MSP Business Plan: Prepare for the Unpredictable Year Ahead

Does any business owner ever intend to fail? Of course not! No sane entrepreneur would start out with that intention, but in fact, 50% of small businesses never enjoy a five year anniversary according to the U.S. Small Business Administration. The reasons behind that high failure rate are too numerous to list, but the unpredictability of client needs, economic conditions and other purchasing factors are all key contributors. Starting a business is, quite simply, a risky venture.

There are no shortcuts and, in many cases, the local, state and federal governments (despite their assurances) don’t make it any easier. Of course, building and growing a profitable IT services business can be even more challenging, as the company struggles to attract new business clients, recruit a skilled technical and sales staff, build out an attractive product/services portfolio and provide the essential level of customer support. Those entrepreneurs who manage to keep the lights on for more than five years should be commended for their accomplishment, but few, if any, are in it for the accolades. Most want their business to be successful; returning a healthy profit to investors, providing a paycheck to employees and offering quality products and/or services to their customers.

With so many dynamic variables and a host of potential organizational challenges available, how can a managed service provider ensure his or her company can endure the next five years—or at least make 2014 a success? It starts with a comprehensive efficiency review. Is the organization utilizing industry-best practices and continually refining each of its processes—especially those tasks that require considerable time and effort to complete? Are those “polished” procedures automated whenever possible

MSPs have access to a multitude of programs designed to help evaluate and improve those operations, from the CompTIA Managed Services Community and the ASCII Group to a host of vendors and distributors that support this IT services business model. Many of those resources require either a small or even no investment to partners and members, and a number of the host organizations offer related marketing and sales tactics as well. Just one great idea taken from any of these valuable yet cost-effective programs could give managed services providers the boost they need to start 2014 off right.

Only after completing a thorough review of those methodologies and automation systems should service providers develop (or amend) their strategic business plans. No matter how much owners believe they know everything that takes place in their organizations, some things do fall under the radar. Employees sometimes take shortcuts or fail to follow through on orders, and actions taken earlier in the year can be easily forgotten. That’s why a comprehensive annual review is so important.

After that evaluation process is complete, it’s time to carefully construct a 2014 business plan. To improve the success of any MSP’s long-term strategy, these four steps are a must:

• Identify new business opportunities: can the organization expand its technological expertise or tap into different vertical markets to grow revenue? Of course, these changes often bring new investment requirements and greater risks for MSPs, but they can minimize each by leveraging outsource partners to provide specialized support and other services.
• Refine and streamline operations: the businesses that survive and thrive are often the most lean. By continually evaluating their processes and expenditures, MSPs can often keep their costs low while maximizing their productivity. Efficiency is the greatest hedge against the unknown, giving businesses access to the resources (leverage) that can help address a variety of unforeseen circumstances.
• Address current deficiencies: the biggest mistake entrepreneurs and managers can make is to ignore their existing problems. Every business plan should include specific measures designed to resolve any past deficiencies or acknowledge any limitations that can’t be easily or affordably changed.
• Include “Plan B” options: Few business owners enjoy developing contingency plans—and no one hopes to use them. Unfortunately, no one can accurately predict the outcome of all the multifaceted market and organizational variables that affect an IT services company and its clients, suppliers and business partners. With the complexity involved in these organizations, a well-crafted “Plan B” can help an MSP make faster and better decisions when things aren’t going well. Those can be the “life and death” business decisions that keep the doors open…or at least maintain the profit margins.

While it’s almost impossible to prepare an organization to handle every circumstance that comes along, the business plan should address the most common situations and hedge against some of the rare events that could spell their demise. Each MSP must revisit and build on their past experiences, identify and implement the proper industry best practices, and recognize the issues that could derail their plans.  Without a crystal ball to show them what challenges and opportunities lay ahead in 2014, there is simply no better option.