James Davis has worked with MSPs for over a decade, helping them drive growth and operational excellence within their companies. As the Managing Director of Sea-Level Ops in the Asia-Pacific region, James knows what Aussie MSPs need to put into practice if they want to grow.
Common MSP roadblocks
We had a chat with James to discuss what Australian MSPs can do to scale their business and win big, and the roadblocks they face along the way.
Australia’s MSP market is in its infancy
Here in Australia, our geographic size is working against us. The US population, for example, is 11 times ours’. In terms of cities, between Australia and New Zealand, there are only five or six key cities in our MSP market above 1 million people. This puts a ceiling on the leadership pool and tech talent available to MSPs looking to grow.
A small market, with huge competition
Only about 2% of Australian businesses are above 20 employees, and only a tiny fraction of that 2% figure ever get above 200 employees. Nearly every business above 20 staff has an MSP or an internal tech provider already. If they’ve already built that relationship, built that trust, why would they look elsewhere? So MSPs are effectively targeting 2% of an already busy, crowded market.
A lack of support and assistance
Currently in APAC there’s no specific MSP assistance. There are no platforms, tech vendors, or business coaches that specifically understand the MSP business model.
MSP owners can’t take the next step
It’s the classic business conundrum: business owners need to step back and stop working in the business, and work on it instead. They need to get comfortable delegating control and empowering their team to act as leaders, while they focus on the bigger picture. They also may lack the breadth of industry experience, having typically only worked in one MSP their whole career.
A lack of financial acumen
MSP owners aren’t valuing their business enough. James has seen a clear gap in understanding the finer details of financial management that’s stopping MSPs from growing. There’s a lack of understanding and business focus that’s capping profitability. This profit limit means you don’t have budget to hire the best staff, offer pay rises or PD, and no budget to spend on sales and growth. You’re extremely busy, with not a lot of margin.
No clear exit strategies
In James’ experience, most MSP owners are 45+ and starting to think about retirement. Obviously they want to sell a profitable business, but they don’t have the skills to take their business to the next level and achieve improved profitability. And without the numbers to show, it’s hard to sell a business.
The top strategies for scaling your MSP
Empower your leaders
Owners shouldn’t get bogged down in project management, running accounts, or performing admin tasks—the day-to-day stuff. Trust that your team leaders can take care of it; this is what they’re there for.
But you need to empower your leaders first. You need to choose leaders that can run the business, and ensure the processes are in place so delegation down the line can occur. Find the right people in your business and put them on the path to lead. It takes time—five years, James says—but it’s worth it. As long as you’ve got the right people within the business who are willing to engage with this mindset shift, then you’re on track to succeed.
Make yourself the business
James tells us that most often in a small business, the biggest impact an owner can have is being client- and prospect-facing. They’ve built their business up, so they’ve got a unique skillset they can leverage. This lends itself perfectly to client acquisition.
Instead of focusing on day-to-day goings on, the owner instead attends events, develops prospects, and meets clients; they provide the face of the business, building it, and leaving their business leaders to manage the work itself.
Allow yourself to live with change
Change is always difficult, but there are things you can do to make it easier.
Improve your self awareness. Understand the type of leader you are, and your personality. Build teams with differing personalities who bring different things to the table.
Learn to give up control. Learn to focus on outcomes, rather than specifics of how to get there. Allow yourself to take a step back, and trust that your teams will get the job done. Allow them to make mistakes, as long as they learn from them.
Be comfortable being uncomfortable. Learn to not necessarily trust your gut feeling. If something doesn’t feel right, it can just be because it’s different—it’s change. Like working with a business coach, you just need to trust the process.
Engage in proactive sales within your current customer base
This is a huge one. You’ve already got a captive client base—so sell to them. MSPs need to move beyond a reactive sales mindset. Optimise what you’ve already got. You can uncover big dollars over the long term, without the need to find new clients.
Change how you approach your external client acquisition
There are two big ways to successfully grow your external clients.
Find your niche, and own it. Verticalisation sharpens your expertise dramatically. Target this specific market, whether it’s through e-marketing, or getting involved in the industry itself and presenting at industry events. This positions your business as the expert. It gets your profile known in the industry, making it much easier to start relationships.
Acquire other MSPs. Bigger businesses are targeting MSP owners looking to retire or exit the industry, or are simply tired of static growth. Merging with other MSPs provides the biggest ROI, while boosting your talent pool and growing your client base. And as James says, it’s easier to buy a smaller MSP and acquire 10-12 new techs than it is to throw up job 20 ads. But mergers aren’t easy, and this should only be done if you’ve got the time, the skills, the funds, and the trust.
To grow your MSP, you need to address the biggest industry challenge
And according to James, that’s leadership talent. To deliver a growth mindset, MSP owners need to identify leadership talent and potential within their business and put the time in to help these people succeed.
It’s a long-term game; but if you want to grow, it’s worth it.