BUSINESS STRATEGIES
Avoid Death By A Thousand Cuts :
Plugging MSP Profit Leaks
Uncover the hidden mistakes draining your bottom line and learn how to stop them before it ’ s too late .
BY PEDRO PEREIRA
Rayanne Buchianico Owner and Founder , ABC Solutions
Tommy Thornton , CEO , Automates
Paul Cissel , CEO , Growth Caddie and M & A Expert in Residence for TMT
Brandis Kelly , President The Midwest Region DigeTekS
Bad business habits are bad for your bottom line . Worse , if you ’ re bleeding profits from a thousand cuts , you may not even be aware of it until it ’ s too late — and you ’ ve bled out .
Leaked profits have many causes , but common culprits are underutilized software licenses , paying too much for too many tools , poor service delivery , failure to automate tasks , staff utilization issues , and client mismanagement .
In your daily efforts to handle workloads and keep customers happy , you may be perpetuating the behavior that hurts what could be a handsomely profitable business . If you feel like you ’ re just scraping by , here are some common mistakes that are eating into your revenue and margins — and what to do about them .
Client Mismanagement — Let Me Count The Ways
Brandis Kelly , president of the Midwest Region at DigeTekS , an MSP in Firestone , Colorado , says client mismanagement can account for anywhere from 10 % to 20 % in annual revenue losses . Client mismanagement results from unclear statements of work ( SOW ), underpricing , project creep , and poorly defined deliverables .
“ When contracts lack clear deliverables or a detailed SOW , it can lead to misunderstandings and scope creep .
This often results in MSPs doing more work than initially planned without proper compensation ,” says Rayanne Buchianico , owner and founder of Clearwater , Florida-based ABC Solutions , which provides accounting and PSA consulting services for MSPs .
Tool Sprawl — You May Be Paying For More Than You Need
A bloated tech stack is another common issue . “ Many MSPs have multiple tools in place that are similar , therefore creating redundancy , which directly impacts the bottom line ,” says Kelly . MSPs should address this by conducting tool audits , which can reduce costs by 10 % to 30 %, she says .
Paul Cissel reviewed tools and licenses annually when he ran an MSP . Most MSPs ignore the practice , but when they start , they are surprised at how much they ’ re paying for unused technology , says Cissel , who is now CEO of Growth Caddie and M & A Expert in Residence for TMT . “ Most MSPs are technicians and haven ’ t seen a tool that they don ’ t like , and I was certainly that way .”
Tommy Thornton , CEO of Automates , an MSP in National City , California , continually rightsizes . He conducts a monthly tool true-up to avoid paying hundreds of dollars a month for unused technology .