Time to Sell Up? MSP Plans for 2022Dec 14, 2021
Let's be honest, 2021 has been a challenging year for all types of IT Businesses. Perhaps you were one of the lucky ones, sitting in a niche market, therefore, finding that the restrictions of 2020 and 2021 didn't impact you as they did many others. Or maybe you have been fighting a constant battle against your customers going out of business or faced other hurdles you've struggled to get over.
I think most of us are hoping that 2022 will be the year we will finally see ourselves out of this mess and back to some sense of normality, so it might surprise you to hear me say 2022 could actually be the best year to sell your business and leave it all behind. Before we get to that, let me give you 5 key things to focus on for the coming new year...
So, let's get to my five focus points for 2022 and find out if selling your business next year, could be the best thing you ever did!
Communication is key. Sounds obvious right? Wrong! This is by far, the biggest issue that I've come across through all of the MSPs that I've worked with this year and through all of the conversations I've had with prospective customers. Get communication right, and deliver a good service, and the rest will generally take care of itself.
If clients call in with a serious issue - don't just log a ticket and then get your head stuck down into fixing the issue until it's fixed. Make sure you agree on a timescale that commits you to regularly communicating back to the client with updates. Checking in every 30 minutes or every hour can make the world of difference to your customer who is sitting there, waiting for you to fix something, but with no visibility or feedback of any progress, you are making.
My Favourite CRM tool is Active Campaign which is an excellent form of communication for MSPs. You can use ActiceCampaign to set up groups for these types of emails, critical notifications when services are impacted across multiple clients, as well as send product updates or marketing emails.
Active Campaign has loads of really great features, including some automation features that would cost you an arm and a leg had you invested in something like Hubspot. There's a link down below where you can sign up to ActiveCampaign for just under $150 per month and it has everything you could ever need as an MSP.
Now I want to teach you some quick tricks that may be worth trying for your business, which I picked up from reading The Psychology of Persuasion. See what you think...
- Using terms such as “Most Popular” increased dish sales at a restaurant by up to 20%. The social proof of something being seen or marked as popular would make others consider it more than other items.
- A car retailer had their normal ads perform poorly. But after they put out an ad looking for a new sales rep as their showroom was getting busy and their car sales were popular, this led to a 41% increase in sales in Jan from the previous year.
- You can acquire “trustworthiness” by being upfront about the drawbacks of a product or service, before trying to sell the benefits. This not only applied in selling but in general everyday social situations.
- Five stars are too good to be true. A product or service is more likely to sell if the rating is between 4.2 - 4.7. Potential purchasers are more suspicious of only good reviews.
- Negative reviews establish credibility. If customers saw a negative review alongside other positive reviews, they were 67% more likely to purchase.
- When a form has lots of fields, splitting it up and putting as few as possible on the first page, and then distributing the others on more pages, would increase form completion. Just reducing the number of first-page fields from four to three would increase the completion rate by 50%!
The third thing is Feedback. I know it sounds counterintuitive, but you actually want to be encouraging brutally honest feedback from your clients AND your staff.
Without blunt, honest and even negative feedback, you can't make the changes needed to improve those issues within your business. Welcome feedback, good and bad but make sure you do something POSITIVE with it.
Remember, when one client has the balls to give you the honest feedback you may wish never saw the light of day, there are probably other clients sitting there who have felt and thought the same but have been too polite to tell you. Those polite customers are the ones most likely to move onto another MSP instead of speaking up, so address issues openly and demonstrate your willingness to listen and make changes.
Use tools like Customer Thermometer, SmileBack and CrewHu to survey your customers and make sure the wording you use in those emails, encourages honest and constructive feedback. My personal favourite by the way is Customer Thermometer and you can get 20% off for the first 3 months by using code pmatheson20. Check out my video about how to get the brutally honest feedback from customers that every business needs.
For your staff, tools like OfficeVibe can be a fantastic resource to make sure you are listening to staff feedback, and that your team is all operating on the same level.
This might sound like a boring one, but it's one of the most important. You simply have to plan and set your goals. If you don't have a goal - well, you're not ever going to hit it.
Remember when planning your goals to include those in your personal life too. Mapping it out like this can be so powerful.
- Plan out all of the things you PERSONALLY want to do in your life next year. Holidays, house renovations, fitness goals, time to yourself, financial goals, savings, whatever they might be.
- Then, plan out all the things you WANT to do in business. Whether that's hiring more staff because you want to delegate some of your work, or whatever else you think is the next important step in your business
- Finally, plan out all of the things you NEED to do in business. Because once you've addressed the personal wants, and the business wants, you'll NEED your business to do certain things. Maybe you'll NEED bigger offices because you've hired. Or maybe you NEED to reduce your overheads so you'll be downsizing. A common one, to meet your goals is that you'll need more customers, but taking on more customers requires more staff.
- So your needs will be to acquire perhaps X number of clients per month, but also every 3 or 6 months, you'll need to hire a new member of staff, how on earth will you achieve that without some sort of goal tracker?
To help you out I would love to send you a free goal planner template that you can pull apart to map out your 2022. Just email [email protected] and tell us you want one.
Before I get to what some may consider a controversial number 5, head over and subscribe to my YouTube channel for weekly videos where I share my MSP tips, knowledge and ideas.
Number 5 if you haven't guessed it, is why I think 2022 could be THE BEST year for you to sell up and exit your business. The reason for this? Well, just like second-hand cars, IT Businesses seem to be following a trend and are currently selling at a much higher valuation than they normally would.
If you aren't or haven't been considering selling, bear with me for a moment...
Much like inflation on property and consumer goods, it seems that peaked interest in companies looking to acquire IT businesses is also forcing up valuations beyond the norm. In fact, from what I have seen, businesses are getting at minimum, 1x multiple more on their EBITDA than they normally would.
The UK Governments latest changes to Entrepreneurs Relief means you only pay 10% in tax on the sale price of your business - (capped at £1 million up until March of 2020). So if you are approaching a valuation of £1m, you might want to think about if it's really worth it to push beyond that valuation price, when the government is just going to help themselves to a bigger piece of your pie.
If you aren't considering selling your business, then what I would do is pay attention to what your EBITDA is. This stands for Earnings before Interest, Tax, Depreciation and Amortisation. In fancy terms, it's the figure that every MSP valuation that I've ever seen starts with.
Even if you aren't planning on selling your business anytime soon, I would be tracking that number every month and trying to improve on the number so that when that day does come, just like it did for me, you will be ready. See the brutally honest video that I published two weeks after I sold my business to understand a little more about why I made that decision, if you're in two minds, it might help you.
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