3 Ways to Ensure You’re Set Up to Grow Your MSP Business in 2023
By David Weeks
I’m hearing a lot of talk around the industry about M&A slowing down. However, the reality I’m seeing is that while the initial landgrab may well have blown over, the change in the cost of borrowing is forcing MSPs that are looking to grow by acquisition to think much more strategically. Instead of doing multiple acquisitions in a year, these companies and their PE backers are doing a smaller number of very strategic, larger acquisitions.
What this means is that while the actual number of acquisitions might be reducing, the value of those acquisitions isn’t. So, M&A is still very much a viable exit strategy for MSPs, and something they should still be preparing for and making sure they understand what they need to do. In fact, we could argue that it’s more important than ever that MSPs sit down and work out their exit strategies to make sure that their businesses are best placed to attract the right people.
Meanwhile, MSPs looking to grow by acquisition need to be shifting their thinking away from just grabbing market share and instead focusing on how an acquisitions can help them move into new areas. Helping them to capitalise on growth opportunities, new revenue streams, and potentially picking up new customers that are already in that area.
There are three key areas, I’m seeing among our partners, that are really helping MSPs both consolidate their value and also drive their business growth.
1. Develop your leadership
Whichever side of the divide you are, it might be time to think about how you manage your MSP business if you want to thrive in this shifting market.
Traditionally, MSPs have been built by people from tech backgrounds. However, because the market is now so hot it’s attracting more and more people into the space who don’t necessarily come from an IT background, but instead come from more of a business background. So, growing MSPs, or those that are looking to grow, might want to consider bringing in a manging director who can help them manage some of the more strategic business decisions they need to take in order to capitalize on the opportunities that come with a rapidly changing marketplace.
There’s always technology in everything MSPs offer, but it’s increasingly becoming about finding the business benefits to get a lead in to generate more opportunity. This is driving MSP to shift away from being service led and instead towards being sales led. And sales is still an issue for many MSPs. Having a leader in place that has that business experience can be crucial in helping make this transition.
2. Capitalise on the power of your stack
The tool stack MSPs have today is so much more powerful than it was even five years ago. And this is opening up new opportunities for them. Even small MSPs now have the power to service large organizations, because of the toolset they have. With the advent of things like automation, scripting, and Managed EDR, MSPs are able to provide a much wider range of services to a much larger market.
For example, even recently you would have been hard pressed to find an RMM that could manage in the cloud. Now that’s no longer the case. When MSPs look at the extended capabilities of your tool sets, they need to reverse engineer that and say OK, what new revenue streams does this open up for me? For many MSPs, this requires a strategic change of mindset.
3. Expand your horizons
Lastly, today’s environment means that MSPs no longer need to be restricted to thinking regionally. We’re seeing more and more of the top MSPs in our partner community working globally, either because they have a selection of customers that are operating out of global bases around the world, or because they have localized offices (often acquired through M&A activity). Also, we’ve got partners that have two or three offices in their home territory, but their clients have offices around the globe, and they’re coming to me and saying, “How do I get feet on the street if I need it?” Through our global partner network I’m connecting them with other localized market-leading MSPs and they’re working out their own agreements and how they help and support each other.
Some have even come together and said, “Hey, you’re in Australia, I’m in North America, why don’t we outsource some of our after-hours NOC and help desks work to each other?” This is providing them with a simple solution to providing 24/7/365 support.
The point here is that whether you’re looking to expand or consolidate the value of your MSP business, the market has changed hugely from the days when a lot of MSPs first set up their businesses. Today’s opportunities stretch across the globe and over a far broader range of businesses. And if you want to be able to make the most of what’s out there some of the old ways of thinking need to be left by the wayside.
David Weeks is VP of partner experience at N‑able
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