and to close those deals. That typically means hiring a team of sales reps to prospect, qualify leads, demonstrate your offerings and then close the sale and onboard them.
How big a sales team should you hire initially? How will they be compensated, both monetarily and in other compensation? What will their success metrics look like?
The number one job of a CEO or business owner is to make sure the business doesn’t run out of cash, and MSPs are no different. You have to try and project how your finances will look like, at least through your first year of operations. Will you need to look for investment, either initially or shortly thereafter? How fast do you plan to grow and scale? Financial projections might be overwhelming to think about, but it’s absolutely crucial to funding your business.
You can go further and even more granular in your business plan—reviewing competitor metrics, analyzing your resources in capital and technology, surveying the market—but this will be a good start to get your MSP business off and running. Learning how to write an MSP business plan will save you untold headaches down the line.
For more tangible tips on staffing, operations and organizational structure, download our eBook Scaling for Success: A three-part series centered around MSP growth.
By Scott Wittstock
By Gretchen Hoffman
By Gretchen Hoffman