In today’s MSP world, the conversation has shifted from mere survival to thriving in an increasingly competitive market. In this episode of Sunny’s Silver Linings, IT By Design CEO & Founder Sunny Kaila spoke to Sumeet Sabharwal, CEO – Netgain, and Frank DeBenedetto, General Manager – MSP Suite, Kaseya, about how MSPs could navigate these complexities and unlock new opportunities. They shared strategies that every MSP should consider to stay ahead of the curve.
Cracking the Code to Profitability
A central theme in the discussion was the persistent struggle MSPs faced with profitability. Unlike other critical business services like accounting or legal, MSPs often operated with significantly lower margins. Frank highlighted a fundamental issue: despite the critical nature of IT services—where even an hour of downtime could cripple a business—MSPs typically see gross margins that are a fraction of what accountants or attorneys earn.
This disparity, Frank argued, stems from a combination of factors, including the difficulty MSPs face in selling the true value of their services. Too often, MSPs resort to lowering their prices to close deals, which only compresses their profit margins further. Additionally, many MSPs find themselves chasing the latest technology trends, which inflates their cost of goods sold (COGS) without necessarily improving service delivery.
The key to overcoming this challenge, Frank suggested, lies in both pricing discipline and strategic investment in technology. By focusing on platforms that enhanced efficiency and reduced COGS, MSPs could protect their margins while delivering high-quality services.
Expanding Beyond Regional Boundaries
The conversation also explored the evolving nature of MSPs, particularly the shift from regional to national (and even global) operations. Traditionally, MSPs had been regional players, largely due to the hands-on nature of IT services. However, as Sumeet pointed out, the COVID-19 pandemic blurred geographic boundaries, opening new avenues for MSPs to expand their reach.
Sumeet shared his experience of pivoting his MSP from a regional to a national player, emphasizing the importance of focus and vertical specialization. By honing in on sectors like healthcare, accounting and legal, and offering value-added services that resonated with these industries, MSPs could transcend regional limitations. Clients today are more interested in expertise and the ability to solve complex problems than in the proximity of their service providers.
This approach not only allows MSPs to serve larger clients across multiple locations but also positions them as thought leaders in their chosen verticals. The success of this strategy hinged on a deep understanding of the client’s needs and the ability to offer tailored solutions that drove business outcomes.
The Power of Focus and Discipline
Both Frank and Sumeet stressed the importance of focus and discipline in building a successful MSP. In the early stages, it was common for MSPs to say “yes” to every opportunity, often at the expense of profitability and long-term growth. However, as Sumeet pointed out, the real key to success lies in defining a clear business model, articulating it well and sticking to it.
This focus extends to understanding the core competencies of the business and doubling down on them. Whether it is developing a niche in cybersecurity or becoming the go-to provider for a specific vertical, MSPs that maintain a disciplined approach are more likely to achieve sustainable growth and profitability.
The Future is Borderless
As the discussion wrapped up, Sunny introduced the concept of a “borderless business,” inspired by his observations of global brands like Starbucks and McDonald’s, that have successfully expanded beyond their original markets by embracing a mindset of abundance and limitless possibilities. He suggested MSPs adopt a similar mentality—one that transcends geographic and mental boundaries.
Frank and Sumeet echoed this sentiment, urging MSPs to think bigger and explore opportunities for growth through acquisition, vertical expansion and strategic partnerships. The future of the MSP industry, they agreed, would belong to those who were willing to innovate, focus on their strengths and think beyond traditional limitations.
Conclusion: Thriving in a Borderless Future
The future of MSPs appears bright for those prepared to adapt to the changing landscape. By focusing on profitability, embracing a borderless mindset and maintaining discipline in business operations, MSPs can not only survive but thrive in an increasingly competitive market. As Frank and Sumeet demonstrated, the path to success is paved with strategic thinking, relentless focus and a commitment to delivering real value to clients.
Whether you are an MSP just starting out or a seasoned player looking to scale, the insights from this conversation serve as a powerful reminder that the possibilities are endless—for those who dare to think beyond borders.
Join us at Build IT LIVE 2024 to learn about ways you can enhance your MSP business’ profitability, leverage borderless talent, build teams capable of thriving in the most chaotic environments and much more.
Don’t miss Sumeet’s session on how you can hire the right leadership team to take your business to greater success. Sumeet will draw from his experience of scaling MSPs for over three decades now. He’ll show you how to identify top talent, prioritize key qualities and conduct interviews that uncover true leadership potential.
Lastly, an HR leader from Kaseya will be at the Coaching Corner on site available to help you in a one-on-one conversation.
