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The seven-year-old MSP is sailing through the entrepreneurial journey. What’s its secret?
November 13, 2018
The channel is a marketplace comprised of startups, or companies that were once startups. Like any entrepreneurial venture, managed-services shops essentially follow the same journey. There’s that first spark of an idea that comes from identifying a gap in the market and being certain you can fill it. You scrape together some cash and then launch your bare-bones business, which you quickly learn may refuse to conform to the model you started with. It’s a time of pivoting and experimenting, and if you make it through, you know you’ve landed on the foundation of a successful business model.
In the past, many MSPs hovered at this point, content in their continued existence. But in today’s channel, service providers must keep pushing down the entrepreneurial path. We’re seeing unprecedented consolidation and private equity flowing into this space, and these investors all want to see the same thing: recurring revenue to cover ongoing expenses, steadily improving profit margins and an executive team that wants to grow the company.
There are a staggering number of MSPs that fall into this group. As private equity snaps up service providers to form “super MSPs,” many partners are optimizing their businesses to catch the attention of investors, or to position themselves for a move that helps them grow organically.
One such MSP is Illinois-based Creative Technology Solutions. Founded in 2011, it sailed through the first two stages of the entrepreneurial journey. Revenue growth, says Eli Webster, the company’s president and CEO, hovers at an average of about 50 percent year-over-year. But it’s in the profit margins that Creative Tech really raises eyebrows.
Since its inception, Webster says the MSP has had an average profit growth of 50 percent each year. The goal is to grow its 2018 profit margin to more than 100 percent of what it was in 2017, one Webster is confident Creative Tech can meet.
It’s the brass ring in a maturing market where every MSP is trying to improve operational efficiencies to increase profit margins while maintaining revenue. So what’s Creative Tech’s secret? We sat down with Webster to learn what goes into the MSP’s secret sauce. Scroll through our slide show for tips you can apply to your business.
Head of Channel Communities, Zift Solutions
Kris Blackmon is head of channel communities at Zift Solutions. She previously worked as chief channel officer at JS Group, and as senior content director at Informa Tech and project director of the MSP 501er Community. Blackmon is chair of CompTIA's Channel Development Advisory Council and operates KB Consulting. You may follow her on LinkedIn and @zift on X.
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