You'll note an increase in the number of blogs and articles (including MSP University's) pointing out good managed service business strategies for poor economies. Many offer good tips, but why not focus on long term success strategies you can implement and benefit from in any economic climate?
Focus on New Vertical Market Clients
Regardless of the current state of the economy, all businesses lose clients. This is why experts recommend a continuous marketing strategy, even when you have all of the work you can handle. Focusing on vertical markets, and selecting the right vertical, will provide higher levels of success for you than targeting industries that are considered “immune” to the effects of a recession.
Focus on Growing Markets
Providing managed services and solutions to alleviate the problems of growth market industries will accelerate your success. Solutions for improved security that meet regulations, data storage and recovery to ensure business continuity even when faced with disaster, and virtualization to help a business do more with less are all areas that are predicted to grow during the next five years.
Focus on Technology-Strategic and Technology-Dependent Clients
Technology-Strategic clients see their that see their technology expenses as investments in their organizations that provide them a competitive advantage in their markets, and Technology-Dependent clients may not be quite as strategic in their view of technology, but are forced to invest in technology because their businesses are so dependent upon it.
Not only are these types of clients more immune to economic factors, they are also more open to building a business partnership with you as a Trusted Advisor, allowing you to move away from the “reactive IT resource” bucket, and proving value beyond your IT skills to their organizations. Clients that fall outside of these 2 groups may be so cost-conscious that they do not make good Managed Services clients, but rather break-fix customers…
Keep a Close Eye on Your Cash Flow and Profit Margins
Every time you offer a free service with the purchase of equipment or hardware, you run the risk of putting your company in a negative cash position. Maximize your profit margins on services just as you would products to reduce the risk.
Most clients will prefer a monthly billing arrangement. Try to accommodate but take the necessary steps to improve your own business cash flow. How long does it take your clients to pay their invoices? If you aren't tracking this issue carefully, you could find your business in trouble. If clients are falling behind with their payments, offer a payment plan that is more suitable to their needs – receiving smaller amounts of cash on a regular basis is better than waiting two months for the full payment to come in, and builds deep loyalty between your clients and yourself. Reflecting the willingness to "tough it out together" as true business partners will continue to prove your value as a trusted business advisor to your clients that may find themselves suddenly in a pinch.
Erick Simpson
MSP University
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