Basic business growth is nice. But profitable growth is far more impressive. So how are the world's best-performing managed services providers (MSPs) driving top-line revenue growth while boosting their profit margins? Here are three great examples.

July 11, 2013

3 Min Read
How MSP All Stars Grow and Increase Profits

By Continuum Guest Blog 1

Basic business growth is nice. But profitable growth is far more impressive. So how are the world’s best-performing managed services providers (MSPs) driving top-line revenue growth while boosting their profit margins? I heard great examples from three of our own MSP partners (Epic Technologies, Neoscope Technology Solutions and Principium Technologies) during a recent Channel Expert Hour webcast. Although each MSP is quite different, they are each expanding their business while also achieving higher margins. Let’s start with business results achieved while using Continuum RMM:

  • Jerry Gob and Jay Rollins founded Principium in 2010. The Louisville, Ky.-based company targets customers with roughly 5 to 250 seats. The company has been pushing hard into the VMware and cloud markets. Year-over-year revenue grew 170 percent in 2012, and the company’s recurring revenue rose about 85 percent with no headcount increase.

  • Tim Martin launched Neoscope in 2006. The Portsmouth, N.H.-based MSP has been pushing beyond the SMB market into the mid-market. Year-over-year revenues doubled three consecutive years with minimal staff increases.

  • Don Viar launched Epic Technologies in 1997. For 2012, the company hoped to grow revenues about 25 percent. In reality, growth was 92 percent without adding staff. For 2013, revenues are up 35 percent year to date. Viar has been pushing Epic into new markets like security, CCTV (closed circuit TV) and access control.

The big question: How are these companies driving growth — lifting revenues and profits — without rapidly expanding their full-time staff to keep pace? The answer: They leverage an all-inclusive, standardized approach to managed services. Or as I often tell Continuum’s MSP partner base, you need to take three steps:

  1. Centralize IT service delivery: Embrace a single management console to standardize monitoring and increase management efficiency.

  2. Streamline operations: Reduce labor costs by sourcing a NOC (Network Operations Center), Service Desk and RMM from a single vendor.

  3. Land and Expand: Use remote monitoring as a springboard into network assessments, backup and disaster recovery, service desk support and mobile device management.

By the Numbers

Think of it this way: The average MSP has:

  • Cost of Goods Sold (COGS) of 65%

  • Selling and General Administrative (SG&A) expenses of 10%

  • Operating profit of 25%

Don’t settle for those average results. Through automation and operational efficiency, our best-performing MSP partners achieve the following business performance – or even better:

  • Reduce cost of goods to 40%

  • Maintain SG&A at 10%

  • Lifting operating profit to 50%

As I told readers earlier this month: It’s time for MSPs to demand more from their vendor partners. Epic, Neoscope and Principium are three examples of how the “demand more” strategy can ultimately accelerate an MSP’s business performance. 

If you’d like to learn more about Continuum’s unified approach to managed services, please don’t hesitate to contact Continuum’s sales group at 724-720-9000.

Steve Ricketts is VP of marketing at Continuum, a leading provider managed services solutions that power MSP growth.

 

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