Three Mistakes You Should Avoid as a MSP

“Experience is the best teacher.”

While most people will agree with this proverb, it may no longer be the case nowadays. Technology has made it possible for us to exchange and share information quickly. And in the MSP field, there’s no need to lose money for you to learn. One mistake can be costly, and even simple mistakes can bring a lot of tension into your relationship with your client. So mistakes are best avoided, not experienced.

Which of these practices can you see in your MSP business?

Very Low Pricing

Pricing plays a large part on whether you’ll be a MSP for a long time or not. This is the area that most MSPs are understandably concerned about. If you price your services unreasonably high, your market may not be able to afford it. If your prices are too low, you may not deliver the desired service-level results. A low budget can be a constraint in delivering excellent service.

When you price your services too low, your clients will doubt the quality of service you provide. For most people, if a product or service seems too cheap then there’s probably a catch. You will still win business if your prices are very low, but the clients you’ll attract won’t be for keeps. They will likely have no hesitation in dropping you if they find an even cheaper provider.

Here are two related practices that are also damaging to your finances.

Competing on price. Having a price war with your competition is the start of your race to the bottom. This hurts your business, and the managed services market too. Your competitive edge must be based in your skills and expertise. Focus on the value that your managed services can give to your clients. At times, you’re likely better off to walk away than to enter a contract with little or no potential for earnings.

Overpromising. Sometimes the pull of winning a new client can be strong. This becomes a trap and you go on promising something you may not deliver. If it works out, you may need to spend more to learn on the job or buy new technology. This translates to money loss rather than revenue. But if this does not work out, it can damage your business relationship. You eventually lose your client. So either way, over-promising deals financial damage to your business.

Not Working ON the Business

Most computer business owners are also highly skilled technicians themselves. It’s not surprising if you’re one of them, and love what you do. There’s no doubt your clients are impressed with how efficient you solve their IT problems. But as the business grows, you can spend more and more time fixing problems for your clients. There’s no time left for planning the development of your MSP business.

Not marketing your services. It’s understandable if you take pride in your certifications. For example, your website may highlight all the trainings you have received. But those interested would rather check your MSP solutions for their IT needs.

Selling products, not services. If you do sell IT products, then the sale should not stop after the sale. Most organizations are not well versed in discovering new technology. They rely on your skills to help them maximize the use of the product they purchased from you. By checking in on a regular basis, you show your client that you are a valuable business partner.

Not adjusting sales compensation plan. Selling a managed services contract takes more time and is more difficult to do. But when you win a client, there’s an assurance of recurring revenue. So marketing and sales are important if you want your MSP business to grow. Either you can hire your own people for this, or outsource it.

But you can keep your sales team motivated by these points. 1) Pay higher commission rates – make this dependent on the initial payment of your new client. 2) Pay when customers renew. 3) And supplement with bonuses, at least initially.

Not doing customer reviews. Customer reviews are very important and are sometimes mandatory in a contract. Face-to-face meeting is the most effective method. If this is not possible, a video conference with your client is a great alternative. Customer reviews are opportunities to find out what you are doing well and what needs improvement.

You can uncover problems you didn’t know existed. Keep the meeting personal and informal. And remember: let your clients talk. This is the time when all you have to do is listen.

Not hiring additional help. When your client-base is growing, you could neglect the management side of your business. It’s more practical for you to hire someone who can take those workload off your shoulders. Sit down and think carefully what takes away most of your time. Is it paperwork? Then hire an admin assistant. Is it MSP duties? Then hire another technician. It’s all worth it if you have more time to manage your business and win more clients.

Going Beyond Your Expertise

Of course you wouldn’t want to market something you don’t know. Yet many MSPs are so eager to bring in new clients that they end up offering products or services they can’t handle. Sure, offering the latest trend can bring in more clients. But it may turn out bad if you can’t integrate the new technology into your client’s business operations.

In some cases, your client may ask you to work on something that is not a part of your core service offering. It can be cabling, website design, or SEO – don’t take the work on and muddle through. Instead, turn to strategic partners who specialise in those services. If you don’t have partners yet, then prepare to point your clients into the right direction. Have a list of reputable contractors for the services that you don’t offer.

 
There’s no perfect business. As a business owner, you will make mistakes along the way. But there’s no need to lose money and cause yourself distress when it can all be avoided. Focus on the value of your services, and not on your pricing. This way, you’ll attract clients that will value your business relationship. Don’t neglect the management side of your MSP business, hire the needed help if necessary. And don’t do work that you don’t know, have your own industry partners. These are beneficial industry practices that will help you stay in the MSP game for a long time.