Secrets to MSP Success: Unlocking 8 Growth Factors

josh (00:00:03) - Good day, fellow dealmakers. We got seven minutes on the clock today. We're going to talk with Paul, who's going to talk to us about what is the value of your MSP and how to increase the valuation, because one day you may want to have a big exit. So Paul, welcome to the show.

Paul (00:00:17) - And thank you very much. Josh, thank you for having me.

josh (00:00:20) - Yeah. You're welcome. All right. So talk to us about what is an MSP business and what are some ways MSP can increase the valuation of their business. Okay.

Paul (00:00:29) - An MSP is a managed service provider. providing IT services outsource IT services to its customers. and you know, what they can do to increase the value of their business is they need to do marketing. There's basically eight facets to any business that you need. Concentrate on anything from marketing, sales, training, legal. You got to have a CPA that knows your size business and knows the MSP market. Need an accountant. You're always looking to upgrade your employees like your customers are always looking to upgrade their equipment and their services.

Paul (00:01:09) - But you also need business coaching. You have industry standards that are very specific with MSPs and then human resources. And those are the eight areas with no matter where you are in the business maturity model, for an MSP. And we have and our tool will go ahead and it will identify what peer group you are in that, in that in that business maturity model. And it'll give you a customized budget to help you grow and accelerate your growth up to the next level of MSP or the next peer group.

josh (00:01:43) - Got it. So you created a tool that allows you to look at the eight facets of business for MSPs.

Paul (00:01:49) - And every business, every business has the same thing. The only thing that really changes for MSPs are the are the services and the delivery. But every business has the accounting, has the legal, has the accounting. It's always looking for everything else but the eight business facets, they're all the same. But the MSPs thing that makes them different from everybody else is, is, is, is the industry standards and delivery.

josh (00:02:15) - So in those eight different facets for an MSP like which one should we dive in today to go in a little bit more details that will have the biggest ROI for the MSP that they're looking to grow.

Paul (00:02:28) - the biggest ROI a lot of people might, might think of, you know, marketing, having a best ROI. But the problem is, is MSPs are are horrendous for spending money on marketing, but knowing, not knowing what to do with the leads when they come in. Okay. And so and so now okay. Now let's take a look at sales training okay. Sales training goes hand in hand with that. Where MSPs traditionally the owners tend to be the IT geeks that that that go, hey, you know, I have these customers that come with me and they steal them from other businesses and, and go off that way. And it's really rough to really look at just one segment of a business that has eight pillars. And you know, you got the business coaching, you got human resources and stuff like that.

Paul (00:03:21) - You know you can do the marketing and advertise and sales training. But if you're human resources and not not keeping your people happy. Okay. You're not going to go anywhere. So just to focus on just one pillar. Josh, you're just trying to get me to do that. It's just really it's really tough. And and that our tool will give them a way to go how much of their budget they should be spending at each peer group throughout the business maturity model, how much they budget they should be spending in eight business segments. Yeah. And so it's not just one, but it's all eight and it changes as you maturing in your business.

josh (00:03:59) - Really. Okay. So the what your tool allows the owners to do is take a look at, you know, what what they're doing in terms of their business. And then where should they be at that time increasing that that one aspect to get it to their normal peer groups, to increase their valuation. And as they grow and mature, those pillars may change.

josh (00:04:19) - But depending on what stage the rat it diagnoses their business and shows them where they might need some TLC in their business. Right.

Paul (00:04:27) - And it gives them a roadmap in a comparison against their other peers. So a lot of times when we're talking to an MSP, go, hey, okay, here's a list of about 20 questions we have. Where are you here, where are you there. And what happens is within their peer group, they might be over exceeding some stuff within their business, but there might be stuff that they're not spending enough time at. And there's pros and cons and different reasons. You know, we're just asking for financial questions on doing this evaluation. It's it's, you know, 15 seconds or less. You can get this information and, and see where you are and and more so yet you look at the peer groups ahead of you. And you can kind of see and and strategize and make better decisions. And what you're doing on a daily day and month to month, quarter to quarter on getting you ready to be at that next level.

Paul (00:05:16) - And a lot of times as you progress from from level to level peer group to peer group, your your your your your increasing your multiple value of your business and by, by increasing those multiples, it comes in really handy when you're looking to do any type of exit or you're talking to an investment broker dealer, a fund manager area, or mergers and acquisitions. You know, it's amazing our, our, the MSPs that we represent, they educate a lot of times M&A organizations and the investment bankers on this is what you need. This is where we are. And you know when you're looking to combine us with someone else, this is this. These are the parameters and different types of stuff that you need to look for to maximize your return and in an expedited manner.

josh (00:06:08) - Yeah, that's super interesting. So for MSPs, if they're looking to, you know, have a tool to diagnose their whole business, show them where they're doing well and maybe where they need to, you know, put some more attention to what's a good place for people to connect with you.

josh (00:06:21) - And check out your valuation tool and your, your blueprint for for growth.

Paul (00:06:27) - Excellent. Well, they can go to Biz Biz Advisory board.com. They go into our store and they take a look for the MSP business evaluator. We do have a free version that will provide them with a quick evaluation and it'll tell them how close they are to the next peer group. And a lot of times if they graduate to the next peer group, they could be worth up to six times multiple.

josh (00:06:55) - Man. That's great. So, fellow dealmakers, I hope you enjoyed these series. We try to get all this information in seven minutes or less. If you have a deal that you'd like to talk about here on the deal, scout, head on over to the deal. scout.com. Fill out a quick form and, maybe get you on the show next. As always, reach out to our guest and say thank you for your time and your energy in sharing this education with us. If you are an MSP or a business looking to, do just a quick check on your eight pillars, head on over to Biz Advisory Board Comm, take a look at their offerings and, find a way to do a deal together.

josh (00:07:31) - That's the mission purpose of the show. Well, guys, I hope you are having a great day and we'll talk to you all on the next episode. Bye, everyone.