One problem managed service providers (MSPs) face is the challenge to differentiate themselves and offer a unique value proposition to their clients. How do you create a business structure that is strong enough to be sustainable, yet is still scalable, allowing your company to survive the jump into new waters?
The tale of two companies
This is the story of two companies, Company “A” and Company “B”. They are both real life examples and they are both managed services providers (MSPs), although this story applies regardless of industry.
Both of these companies:
- Sell the same service
- Sell at the same price
- Sell in the same geography
- Sell the same technology stack
- Have the same annual revenue
- Hire the same great people
Let’s take a look at the financials for these two organizations.
- Company “A” – EBITDA of $300,000 (25%) on Sales of $1.2M
- Company “B” – EBITDA of $0 (0%) on Sales of $1.2M
What do you think differentiates these two companies?
Processes are beneficial for everyone
The short answer is process. Company “A” has figured out that they need to be able to execute the same tasks faster and cheaper than their competitor. How do they do that? There are really only three primary ways:
- They have recognized the importance of standardizing their technology stack. It is very difficult to be efficient, for example, when you are asking your team to support 5-6 different types of firewall.
- They are executing the same workload with a lower cost structure. Company “A” has documented their processes such that less senior resources are able to perform them. Think of typical IT tasks such as deploying a firewall or server, applying an advanced traffic shaping rule on a router, etc. These would normally require a more senior resource, but with great process you can extend these tasks to more junior engineers.
- They are doing the same tasks faster, with less time variance. Once a process is well-documented, you’ll be able to improve the time required to execute each task. Complex procedures can be analyzed and wasteful steps removed or improved. This is exactly how lean companies think, and how they are continually removing waste out of their daily processes. Company “A” is spending dramatically less time on new hires, for example.
Combine these three things above and watch the magic unfold.
Stand out by standardizing your processes
So, think about how you can start to standardize the processes in your business. Think about how you can replicate those standardized processes, and get all of your people following them effortlessly. You write down how to do something, make improvements over each iteration, and document everything so that any tech can handle the task next time. In today’s fast paced business world, we are all searching for ways in which to grow our businesses and to stand out from the crowd.