In my previous roles (R&G and Deacon) I was lucky enough to be involved with hundreds of small businesses and gained some valuable insights into the values, processes and systems that separate mediocre businesses (15% growth pa), from high growth (50%+) businesses.
What I learnt over this time is there are clear qualities separating those who out-perform the market and those who don’t.
Here are the four qualities I’ll be discussing:
- Out-performers have a ‘growth mindset’
- Out-performers measure, and understand the ‘bar’
- Out-performers understand the true nature of ‘their price’
- Out-performers get the best people
1. Out-performers have a ‘growth mindset’
Simon Reynolds shared this term with me and once I understood his meaning I began to see the values which embody a ‘growth mindset’ appearing in many “Best in Class” companies which I worked with. A growth mindset embodies a yearning and desire for constant learning and improvement. This isn’t always the owner of the business reading “self-help” literature, but something that is ingrained into the values and culture of the organisation.
These businesses have created a culture of ongoing learning and development, in which they tackle in a structured way. It is measured, built into KPI’s and talked about often. Meetings exist where staff members review performance, gather feedback from customers, search widely for solutions and then drive actions to improve performance.
As an example, many of the best MSPs are part of peer groups that on a regular basis share best practice strategies and are transparent about their business. HTG Peer Groups is a great example of one of these groups. Here’s a blurb from their website:
An HTG peer group is a group of 10-12 like-minded IT company leaders who meet quarterly in a non-competitive environment to network and discuss issues specific to each member’s concerns as a company owner, president or manager.
High growth MSPs also attend business improvement events such as Kaseya Connect in May. This is an annual event hosted by the Kaseya team and brings together 700 of the best MSPs from around the world as well as proven experts in the field to host business topics that are important to your IT service business.
If you’re the business owner it is your responsibility to maintain a growth mindset. That means, you need to spend time reading to improve yourself and your business on a weekly basis. Here are a couple of great resources I personally recommend:
Continuous improvement comes from the top. Start educating yourself and build a culture of constant improvement within your company.
2. Out-performers measure, and understand the ‘Bar’
When I started my Managed Services Business our slogan was “Benchmarking Australian IT” – or, becoming the benchmark by which all IT companies are compared. Whilst an admirable quest, what I was missing was an understanding of where the “bar” (or benchmark) was actually set.
This is where organisations such as HTG excel. They assist in giving MSPs a baseline to work with because let’s face it, most of us work in a bubble for 95% of the time not knowing how we compare to others!
I made the mistake of simply trying to copy the “market leaders” – if Market Leader X had a role whose sole responsibility was logging and monitoring jobs, then that’s what we should do to become the benchmark! What I realized later, after speaking to one of my clients who ran a highly profitable and rapidly expanding legal practice, was that by taking this knee jerk approach I was effectively trying to replicate someone else’s business model –never a good idea.
He explained what I needed to do to ‘Understand the Bar’ was:
- Find out what were the key components that made a satisfied customer in our industry? We found the four areas were speed, accuracy, partnership and advice
- Find out how our customers rate us in these areas
- Find out how we compare against the top performers and vs. the industry average in those key areas
- Get the feedback regularly (quarterly)
I was lucky enough to find these answers and by having an understanding of where the “bar” sat, I was able to drive continuous improvement in our program. Our business changed from a $1.5m business growing at 12% a year to a business growing consistently by 40%-50% per year. The processes we implemented back then are still being used to this date, and are accountable for our continued growth.
One of the initiatives we implemented in that business was a customer feedback tool. This tool was so successful for us, it formed the basis of why we developed Client Heartbeat.
Best in class companies in any industry are companies that take action. They take feedback regularly, measure it accurately and understand where their competitors rank. If they drop below the bar, they bring staff together to highlight and solve the problem in a way that works for their business. If they exceed the bar, they celebrate internally and build this into their unique selling proposition (USP) to win more clients.
3. Out-performers understand the true nature of ‘their price’
The MSPs I worked with that were growing by 100% each year weren’t discounting. Isn’t that an odd fact?
I’ve talked extensively on pricing in one of my previous posts. It is absolutely critical to both growth and profitability that you understand the true nature of how price affects your business. Read my article on MSP Pricing.
4. Out-performers get the best people
Having owned a recruitment business that specialised in staffing for MSPs, I’ve certainly seen my fair share of hiring methodologies. The truth is, without great people you will not be successful – you can’t do it on your own!
There is a saying, you get the team you deserve and I believe this wholeheartedly. I suggest that if your team is not performing to your expectations, it is not their fault…..it is yours!!! You are in charge of the people you have on the bus, and you are responsible for giving them the tools and structures that allow them to excel in their jobs!
Marcus Billingham in the book First Break all the Rules says it best:
“The vast majority of people, want to do a good job”
So how do attract the best people? I’ve hired hundreds of roles for MSPs and here are some of my tips:
Wait for the right person:
Too often, businesses compromise because they need someone ASAP. Don’t just put a job ad up and select the “best candidate” out of the list you received. To become a high achiever with top quality people you need to be selective. Re-advertise. Speak to a recruiter. TAKE YO
Pay them what they are worth:
One of my clients when I was in recruitment was an MSP with three staff. He came to me looking for a BDM and I just happened to have someone I thought might be suitable. The BDM wanted a $100,000 package. Now, in most cases other companies where I had shopped this BDM around to had refused to offer such a high package to begin with, however this particular client with a tiny team and handful of clients didn’t blink an eye. 12 months later, my client was sitting near the top of the CRN Fast 50 and 12 months after that had moved into an office that seated 35 people.
You must pay people what they are worth to get the best quality people. Top performers in any role understand that they add a lot of value. By trying to save an extra $2,500 pa – you can come across as cheap or offensive. The worst situation is where you ask what their absolute bottom is, and then you go back $2,500 cheaper to try and get a “deal”!!
Hiring people is not like negotiating your new mobile phone contract – you don’t need to squeeze every last cent out of them!! Instead of trying to screw them down to below what they are comfortable with, try a performance bonus structure that is aligned to adding additional value to the company.
The most successful companies I worked with had the philosophy they would pay people what they wanted but demanded world class results. And guess what? Their people worked their butts off in return!
Don’t just look for technical skills:
What really surprised me when I started recruitment was that there was such a massive difference in the types of people that my clients hired. Most the time it was typically based around the personality of the business owner. The most successful MSP business owners looked past just technical skills and evaluated the candidates based on values and characteristics that they wanted in their team.
In one of my favourite books of all time “Winning” by Jack Welch he talks about the 4E’s:
- Positive Energy
- Ability to Energize Others – probably more relevant for managers but still a great characteristic
- Edge – The courage to make tough decisions
Technical skills are important, but only become a portion of what you must look for when selecting a candidate. Just because they can technically do the job, doesn’t mean they will do the job well. Take your time!
5. Use Client Heartbeat
If you really want to focus on business improvement, having a “growth mindset” and also attracting more referrals – I recommend you take a look at Client Heartbeat.
Client Heartbeat is used by top performing MSPs in the US, Europe and Australia.
The tool can help you:
- Identify your BIG customers at risk of leaving you
- Benchmark your performance against your competitors
- Automate customer feedback
- Get more leads and sales
Click here to see why 20 MSPs a week are signing up for Client Heartbeat
So there you have it. What I believe the fastest growing and most profitable MSPs that I’ve worked with seem to understand that the others don’t. Master these areas and I guarantee you’ll be growing faster, and become more profitable in the long run!