EP169 – BF Edition –
Maximising MSP Profitability with Ian Luckett

INTRO

In this episode of the IT Experts Podcast, we're going to help you maximize your MSPs profit.

Welcome to the IT Experts Podcast, the only podcast to help MSP's scale to 1,000,000 in if already there get to 5 and go fast at the end of the day. Isn't it all about building a business that works for you rather than you for it? I hope you enjoy the show.

IAN

So, good morning, good afternoon, good evening. Welcome to the IT Experts podcast. Hope you're all doing good. Today we've got a quick punch in the gut, slap round the head, whatever you want to call it. This is the Breakfix edition on how to maximise your MSP's profit. Why am I doing this show? Well, to be quite frank, last week we spent a couple of weeks with our clients at the two day intensive, which is when we reset their growth plan, so they all understand what they're doing, what the focus is for the next 16 week period, how to overcome these hurdles to do some networking and have a bit of fun, all that kind of stuff.

Anyway, one of the subjects and one of the topics that we were talking about was, yeah, it's great to build and aim for £1,000,000 MSP, right. But we want to make sure that you're making the profit. We want to make sure that you are, you know, sustainable so you can reinvest that money back into your business again. You can reinvest in the right people and the right roles in the right organization. You can reinvest in the right tools, even though you guys do have this innate ability to just buy every single thing, and the clients who are listening to this, you know who you are. People in Belfast, people in London, people in Birmingham, you know who you are, who just go out and buy every single thing, every single new little shiny little toy that comes out.

But in this episode, which is the breakfix Edition, if you haven't heard these before, these are quick, super smart. I need to get them under 10 minutes is my aim, for this is to help you with. I've got three things I want to talk to you about today. That's going to make some big difference because it's what's making big difference to our clients because they are following the frameworks that we use at the Growth Hub and they're getting amazing results. And these are just some of the things that are just popping. So I'm going to share them with you because I thought it'd be a good thing to do. So, you know, profit, as we said, is really important and if you're struggling, you've just turned like the back end of last year, it was alright, you know you it could be better, but do you know what the definition of insanity is doing the same thing every year and expecting a different result. So we've had a flurry of people who've just fed up doing that and they've come to us and sort of salute. How can you help? And we having some conversations which is absolutely brilliant. We've actually got a quiz on the website which you can go and check out MSP mastery quiz. If you hit the mspgrowthhub.com website there's a quiz in there and it helps you understand where your business is kind of check in on your maturity, where your business is right now where you could be and gives you a score and a bit of an action plan, which you can focus on which is really cool. You know the definition of doing the same thing year on year and expecting a different result is absolute madness. So let's change that, let's make some more money in your business. Some more profit in your business this year.

So the first one I want to talk about and I'm going to mention it and then you're all going to sigh and moan is... Knowing your numbers. Okay, but what I mean about knowing your numbers, doesn't just mean and we kind of find that we're repeating ourselves and the reason we're repeating ourselves because it keeps coming up and people keep making mistakes around this and not understanding their numbers and then they find themselves in cash flow problems and they can't get the right people because they're too expensive and but they don't know when they can invest because they haven't got a cash flow forecast. Their clients are jumping around all over the place. Some of them leaving, some of them starting, and it's all a bit of a, all a bit of a mess to be fair. So you know, understanding your numbers is super important. Understanding your P&L, you can go you know you can get really good grapple on this through your 0 system and how that works, your cash flow, understanding what the next 16 weeks is in your cash flow, what's coming in, what's going out, what can you invest in? You know if you wanted to spend some money on marketing or on some people, or an event or something like that. How do you know whether you can invest it? Because remember that your bank balance is not the health of your business. It's just pretty much what's in your bank right now. It means nothing, and pretty much like your turnover as well means. It obviously means something because, it's because there is a certain amount of profit in there, but you know, we're working with our clients to get anywhere north of 55% gross profit and anywhere north of 20% profit and a lot of them when they join and not where they need to be and we can help them with that and slim down and strip up and we have a lot of things in the Growth Hub called low hanging fruit.

Right. So #1 want you to understand where your cash position is and where your cash flow is. Simple cash flow, don't bother the ocean, don't go and buy some system to do it. Just work out what that is, understand what direct debits you've got that you're paying for. What subscriptions have you got, what bits of tech have you bought, had him for a year. And yes, that particular client I'm referring to, you know who you are and has done nothing with it. How many of you are listening to this, where you've gone to an event you've bought something cause it's an introductory offer. You've gone back to the office, you've got really, really busy, and then you've gone. But yeah, what's this thing we're paying. You know how many hundreds of dollars or hundreds of pounds or whatever it is a month for, we don't even use, wait, what a great idea. Well, if you've got money like that, spare come and send it to me, I'll give you my bank details and you can send it to me. And I might even ring you once a month and just have a chat. But, look, in all seriousness, understand where your cash question is, understand what direct debits and subscriptions go through your bank balance strip, out the stuff that you don't need if you're not using it. If it is not creating value, creating the opportunity to add profit and turnover in your business for the next 12 months, get rid of it. Delete it, phone up your bank, have a good call and you will make a bucket load of money by just doing that because people don't do this, and that's why, you know, some of these subscriptions are really great for the vendors because people buy it and then it just sits there and then and then never even used the system. So #1 know your numbers, cash flow, direct debit subscription. So let's have a bit of a clean out. Make sure we've got all that in place.

#2 analyze your clients and start to build an amazing account management process in your business. What I mean by this is, you know, and I'm not talking about boiling the ocean and creating a processed end to end, you got to involve everybody in it, you know, to start with, have a look at your clients, pop them on a spreadsheet. Some people call it white space selling. But I actually want to get before that, that's around what products and services each client has with your, you know with you. I want you to understand how many of them are actually profitable or and I want you to focus on the ones that are not comfortable.

I was talking to one of my clients yesterday, a year ago, it's only one of the little guys. A year ago he was not profitable. He was in a bit of a bit of a pickle. We had to make quite a few changes to sustain the business, talked to me yesterday that's 70% gross profit. I said, how did you do that? What did you do? It says it was really easy. I said go on this, I sacked all my little clients that weren't making me any money. Really, is that what you did? He said. Yeah, it's got all this noise going on all these phone calls going on and they weren't paying enough money. They didn't see the value in what we were doing. They kind of hadn't been through all of the things in the scripts and the way that we operate here at the Growth Hub and he just pinned them off and that was it and started making, you know, much, much more money.

So summer turnovers actually stayed the same. But my profitability has gone through the roof. We're now he's in a great position to build from a foundation he can. Then he then knows that if he brings in more clients and they're at that same profitability level, what's going to happen? It's going to be much more profitable. So they can then invest in people, team, proper systems, proper processes to build that business and to build that scalable MSP that we all want. So have a look at which clients are profitable, have a look at which clients are buying what services from you and what opportunities have you got there, have a check in so you make sure you've got your PSA configured correctly. Because guess what, if you haven't got your PSA figured correctly, then you're not going to be proper costs in there, so you're not going to know the profitability and the, you know, the health of each of your clients, you know, so you know what the good, the bad, the ugly are. So analyze the clients. Get all of that in place. Know where you really are so #1 know your numbers business where that's sitting at #2 know your clients where they're at. This is your low hanging fruit stuff.

We always keep talking about #3. Let's have a call, let's get rid of those clients. Let's go and have a conversation with them. Go and have the brave conversation with them, which is what some of our guys were talking about last week, either. So that package you're on right now is not sustainable anymore because of the investments we've made in our security, our team, our infrastructure to keep us safe and to keep you safe. So therefore, your package is now X, if you don't like it, we can off board you know, problems because I know because I've done step one and two. I know that you're not profitable anyway, so I'm quite happy for you to go and find yourself another MSP.

Good luck with that one. So let's start sacking off the clients, that are not profitable. Sacking off the ones that are not making you any money and that are really, really noisy or getting to love you again and you know, go back into them and reclose them, read the value, make sure that you're telling them you know, how you're developing your business so that effectively you're going to be creating more value for them and. Hopefully, well I know if you carry out those three tasks on this very, very quick Break Fix Edition podcast, you will get yourself in a much stronger financial position. You recruit the right people, go and do some amazing marketing so that you can then go and attract the right clients. Which is then going to make your business more scalable and your business will start to become a great place and it will work for you rather than you working for it. So I hope you enjoyed this quick sharp jab in the ribs helping you out get a bit more profitability in your MSP. If you need a hand with anything, if anything piques your interest, you know where you can find us on LinkedIn, drop us a quick message, more than happy to chat in the meantime, you can enjoy the rest of your day and I look forward to catching up with you soon. Take Care now.

OUTRO

So I hope you enjoyed the show if you did, I'd love it if you could leave a rating and review on your favorite podcast platform. If you want to know more about how to take your MSP to a million or if you're already there go faster. Then come and join Stuart Warwick and myself in the scale with confidence Facebook group the link is in the show notes. You go enjoy the rest of your day and I look forward to connecting with you soon.