Posted 20 July, 2016 • by Craig Sharp
All organisations need to write a formal business plan as a guide, even if it's just at the beginning. Business plans help you manage transitional periods and growth within an existing business; working out where you are and where you want to be in the future.
Many MSP business owners come from a technical background and therefore, business best practices don't always come naturally to them. For this reason, drafting a business plan is more important than ever. By sticking to this blueprint, you'll make sure you stay true to your business vision, objectives, financial goals and more.
After 20+ years of providing IT services to U.K. SMEs, I understand that writing and enforcing official business documentation can be nerve wracking for MSPs with little related experience. Rather than struggle to find examples to model yours after, optimise your MSP business plan by checking out my seven point plan approach.
The plan–based off of the tried and true McKinsey Seven S's plan–is purposely designed to be broad and open to interpretation but by following it, you’ll set your MSP business up for success in the long-term!
The most important part of any business is the staff. Without them, it's harder to scale your business. In an increasingly competitive marketplace, it can be difficult to find the right talent. Still, you need a team with a wide array of skills to be able to support your clients' ever growing needs, so invest your time in hiring the right people for the job. Use your business plan to map out hiring criteria and personnel objectives.
According to CompTIA's UK State of the Channel Report (2015,) the U.K. faces a higher demand for highly skilled IT labour than there currently is a supply of, driving the cost of labour sky-high. As a result, MSPs face an even tougher challenge in recruiting the right people, with the right skills for an affordable salary.
This is one of the areas in which MSPs may contest the definition of skills because most will focus on technical skills and the multitude of accreditation and training available for tech workers. However, in my experience it's as important to look at the non-technical, soft skills of a prospective employee to see if they’ll be a good fit for your business.
I have always found that technical skills are fairly simple to teach, yet what most employers find hard to source are people with a sound work ethic, good timekeeping, empathy towards customers and a polite manner. Sure, knowing how to accurately set up Exchange 2012 is an important skill for your technical staff members, but client-facing work demands expertise in these other, less obvious areas.
In a smaller MSP where it's not possible to differentiate staff roles as clearly, having a range of skills can be more important than simply being a good tech or a good client manager. You need a mix of both to increase client satisfaction and retention! Consider which employee skills you value and will require for your business, and include them in your MSP business plan.
This isn’t a section about the colour and design of your corporate T-shirts, but a discussion about the style in which you, as the MSP owner, run your business and how you allow others to grow and develop within it. Again, the fact that many MSP owners come from a tech background means it's often uncomfortable to release control.
As a result, MSP owners fall into the trap of micro-managing and not allowing the staff they’ve employed to do their job and complete what’s needed day-to-day. For your MSP business to grow, you need to adopt a style which enables people to do the job they’ve been employed to do, within an agreed framework (process) that you’ve documented and using the skills they’ve demonstrated as valuable for your MSP business.
In my experience, this is the main business plan area that most MSPs should focus on. You need clear systems (and processes) in place to deal with a variety of daily IT challenges, ranging from technical processes such as new user setup or hardware upgrade/replacement, to staff processes such as time sheets or email policy.
Systems and processes also help you reduce the management burden. Too many times I have seen MSPs having to involve two or more people in an activity because there was no clear system to follow. This drains resources from other projects and results in a slower resolution timescale. It may feel like an uphill struggle, but just take a single process and start there, one step at a time.
You may feel that you don’t have time to focus on documenting clear processes, but that's just not true. By carving out time to start this work now, you’ll quickly free up the time you were previously wasting, later.
If you’re a smaller MSP, then it may seem wasteful to create a formal staff structure or organisational chart with just a few people working together. No matter your size, however, MSPs need to establish a clear staff structure for two key reasons.
First, you need to know who makes the final calls. There are numerous cases in which client tickets or internal decisions need a final, decisive action and everyone needs to know who's responsible for making it. Too many times internal or external challenges can drag on unless a quick decision is made. Always remember, a camel is a horse designed by committee, so don’t prolong issue resolution by letting this process carry on.
Secondly, there is a possibility–especially in smaller MSPs–that without a clear structure you’ll end up with the wrong people in the wrong part of the business. You may, for example, have level 3 engineers working on level 1 issues, or visa versa, so it's vital to correctly position people in your growing business.
While strategy is possibly the most ambiguous of the seven S’s, it is also the business plan consideration which covers the largest amount of conceptual real estate for the growing MSP. You need to have a clear strategy on what you want to offer, how you want to offer it and the fees you plan to charge for your service. Then there are the separate, more technical cloud, backup, sales and marketing strategies that you'll need to plan for as well.
The reason strategy is the hardest, in my opinion, of the seven S’s is that at the beginning of your MSP business you’ll be finding your way and looking to maximise ALL opportunity which comes in your direction. However, that initial ‘scatter gun’ approach leads to increased challenges further down the line.
Now, strategies can and should be adjusted over time but before revising, you should pursue the established strategy until there's universal agreement that it no longer works.
“A shared vision is what you and the other members [of the MSP] want to create or accomplish. A shared vision is not imposed by one or a few people as an organizational mandate. Rather, it is derived from the members of the organization, creating common interests and a sense of shared purpose for all organizational activities" [source].
Now this may sound like "management speak," but having a shared vision in your MSP will help your business deal with challenges more effectively. If you are not all working from the same shared vision, you'll find yourself disagreeing with team members when when the going gets tough.
You may start with a simple shared vision, written very much like a mission statement. You could state your intent to offer the most cost-effective solutions for clients or deliver the fastest ticket resolution, but also think deeper. Your shared vision should cover how staff are treated, your office environment, flexible working options and employee growth and development.
Putting together a formal document containing a range of speculation over your future plans may seem like a waste of time for a growing MSP, especially when your focus may be the next Office 365 deployment, server migration or hardware upgrade. However, failing to do this at the beginning will inevitably lead to problems further down the line, so invest your time and resources wisely. Before taking on any new business, create or revisit your MSP business plan.
Craig Sharp is the founder of MSP Wingman based in Birmingham, UK. Retaining a stake in local MSP Abussi Ltd, Craig has a proven record in managing, growing and transitioning an MSP from break-fix, through VAR and into a true Managed Services Provider over the past 20+ years. Craig believes passionately that the key to IT / MSP business success is reducing the tech, and building business focused relationships. Additionally, Craig helps smaller IT / MSP businesses grow through targeted and innovative marketing approaches. Most importantly Craig has a passion to educate and inform. Follow Craig on Twitter @MSPWingman or #MSPWingman.