DO YOU HAVE HYPERGROWTH ENVY? How do some managed service providers achieve eye-popping results while others struggle to hit double digits? It’s fair to say that MSPs experiencing hypergrowth, which the World Economic Forum defines as having a CAGR of more than 40% along with doubled revenues in two years or under, exhibit a number of similar traits.
One is the ability to scale processes and resources quickly to match growth. Otherwise, MSPs risk having more business than they can handle, notes James Velco, president at TechNoir Solutions, an IT services provider in Chicago.
“The ball is rolling so fast, many of the things that you planned on doing down the road have to happen now,” emphasizes Paul Redding, CEO at Cordova, Tenn.-based Carlin Bradley, an IT and cloud services provider.
MSPs enjoying hypergrowth also have operational processes that facilitate their growth, not just for the services side of the business, but also sales and marketing.
Paul Dippell, founder and CEO at Plano, Texas-based solution provider consultancy Service Leadership, says MSPs should operate their sales as an empirical process by logging “every single sales opportunity” in a CRM, regardless of how vague they may seem. This enables you to measure your conversion rate accurately, as well as keep track of any leads or potential leads if your sales team changes.
Rigorous processes are also important to ensuring that sales continue at an efficient rate. Velco notes that without sales and marketing processes in place, resource can be pulled from one part of the business to the next.
“For a long time, I was doing everything, and finding new clients started taking a backseat to actually supporting current clients, so you have to bring on dedicated sales and marketing people. It’s been a key component for us because now we have somebody dedicated to going out and building new business and working with our defined strategy.”
MSPs seeking hypergrowth can also benefit from hiring a CMO or similar role who can help tightly define their target customer profile and the business drivers decision makers in those target customers care about, Dippell says. This enables the creation of a focused marketing campaign that strikes the right chord with potential customers, preventing wasted marketing efforts.
“All of these things are not things that you should maybe, perhaps, think about doing; they’re all processes that need to be happening if you want to get on this hypergrowth,” Dippell says.
In terms of staffing, Velco advises treading cautiously. “We don’t hire until we reach a tipping point, and then I get to another tipping point and hire another person,” he explains. “I have to feel that I can sustain those full-time roles.” To meet staffing needs quickly, TechNoir utilizes contractors.
In Redding’s case, instead of hiring immediately his firm looks to its customer base to identify areas where they’re working too hard and not making enough money. “We cut those customers so that we can focus on onboarding [new customers], new revenue, and growing with the team that we have. It’s important to recognize that growth brings an opportunity to offload bad business.”