Built to Last: 5 Steps to Ensure that Your Business Will Outlive You

You and your MSP company are two separate entities, and you have distinctly different futures. While you should both be growing and evolving, only one of you has to eventually come to the end of life. 

Regardless of what phase your company is in — startup, growth, scaling, or preparing for sale — you can take steps to ensure your company’s success and continued benefit to your heirs, employees, and customers. 

Here’s how to do it in five steps: 

1. Assess your current position.

Securing the future of your business is a journey, and every journey begins with figuring out where you’re starting from. Conduct a high-level analysis of the following areas:

• Finance
• Operations
• Market position

This first step is about getting a feel for where you currently stand. You’re looking for big problems that need to be fixed and strategic opportunities and capabilities to capitalize on. 

For finance, look at the balance sheet, profit and loss statement, revenue, profitability, cash flow, assets, and liabilities. Many business owners will already be up to speed on their finances, and if that’s the case take this opportunity to seek some outside perspective. Talk with other business owners, members of your leadership accountability group, or a consultant who specializes in finance. 

Evaluating the business’s operations and market position should begin in a similar fashion, as most MSP owners know what’s working, what’s inefficient or not working, and where they stand in their market. Also look at technology vendor and supplier relationships to ensure that you’re building strategic partnerships that will benefit the company in the long run.

As mentioned above, do some leg work to quantify the business’s performance and competitive outlook, and seek outside sources to gain additional context for how the business compares to other similarly sized MSPs. Conduct a strengths, weaknesses, opportunities, and threats (SWOT) analysis. This will be your baseline and serve as the basis for evaluation of the business’s performance in the future.

To complete this step, set some short-, medium-, and long-term goals for your company in the coming years. These goals can help to guide you on the path ahead.

2. Strengthen your foundation.

After completing the SWOT analysis, take the necessary steps to improve the business’s fundamentals. For many MSPs, the first step will be getting their financial house in order. 

I completely understand how bookkeeping can be difficult to prioritize during the early years of launching a business. But letting problems and oversights compound will only cause more trouble later.

The reality is that life comes at all of us fast, and unpredictable things — both good and bad — will come your way. On the upside, you may receive a surprise offer to buy out your company. On the other hand, IRS audits, cash flow problems (that may necessitate a short-term loan), natural disasters, and health crises also happen.

It’s wise to get your books in order now, so that whatever comes your way, you won’t have to be worried about your books. Creating a data vault should be your first step.

A data vault is a single secure location, physical or virtual, where all essential business documentation that would be needed to demonstrate the business’s standing and financial wherewithal can be accessed on short notice. The data vault should include the following documentation:

The next step is to optimize your company’s operations. Consider starting with your company’s documentation, including policies, standard operating procedures (SOPs), and training materials. Determine if they still make sense and are representative of the processes that employees actually follow. 

The actual processes that are followed often evolve (or devolve) much faster than SOP documentation is updated, and the variance can cause a wide range of problems. Take the time to update the documentation and ensure that new hires will be trained with the correct materials going forward. This step alone will eliminate many future problems.

As you work on optimizing processes, look for opportunities to streamline operations while minimizing reliance on specific individuals to accomplish any particular task. The workload should be spread evenly across employees, and all tasks should be able to be delegated when necessary. As you work on improving processes, look for opportunities to invest in technology and automation to maximize your employees’ efficiency. 

At the conclusion of this step, your company should be running more efficiently and profitably than ever before.

3. Create a growth strategy.

Build upon the company’s solid foundation with a growth strategy to help you reach the goals you set in Step  1. A Google search will provide numerous options for MSP growth strategies, but I would start with this blueprint from Robin Robins at TMT. Channel Futures also has several useful resources, including this helpful blog.  

Do your homework, talk with other business owners, and develop a roadmap that will get your revenue and profit from where they are to where you need them to be to accomplish your goals. If you’re just beginning to research growth strategies for an MSP company, I highly recommend Mike Michalowicz 's bestseller, “The Pumpkin Plan.” That book changed my life!

4. Cultivate a strong leadership team.

As your company grows, it’s important to decrease its overall reliance on you, as the owner, to perform all essential functions. The only way to hand off essential functions is to recruit and hire the right people to be your company’s future leaders. This is definitely a long-term process, and it may take years to recruit, train, mentor, and develop your leadership team.

As your company grows, look for opportunities to delegate tasks to employees when you think they’re ready, and empower them to take ownership of their roles and the outcomes of their work. 

When your leadership team is in place, create a succession plan to ensure a smooth transition in the event of unforeseen circumstances.

5. Secure your intellectual property.

It’s easy to overlook intellectual property (IP). While some MSPs may have IP related to technology or process innovations that could be classified as trade secrets or be eligible for patent protection, almost every MSP has the more common forms of IP: trademarks, copyrights on code or documentation, and domain names. 

Be sure to lock down the company’s IP to protect your brand and hard-earned innovations. From a marketing perspective, it’s critical to protect trademarks, copyrights, and domains to prevent another company from using or trademarking them before you do.

Own Your Future Starting Right Now

It may seem a little daunting, but securing your future starts with simple steps you can begin working on for just a few hours a month.

Do the easy stuff first: assess your company’s current position, set some goals, and start working on a growth strategy you can believe in. From there, move on to the later steps as the pieces come together. Your future self, company, employees, and customers will be grateful!

Feel free to leave a comment or reach out to me on LinkedIn if you have questions about growing your MSP. I would love to hear from you.