it managed support services For those of you looking to grow your MSP through investment; or sell your MSP through Managed IT Services M&A activity. My advice is to stay away from the hockey stick growth diagrams and high level market data. Build the case for what you have in place today that will increase your chances for success in the future. Let’s take a look at how.

I recently had the pleasure of sitting on George Sierchio’s business valuation seminar hosted by MSP University. It was an extremely interesting session, which reinforced a number of key business valuation principles. The top 3 which stood out in my mind (disclosure – my mind tends to lean towards how our company can help MSPs grow and conquer).

  1. Can you demonstrate strong market traction and sustainable differentiation
  2. Have you proven your business is scalable – withor without the Principal
  3. Is your business’ growth predictable – can you show the hockey stick curve and actually mean it!

First let’s examine the idea of proving market traction. While this principle varies from sector to sector, it is in my observation that this is most important for younger organizations (less than 5 years) to properly demonstrate.

For younger MSPs, demonstrating traction can be as simple as showing your most recent sales pipeline report – extracted from whatever PSA or sales tracking tool your team is utilizing. This will assist in the day to day management and organization of the relevant revenue data  and  provide an  important link towards the consolidation of the information contained in the report to ensure the more macro elements can easily be extracted and acted upon.

Another factor contributing to a younger MSPs traction is the ability to quickly explain the milestones met by your group as it relates to your burn rate and/or total funding raised thus far.

For example, if your organization is running on $10,000 per month (salaries, marketing etc.) what do you have to show for this money spent? How many new leads have you brought in? How many leads have you converted to suspects?  How many suspects have your converted to prospects?  How many customers have you on-boarded?  What strategic partnerships have you developed? Can you demonstrate a fairly precise closing cost for each new client going forward?

Sustainable Differentiation and Scaling

While no one can predict the future, as Brian Sherman told us in his post Reduce your Help Desk Risk we can monitor what is going on in our space and plan accordingly.

For example, whether you are a new or long running MSP – or any company for that matter, in my experience with the Angel investing community, for an investor to take the plunge there has to be something unique you bring to the table other than excellent service, and the fact that you act as an IT Department for your SMBs.  Ask yourself – what do you do better than anyone else, and how can you invest in this area so to ensure no one can outperform you?

Do you have a team of geniuses who can increase productivity and thus profitability for your clients through automation?

Have you strayed from the commoditization of technical services path and developed your own technology component?

Whatever it is that makes you different – it is important to show how you can take this component and scale it up.  The trick is to do this while the rest of your business maintains the status quo working in tandem.

This makes for a perfect segway to the final point I would like to cover in today’s post.

Predictable Growth

If your goal is to exit your MSP through Merger of Acquisition MSP, or attract money to take it to the next level it is of utmost importance to prove to your investment audience (Banks, Angel Investors – whoever!) that for X dollars invested you can reasonably deliver Y dollars in return.

A great way to do this is to outsource the high touch, day to day front line work – your MSP Help Desk
!

In our view at GMS, it is precisely this component (the day to day operation) that can be documented, streamlined and outsourced to a vendor partner. The key component here is that the risk is on the vendor. If the market fluctuates up or down then your costs vary accordingly.

So for those of you looking to grow your MSP through investment – or sell your MSP.  Stay away from the hockey stick growth diagrams and high level market data, and build the case for what you have in place today that will increase your chances for success in the future.

Would love to hear about your own experiences, and reactions to this post!

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