What keeps Managed Service Provider (MSP) owners awake at night?
Organisations of all sizes are looking at improving ways to manage their mission-critical IT services. There has never been a better time to be a successful MSP. That said, such a favourable environment does come with some negatives.
Ambitious and fast-growing MSPs we’ve talked with recently report these five major challenges are keeping them awake at night:
1. Attracting top talent
As technology becomes more complex it both drives new clients to you but also means your recruiting becomes more problematic. Good people are hard to get and the best people are expensive.
2. Accounts Receivable
Your clients enjoy the benefits of having a stable IT spend BUT seem completely ignorant that there are numerous reasons why a monthly fee will vary from time to time. So each monthly bill seems to spawn a time consuming and expensive dance where you need to remind clients of the limited scope of their service and the extras you charge for. Who would ever have thought it was so hard to just get paid for what you are owed!
3. Response times
The average MSP client is not a patient business. Simple problems (often user-generated) that are low priority, get chased up as if they are mission-critical IT issues. To meet client demands and expectations means more engineering resources, and prompt customer service.
4. Customer retention
It seems more and more MSPs are entering the market to challenge you for your existing customers. As quickly as you win new customers, another MSP is pinching your existing clients. Forward-thinking MSPs address this by using high touch account management – whereby you become your client’s IT advisory partner. That requires expensive account management resources, people and processes.
5. Speed of change
As hackers and malware have become more prolific, so too has the rate of change in the cyber security world. Dangerously, if you don’t devote sufficient resources to specialise in security, both you and your clients become more vulnerable. Staying one step ahead is both time-consuming, resource-consuming and… expensive.
In short, it’s not easy being a successful MSP.
There is one thing you can do that helps address all these challenges. Focus on improving the velocity of your firm’s inbound cash flow. Why? Because the challenges above are also often growth pains that require an ongoing need for additional working capital:
- More cash for good salaries to attract great talent
- More predictable cash flow from your receivables
- More investment in resources to improve response times
- More customer service programs to WOW existing clients
- More investment in the latest cyber security measures and personnel.
The best and cheapest access to additional working capital is achieved by getting you paid more quickly (ideally within your terms of trade) for work you have already done. That provides you with CASH. Freeing up more cash to spend on these pain points will mean you can continue to be a growth MSP and… sleep well at night.