If you are running a managed service provider, it is possible that a good amount of your customers come from referrals. These can be a great source of business, especially for those that are just starting up. However, as your company grows, it is important to expand your business without relying too much on referrals while ensuring that you have adequate resources. This is where the MSP business plan enters the picture. Creating a comprehensive MSP business plan can help work your way towards business expansion.
The Basics of an MSP Business Plan
An MSP business plan is a high-level document that defines your strategy, long-term goals, success metrics, pricing, and potential profitability. Having a business plan will help you predict the events that could threaten your business posture. Understanding the cost of IT services will allow you to come up with the perfect budget and maximize ROI for your business.
Now what are the necessary elements when building your MSP business plan?
Mission statement
You need to create a mission statement for your MSP business plan. It should specify the reasons why you do what you do. For example, what value can you offer to customers? Here are some examples where you could take inspiration from:
- Help small businesses set up and maintain effective IT infrastructure
- Deliver support for client hardware
- Maintain efficient and secure IT systems
- Become a leader in technology and the best IT service provider
After coming up with your mission, share it with your team so everyone will be able to live by these values.
MSP Executive Summary
This tells the “why” of your business. Start by determining what market needs does your MSP address. Identifying this is critical because your business’ executive summary must exhibit your goals about the main drivers of your business.
After doing a thorough analysis of your current business and financial situation, you can add your MSP executive model into your business plan. The things that should be included in your executive summary are the overview of the nature of the business, customer description, challenges your MSP try to solve, as well as the services you offer.
An MSP executive summary can save you resources by identifying a defined scope of services and target market. This could help explain to your team what projects and goals should be prioritized.
Local MSP Market and Competitive Analysis
MSPs are a localized type of companies. In order for you to succeed, you should be able to build a solid client base. Performing a local market analysis will require you to collect information about competitors in your market area, within 10-30 miles of your operations location. Make a research about various pricing strategies, offerings, and the unique services they offer to customers. Know about the demographics of their customers – are they small businesses, healthcare, legal, or manufacturing? Business planning can be seamless once you identify these key market analysis questions.
MSP Operating Plan
Your MSP operating plan will determine how you will perform the work. What people, processes, and technology will you utilize to provide high-quality services? If you are already running an MSP, identify the areas that need to improve.
In addition, you should also consider your own inventory. What products do you need to run your business? Will you require on premise hardware or on demand software? Another question to ask is the location of your MSP.
MSP Financial Planning
When considering your financial plans, you should compute your profit margins and examine your potential revenue sources. Having a strong sense of your financial situation can help move your business forward.
While a break/fix model may have worked for your MSP in the past years, you should consider transitioning clients to a per-user or per-service approach if necessary. Your financial plan should revolve around Key Performance Indicators (KPIs) and business goals. The KPIs should include:
- Monthly recurring revenue
- Sales conversion rate
- Source revenue
Setting up Goals with your MSP Business Plan
After setting the strategies for your MSP business plan, make sure that they are compliant with the SMART framework. SMART is an acronym that stands for the following elements: Specific, Measurable, Achievable, Relevant, and Time-based. You want to have a clear vision for the future of your company, as well as the goals and objectives for each project that are carefully planned, clear, and trackable.
Final Thoughts
Planning can help you achieve the goals you have set for your MSP company.
When organizing your MSP business plan, you should think about your customers, your team, the potential market for your services, and your sources of income.
If you are looking to improve customer experience as part of your business planning, you may use MSP tools provided by ITarian. We offer a centralized platform to reduce operational costs and improve quality of service.
