I know, obvious clickbaity title for October, but give me a bit of grace. While scared may be an exaggeration, there are plenty of things that keep IT service providers up at night. I put out a poll yesterday to ask what they were worried about. I started with the typical cyber-risk stuff and business concerns, and I found some interesting results pretty quickly.
MSPs are more concerned about business issues than cybersecurity. This deserves some digging into, and I believe that there are two non-exclusive answers. The first is that some are sticking their heads in the sand. If you don’t believe me, I can lead you to several social media threads where certain individuals put 100% of the responsibility on to the client. The second group, they have it handled. There are enough guidelines, vendors, and cyber-insurance out there to help minimize and mitigate the risk that an MSP who leverages them has no need to worry. Put those two scenarios together and that is why “Cyber Risk – Client Incident” was only the third biggest concern at 22%. Interestingly enough, “Cyber Risk – MSP Incident” came in way back at 8%. My opinion, make sure you have your house in order and that your service delivery aligns to one of the many cybersecurity frameworks available.
Number two on our list, coming in at 27% was “Getting New Clients”. This is not a surprise to anyone who watches this space. It is still a space dominated by technical personalities as owners and CEOs. It has changed over the 30+ years I have been in this space. Business-minded owners have seen the opportunity and begun launching MSPs and they have done so with mature sales and marketing strategies. The average MSP still lacks a formal sales and marketing motion. I do not blame the MSP, it’s not their fault that word of mouth has worked, and continues to work, so well. My advice, create a funnel. Create a visual representation of how you get customers to
- Become aware that your business exists
- Explore and evaluate your services
- Convert and onboard as a client
- Become members not just clients of your business
Simple steps so that you can be intentional, measure your performance, and consistently improve in all those key areas so that you always have opportunities flowing into your business while at the same time retaining and expanding the ones you already have.
I want to take a second to point out that “Keeping Existing Clients” came in way down at 8%. I understand this for the same reason I understand how most have been able to rely on word-of-mouth marketing. It simply hasn’t been a problem. The pendulum is swinging on this one too. Business and marketing savvy competition is hunting your clients. That is why I included #4 above. You must proactively engage existing clients to ensure their satisfaction and reduce the reasons and opportunities for churn.
And finally, coming in as the top concern of MSPs in my totally non-scientific poll, “Cash Flow”. At 29% it was the top concern though I will admit all three are close in representation. I will defer to the accountant types on this one, but I always go back to my favorite management book author Peter Drucker and this quote: “What gets measured gets managed.” This along with “You will miss 100% of the goals you don’t set,” is what I believe are the keys to generic financial viability. I use the word viability very intentionally here. Cash flow is the lifeblood of a business. Without it a business will starve, suffocate; whatever term you want to use. The danger is that it can be a slow death and difficult to recognize until it is too late. Loans and credit cards can put off death but more often accelerate it when used to compensate for cash flow rather than being used for short-term coverage or investment. Simple financial reporting and controls that your accountant can help you set up, combined with setting goals will give you vision and direction for the financial well-being of your company.
In addition to the original poll options I provided, my respondents added two more. First was “Legislation” and second was “Dealing with Employees”. What is interesting is that both are business problems and if you do not include cyber risk as a technical problem, no technical issues were mentioned at all. I think that legislation is going to be a big factor going forward as it encompasses many areas from regulation to taxation. By the way, did you know that SaaS software is taxed 9% in the City of Chicago? Look it up, it is true and unnecessarily complex.
Now I want to address the bottom of the list. “Cyber Risk – MSP Incident” and “Cyber-insurance” came in at 8% and 1% respectively. I see too many MSPs that ignore their own cyber-hygiene simply because they are so busy helping clients. Put your oxygen mask on first. That goes for insurance as well. Every business that depends on IT needs cyber insurance, doubly so for IT service providers. The other problem with insurance, and cyber insurance specifically, is that there are rules that must be followed for claims to be paid. Rules that change, rules that can be in compliance one day and out the next, so they must be monitored and audited regularly. Not necessarily something to be scared of, but definitely something to take action on.
I have had the privilege of watching this industry over the past 30 years. To see it evolve from the local computer store to the managed services practices and co-managed IT that exists today has been amazing to be a part of. I truly don’t think there is anything to be scared of, it is just change. Some people are afraid of change, but I have seen this industry embrace change more than once and become stronger for it. Happy October.
Guest blog courtesy of Egnyte. Read more Egnyte guest blogs here. Regularly contributed guest blogs are part of ChannelE2E’s sponsorship program.
