So you’re standing on the brink of a new year feeling much like the old Roman god Janus, after whom January is named. Janus is usually depicted as having two faces looking in opposite directions. One looks back to the year departed, and one looks forward to the new and uncertain year ahead.
Maybe you’ve set yourself the goal of expanding your business in 2016. Getting your managed service provider business to scale up can be difficult. We all know this feeling of having lots of clients we spend time with every week either physically or on the phone, helping them out with everything from fixing that new phone line and the printer that is running out of toner to setting up that new hosted mail server.
How break-fix companies make money
You probably get paid by the hour. So you experience the dilemma of helping your clients quickly and expediently but you also want to drive up the number of hours billed as this is your true revenue.
So, how do you move from being a break-fix company to becoming a fully fledged managed service provider where you bill or invoice your clients a monthly retainer and some months you win and a few you lose – hopefully winning more than losing?
Automation + less time on-site = more profit
Becoming more profitable goes hand in hand with automating services and spending less time at your clients’ sites. This would save on effort but also enable you to help more clients at the same time with less resources. However, you are probably feeling a light breeze from Microsoft who’s trying to take over your clients by offering Office 365 and hosted services on Azure. Don’t panic! You can turn the situation into your advantage.
Your clients are probably already using MS Office, so why not help them move from a traditional software version to a hosted version of Office 365 and invoice them for your involvement? You know that they’ll make the move sooner or later and if it’s not you it’s probably your worst competitor helping them out! You want to end up with as much monthly recurring revenue (MRR) as possible, which is your path to “freedom.” Yes, you probably will lose in the short run but in the longer run you will still have that client and they get one consolidated invoice from you for all their services, MS Azure, MS Office 365, QuickBooks, antivirus software etc. Your net revenue per user will probably decrease but in line with more services being automated, this is only natural and the decrease in revenue would happen whether you’re involved or not.
The not-so-risky managed service provider business
On the positive, you could end up getting even more clients as you now spend significantly less time per client and are, hence, minimizing your risk. On the other hand, break-fix companies spend more time with fewer clients, which can be a risky business if one or more clients should go out of business or switch provider.
So don’t turn your head in both directions like Janus, when it comes to MSP business growth. Turn it towards automated services and spend less time spent on clients’ sites.
If you have any comments, please do not hesitate to reach out to me at firstname.lastname@example.org