Case Study

7 Tips Every MSP Should Consider When Building and Maintaining a Cash Reserve in 2023

When you are building your IT company you want to have a rainy day fund or the means to keep your business running during the peaks and valleys of the business world.

Monthly Projections
Your fist order of business is to figure out what your recurring spend is.  Look at how much money is going to be coming vs going out for the next month.  You can use a previous month’s bills and expenses to come up with a rough number that you will need to go by.  You may need to act immediately upon the information you gather.

Cash Flow

You want to make sure you are profiting, and to do that you will look at your outgoing bills versus your incoming expenses.  It is not a very difficult thing to calculate, but if it is skewed against you, you will need to act quickly and decisively.   Make sure you always have positive cash flow, by keeping your contractors and vendors bills tight and on top of your collections.

Upcoming Business

It is good to have an idea of how much business is actually going to come in do not count on anything that is not signed or anything without commitments that have been made in writing.  You want to constantly be auditing your upcoming business

Employees and Contractors

As you move forward in business you may want to consider working with a white label partner who works at a fixed cost. You do not want to saddle yourself with a full time or part time employee until you can take on the payroll expense. You should consult with a tax person to find out how much you are actually going to have to pay vs what you think you will have to pay, someone’s hourly rate is not the actual money they will end up costing you.  You must consider workers compensation, insurance, state tax, and many other factors go into having an employee.


You need to make sure you are on top of your collections. Do not let anyone go beyond owing you for 30 days after you bill is due. You will need to basically, call, text and sometimes physically appear before them in order to collect. Collections is hard and not easy and is the farthest removed from your actual business skillset and comfort zone.  Getting people to pay for your work is not. Make sure your contract clearly states payment terms.

Working Some Assignments, Yourself

Nothing is more helpful than if you put in some hours of your own versus counting only on your subs or white label partner. If you work your own accounts, you may be able to save money and push that towards having some additional cash available as a reserve. Working for yourself and doing some of the jobs will reduce your operational expenses.

Immediate Action

You must take immediate action when something is wrong. You don’t’ want to wait something out, count on something to come through or happen in order to save the day. Don’t take things personally, don’t worry about firing your brother to save your business. You need to make qualified decisions,   when you balance sheet is bleeding, counting on a contract to come through to save you is not advisable.


Building an IT service business is not only stressful, its time consuming if you do not learn to train others to do menial tasks. If you do not learn how to delegate, you will end up doing everything which makes a lot of room for mistakes to occur. This could create a lot of unhappy clients. Learn to delegate menial jobs that can easily be done by a partner. A white label partner can easily take on all level 1 help desk issues around the clock.

Single Point of Contact is a White Label Managed Security Service Provider that provides a wide range of cybersecurity technologies, 24×7 help desk and managed IT services. If you have challenges with bandwidth or an in-house skill set, we can help.

Contact us today to discover more about how we can help you achieve your company goals.

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