How to Scale Your MSP Business to Manage Rapid Growth

I think we can all agree that growing your managed services business is a good thing. Like everything in life, though, you can have too much of a good thing. Scaling your business slowly is hard enough, but what happens when you grow so fast it gets out of control? 

Fortunately, there are things you can do to prepare your company for those periods of hypergrowth. The better prepared you are, the more revenue you will be able to realize out of the opportunities when they occur.

1/ Planning, planning, planning

The first thing you must do is have a plan. This may sound simplistic, but many of the managed services providers (MSPs) I talk to do not have a formal growth plan. They may have a goal to grow 30% this year, but they don’t have the steps planned to get there.  

Knowing what steps you have to take means you already know what to do—you just have to speed up your timetable. This applies primarily to hiring. The number one resource that will prevent you from adding more customers quickly is the number of technicians you have.  

Because of the time it takes to hire people, you need to have a solid process for hiring technicians you can execute on at any time. Other employees may be equally important as you reach certain milestones in your business. Do not forget about yourself. You are a limited resource that will only stretch so far. Make sure you are planning how and when you are going to delegate parts of your job to new positions.

2/ Tracking your performance

The next thing to consider is measuring key performance indicators (KPIs). If you are reporting on KPIs like technician utilization and time to completion, you will more quickly recognize when you are running out of these resources. Waiting for customers to tell you is too late.  

Other leading indicators can be device counts for existing and new customers, sales volume, and accounts payable. Accounts payable is an interesting one because in many small businesses you do not pay vendors until the customer pays you. You do not invoice the customer until the work is done. Therefore, your accounts payable may be growing because of a backlog of work that is not getting done. Good KPIs help you recognize accelerations in growth earlier, helping you to react sooner.

3/ Get the right people, processes, and tools

Your best resource is people. People are amazing, they can learn and adapt, and they can stretch themselves to do more for short periods of time. Invest in your people, and just like investing in your health, you will be able to withstand periods of greater stress.  

First, invest in the right tools and processes. If everyone is using the same tools to do the same jobs it is easier to train new people. Second, you can also cross train them so that sales people can do basic billing or marketing tasks. Train techs to help with sales calls. If you have good people, they will be eager to help out.  

Use overtime to reward people for going above and beyond. Those willing to put in the extra hours will appreciate it, and it may just be enough to get you through a spike in activity until you can hire additional resources.

4/ Can you afford it? 

Finally, prepare financially. There is always a period of time between hiring a new employee and when they are producing to capacity. This can be days or weeks, but you need to be prepared for the uptick in payroll without an immediate match in revenue. My best advice is to start putting away money so that you have at least four weeks of their payroll saved before you hire them.

Scaling your business depends a lot on how well you hire and train people. They are your most expensive and most critical resource. Learn how to hire quickly and effectively. Place them in a process that teaches them how to duplicate your best practices as soon as possible. The combination of those two things will allow you to scale rapidly when demand dictates.

 

Additional reading 

• Having the Courage to Raise Your Rates
• How to Avoid Overselling and Underdelivering
• 7 Common Mistakes Growing MSPs Can Make
• Are You Ready to Sell a Layered Security Offering?

 

Eric Anthony is principal of customer experience at SolarWinds MSP. Before joining SolarWinds, Eric ran his own managed services provider business for over six years.

You can follow Eric on Twitter at @EricAnthonyMSP