Welcome to March! It’s a new month with a new MSP growth habit to start focusing on. In January, I encouraged you to Never Stop Learning to kick off our list of 12 MSP growth habits. In February, I urged you to go out and Find Love in the form of updating your MSP’s social proof for your website and social media feeds. For March it’s all about stepping out of your comfort zone and exploring new market opportunities to help expand your MSP business.
There has been a lot of talk lately around the state of the economy, and that we should be preparing ourselves for a possible recession. According to the World Bank, over the next year global growth will fall as low as 1.7% from the 3% that was projected just six months ago. So MSPs should be taking the time to strategize on how they can create a more recession-resistant business.
And the proactive ones are. Even with all of this potential doom and gloom being documented in the news, proactive MSPs are recognizing that this recession is representing some really good opportunities that they can leverage to help grow and expand their businesses.
Proactive MSPs are recognizing that if they remain with the status quo, doing what they have always done, supporting the same types of customers they have always supported, then they likely will struggle if a recession occurs.
In my boot camps, I talk a lot about how MSPs should be constantly striving to push boundaries and continually looking for new ways to differentiate themselves. This can help them remain ahead of the competition. And one way that they can do that is to move upmarket. A great way to do this is to target mid and upper enterprise companies and promote the co-managed IT services model to them.
Why co-managed IT services makes sense now
- Market timing is ideal
We’re currently facing not only a tech labor shortage but also a possible recession looming, which generally brings about layoffs and downsizing. This means there has never been a better time for MSPs to consider augmenting their traditional managed services model with the co-managed approach. The co-managed IT model is a natural fit for MSPs as it plays right into their wheelhouse. - Makes good economic and operational sense for internal IT departments
Offloading tasks and certain network responsibilities to an external MSP firm can make good economic and operational sense for internal IT departments. This is especially true if they are facing downsizing or are struggling with trying to find and hire additional technical personnel. Budgets generally get tighter in times of recession and staff hires are postponed, forcing existing employees to have to manage more while working with less. Co-managed IT services can provide a more cost-effective option for internal IT departments instead of hiring a new full-time employee, and they can typically acquire a pool of specialized IT resources for the same cost, or less, than one full-time employee. - Allows MSPs to broaden their target market beyond their traditional outsourced managed services customers, and helps develop a new source of revenue for their business
Without acquiring or merging with other MSPs, many IT service providers are struggling to find ways they can grow their customer base and increase their revenues within the traditional, outsourced managed services model. But by shifting their focus and moving upstream into the mid-market space, the co-managed approach provides MSPs with the opportunity to attract and work with much larger customers than they would have been able to attract previously under the traditional managed services model. And with these larger customers, comes bigger contracts with higher returns—thereby, enabling them to break through any revenue and growth plateaus they might be experiencing. - Provides a tangible way for MSPs to differentiate themselves from their competitors in their marketspace
Co-managed IT services is still a relatively new concept for MSPs, and at the moment not many are promoting this kind of service. And I know this because as part of my role I look at a lot of MSP websites and am connected to many MSPs on LinkedIn, and there is rarely a mention of co-managed services. So even if your competitors ARE offering co-managed services, I am prepared to bet that they aren’t promoting it. And we all know in this digital world, that if it can’t be found online then it doesn’t exist. So you can use this as an opportunity to get ahead of the competition and build a proper marketing and sales strategy around it.
The co-managed IT model will increase the overall valuation of your MSP
If you can find a way to increase the average deal size of your recurring revenue contracts, that will help to improve the overall worth of your MSP in the eyes of potential investors. This type of diversification is something our fastest growing MSPs are doing today to help differentiate and prepare their businesses for any economic uncertainties that may lie ahead.
So if you are looking at how you can create a more recession-resilient MSP, consider moving upmarket and begin targeting those larger organizations that may just have a one- or two-person internal IT department. These individuals are generally overwhelmed and understaffed and could really benefit from the supplemental services and expertise your MSP could provide, without having to incur the time, effort, and expense of hiring internally.
Stefanie Hammond is Head Sales and Marketing Nerd at N-able. You can follow her on LinkedIn and on Twitter at @sales_mktg_nerd. Read more N-able guest blogs here. Regularly contributed guest blogs are part of ChannelE2E’s sponsorship program.
