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4 Mistakes MSPs Make (And How You Can Fix Them For Better Growth)

4 Mistakes MSPs Make (And How You Can Fix Them For Better Growth)
One of the biggest benefits to being a managed service provider (MSP) is the consistent income that comes with it, and many resellers have shifted into the lucrative business model specifically for that reason.

But new business comes with new challenges and difficulties, which can leave MSPs scrambling to acquire new customers for their business. In that scramble, many make mistakes, and if you find yourself scratching your head and looking for answers, you might be making some of them yourself.

These are four of the more common mistakes MSPs make and what you can do to fix it.

Problem #1: You Have No Identity

Many MSPs make the mistake of trying to offer a little bit of everything so they can attract as many new customers as possible. In the process, they stretch themselves too thin and, instead of offering a few high-quality services, they offer a wide range of mediocre ones.

This happens more with smaller MSPs that don’t have the resources or staff to support multiple services. Because of that, they fail to establish an identity. That’s a mistake, too.

Niche markets exist for a reason, and many MSPs thrive—and grow—by focusing on a specific part of managed services, such as monitoring, patching, or network management.

That’s not to say you should only offer one service. Instead, you should examine the market to determine which services you think would be the best both now and for the next few years.

Advice: Find a cloud-managed network solution that lets you choose what services you’ll provide today, but comes with the flexibility to shift if needed.

Problem #2: You Price Your Services Too Low

Compared to one-time sales, monthly contracts offer the security of regular income. However, you need to get the pricing right.

If you price your services too high, you risk losing your customers to competitors. If you price them too low, you’ll end up hurting your chances of making a profit each month, ultimately preventing your company from growing or even staying afloat.

Many MSPs make the mistake of assuming that price is the ultimate deciding factor for their customers. Yet, as we mentioned in the section before, serving a niche market and doing it better than your competitors makes your services more valuable. And people are willing to pay more for a good experience—up to 16 percent more.

Advice: Price your services where you’re comfortable with them and sell your MSP on the value it provides rather than the price.

Problem #3: You Spend Too Much On Unneeded Features and Products

At the heart and center of your MSP are the products you use to provide your services. Some choose to buy the basic hardware and then develop their own software to sell to their clients. Others, however, choose to resell third-party services as part of their lineup.

Part of reselling solutions is having to choose which products and features you want to offer. Newer options with the latest technology come with a higher risk and reward. Older, more reliable options can limit the scope of what you can do.

Many MSPs make the mistake of going after top-end solutions before the market demands them, hurting their revenue and drowning their business in debt. On top of that, the first iterations of technologies and products are often glitchy. Using these to handle your customers’ business puts their network at risk, which could ultimately hurt your business, too.

More than anything, the biggest risk here is scalability. If your client grows or expands, the cost to you—and, more importantly, them—could be too much to handle, leaving you both with too little cash in your pockets to move forward.

Advice: Evaluate what your MSP offers and find a solution that has the flexibility to scale with the potential growth of your business and your customers’.

Problem #4: You Have The Wrong Payment System In Place

When you resell products as a one-time or by-project service, payment for the services usually takes place once the customer commits. Relying on your customers to pay their bill on time each month could cause some problems though.

Whether you send invoices to your customers each month or quarter, you’re relying on them to pay consistently. Sometimes invoices get lost in flooded inboxes. Sometimes employees quit and leave. And sometimes, whether you like it or not, customers are late with their payments.

No matter what the cause is, when you’re providing monthly services and have your pricing adjusted to reflect that, your ability to do business is dependent on your customers’ ability to pay on time. One late payment here and there might not be too much of a problem, but consistent late payments from multiple customers could severely inhibit your ability to do business.

Advice: Implement an automatic payment processing system for your customers that helps remove the cost of human error.

One Final Note

You’re going to mistakes. We all do. How you respond to them and what you learn from them will determine what happens to your business.

Let us know what challenges you’re facing and the goals you hope to accomplish, and we’ll let you know how we can help.

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