Business plan

MSP Sales, Key Business Plan for Success 2021

MSP sales strategy and business planning will be particularly important as we approach 2021, with the year ahead offering potential for expansion as well as lingering economic risks.

The speaker at this week’s IT Nation Connect conference, a digital event hosted by ConnectWise, encouraged service providers to take extra precautions in preparing for the year ahead. Gary Pica, president of TruMethods, an MSP training and software organization, suggested that the 11-year period of unprecedented economic expansion preceding the pandemic was more forgiving of miscalculations than the current business environment.

“Our total addressable market [had] grown so dramatically that you [could] make a lot of mistakes and still be successful,” Pica said, noting that a rising tide causes all ships to float.

But with the market entering a low tide, MSPs may need to make some adjustments to their 2021 plans, he added.

“Your sales and business plan for 2021 will likely be the most important you’ve had in your career with the business, because there’s more risk and more opportunity,” Pica said. “So much has changed in such a short time. That’s when planning is more important.”

New opportunities that have arisen or been accelerated due to the pandemic should inspire MSPs to expand their business with current customers and add new logos. But before planning an expansion, MSPs need to assess their situation from a business and commercial perspective. Specifically, MSPs should consider their cash and credit position, accounts payable and accounts receivable, and the net profit they are currently generating.

Gross margin plays a critical role in having the funds to invest in bringing new services to market, noted Paul Dippell, CEO of Service Leadership Inc., a Plano, Texas-based consulting firm that provides financial performance benchmarking to solution providers. He called gross margin “the oxygen” that sustains the life of a business.

He said MSPs must generate service revenue 2.5 times their service salaries – payroll multiplied by the number of employees providing services. A service salary multiple of 2.5 should allow a company to generate gross profit and, after subtracting selling, general, and administrative (SG&A) expenses, enough net profit to reinvest in the organization.

Chris Peterson, director of Vector Firm, a sales training and consulting company, provided some ideas on how MSPs could invest in business development in 2021. He suggested creating a simple set of services or technologies to spark conversations with customers. The packages must be reproducible, while allowing the offers to be adapted to the customer’s needs.

Peterson, speaking on business development at IT Nation Connect, also recommended to inform the best customers about new offers and new services. He said many customers may not know or have forgotten about the latest services added to the portfolio. If a service provider hasn’t added new services recently, the company still needs to remind its top-tier customers of what it offers.

Additionally, he said companies should enter 2021 with aggressive short-term promotion. The idea is to revive business at the start of a year in which organizations hope to return to growth. “People are really excited to move into 2021,” Peterson said.

Other news

  • Hewlett Packard Enterprise has expanded the HPE Partner Ready program with additional support for sales, service activation and SMB opportunities. New sales support includes a faster proposal creation tool and deal registration approval process, updated sales certifications available through the HPE Sales Pro Learning Center, and a revamped demo program. HPE partners can also access expanded enablement resources to deliver HPE GreenLake, as well as promotions and incentives to target SMB and mid-market customers, among other benefits.
  • US Signal, a Grand Rapids, Michigan-based data center service provider, unveiled its vulnerability management as a service offering. The company said the service aims to help IT departments identify, classify, prioritize and remediate network vulnerabilities. Data center and colocation service providers have expanded their security offerings.
  • Involta, a hybrid IT services, cloud computing and data center company based in Cedar Rapids, Iowa, has launched an AWS cloud optimization service. The company’s managed account offering for AWS combines collaborative consulting with managed services, according to the company.
  • Maven Wave, an Atos company, has deployed an open-source toolkit that the company says addresses the challenges of exploratory data analysis. The toolkit, dubbed data-describe, is Maven Wave’s first open-source project.
  • Otava, a cloud solutions provider based in Ann Arbor, Michigan, is partnering with IT services firm T4S Partners to deliver a managed and compliant cloud offering. The offering targets the development and management of digital applications created for compliance-sensitive organizations, according to Otava. The companies’ first joint initiative created a HIPAA-compliant offering for healthcare organizations.
  • Komprise, a Campbell, Calif.-based data management service provider, has expanded its partner program. New resources include technical training certifications for cloud data management, financial incentives including market development funds, and an updated partner portal. The partner portal includes a transaction recording program and a TCO calculator.
  • Starburst, a Boston-based analytics company, has launched a partner program. The program, Starburst Orbit, offers options for consultants and system integrators, resellers and technology partners.
  • Modern Systems, a Dallas-based application modernization service provider, rebranded as Advanced. With the name change, Advanced is now fully integrated with Advanced, a UK-based software and services company that acquired Modern Systems in 2019.
  • Avant Communications, a Chicago-based vendor, has launched a UCaaS TCO assessment tool, which the company said its partners can use to explore the costs of UCaaS offerings.
  • Anexinet Corp., a Philadelphia-based digital business transformation solutions provider, has named Michael Cirafesi as executive vice president and general manager. Cirafesi will lead the company’s digital business unit.

Market Share is a news roundup published every Friday.


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