Sustain and maximize your business profit margins with the Right Technique
The secret to continual growth of Managed Service Providers is discussed in depth in this 3 part series. This is the second part of the series, that is focused on methods and techniques that help maximize the overall business profit margins and also help optimize the whole process.
In the previous part of the series we discussed the dynamics of starting out and working their way up the ladder. After a firm groundwork is laid out it is time for scalability. The mid-stage MSPs start to taste financial success and stop the hassle with payroll each month. The ones who are focused on improving the business profitability are the ones who end up achieving great success. Before we go any further with this discussion it is important that you understand how measuring the profitability works. MSPs have a basic lever which they must pull through to help boost the margins:
- Cost Cutting – It is important to identify the areas where the expenses can be trimmed. Reducing the headcount is one major help when the client revenue starts to grow, this gives room to profit. The cost is inclusive of training staff, salaries, as well as benefits.
- Process Optimization – Unorganized approach is the one that majorly disrupts the whole business model. MSPs can boost their efficiency with better documentation of the repeatable processes which can be automated well using the RMM or PSA solutions.
- High value services must be sold – Adding revenue is the one factor that can boost the top line. MSPs offer their staff the task of proactive projects with increased revenue and this elevation in the MSP status and the lucrative consultancy with the clients pose as a great benefit helping surge the profit margins.
You might have a clear vision but not a distinct path to take you to your desired destination. Here are some of the excellent and helpful tips as affirmed by MSPs.
- An Inclusive Pricing Model – MSP services have witnessed a visible change over the years, from starting with a la carte to now having moved to per-ticket, per-device or per-user model. The latest evolution is a value-based and flat-fee model. This comprises of individual services that are kept private and not disclosed but billed as a single service.
- Guidance and Appropriate Training – Good OS for MSPs can have tons of trial and errors, this tends to waste a lot of both time and money. You would need to fast track the success by ensuring you are in-line with the latest industry practices and techniques being adopted. This would mean getting the best online training for the sales and marketing team.
- Infrastructure matters – Businesses often are at a loss of infrastructure or the applications that they require, but in case they have other related things sorted, they do need a compatible IT environment to match the clients. Best in-class MSPS require compatible systems.
The route to finding a defined and systematic path starts by advancing the strategies in the startup phase itself.
- Automation – There are foundational tools introduced for the MSPs, they are as follows:
- RMM (Remote Monitoring & management) – It is designed to aid the MSPs to remotely and proactively keep a check on the client’s network, computers and other related activities. The RMM tools are known to ensure accelerated growth using automation. The quick onboarding as well as training helps cut the cost of setup. You will not be required to hire a dedicated specialist for the task. The tools is used to identify the problems.
- PSA (Professional Services Automation) – Software application suite which is known to keep the core business process up and running. The core business processes are inclusive of Time & Expense management, resource management, as well as project management. It is the one tool that is added as the client base increases. The challenges that MSPs face majorly is how to manage the activities manually, this is taken care of by PSA tool. The critical aspects like accounting and RMM applications are integrated well to offer as the right solution.
- Outsourcing – The savvy MSPs are the ones who are already reaping the toil of fractional workforce which happens to be tapping talent with no high salaries or benefits of any kind. Here are some key areas that are outsourced:
- NOC (Network Operations Center) – The facility in which the system administrates, monitors, supervises as well as maintains the IT Networking System.
- SOC (Security Operations Center) – It is the site where the information security experts aid their diligent tactics to monitor, analyze as well as protect against cyberattacks of any nature.
- Help desk – Customer service is of utmost importance and so is the help desk.
Outsourcing works the best for non-core functional tasks like the system admin, help desk, the ones that can be handled by niche experts outside the in-house team.
While it is undeniable fact that outsourcing and automation can take MSP to a different level one, must also acknowledge that the cost of investment is meagre in these cases. The investments made also have a long tail effect which helps build credibility and eliminate chances of human error. The secret to growth and sustaining lucrative profits has been well defined in this series. The next and the last part of the series will discuss the techniques and ways to protect revenue.
At Single Point of Contact, we are fuelled by the vision to offer the best services for your business so your customers receive high-quality service. Whether it is your requirement for 24/7 computer support or the equipment required to handle the tasks related to new clients. You can reach out to us, to know more about the services offered. Feel free to contact us at any time to schedule a consultation to go over all of your important needs.