Getting your Managed Services Business to $2 Million

Let’s figure out how many billable hours you have per month.  Assuming 148 hours per month total (168 – 20 for vacation / sick / holiday) per technician at 70% utilization equals 104 hours per tech.  Let’s round down to 100 hours per month, and multiply the result with the number of billable resources.

Determine how many average hours were worked in the prior three months and subtract that number from the total available.  The result will determine how many man hours you have on the bench each month.

Take the total hours and divide that number by five to come up with a burden point total.  (Assuming 3 technicians, you would get 60 points)

Now, look at your MSP customers and rank them by hours worked per month.  Rank each customer as a 1 through 10 (1 is small, lower revenue customers, using an average of 5 hours per month, while 10 is for your larger customers, 50 hours per month or more).

Total those customer points up to figure out how many points you have available after your average month for growth.  Let’s assume you have 40 total points in your current customer base, and you can take on an additional 20 before you are fully burdened.  With this knowledge in hand, let’s focus on growth.

Build an inverted triangle (funnel), and draw four lines vertically across it

Fill the top area of the funnel with “leads” or “suspects”.  These are raw opportunities generated by marketing efforts and contact lists.  Let’s assume for the sake of demonstration that you can find 100 suspects per month.

Establish a methodology for turning suspects into prospects.  A prospect is someone who can use your services, and is like to engage in the use of someone’s services during a specific timeframe (3 months, 6 months, whatever).  This can be done via email, call campaigns, surveys, and direct mail.  When you are done sifting those 100 suspects / leads, you should end up with roughly 20 prospects.

This is where the sales people get involved.  Sales efforts don’t happen at the top of the funnel (if you are expecting your sale people to manage their own funnels from top to bottom you will find it exceeding hard to keep good salespeople on staff).  Get the prospects into the hands of your sales team, and convert those prospects into customers.  On average, 20 prospects are going to yield 2 customers. 

You just grew by two customers.  Congrats.  One of the customers was a 2 (smaller) and one was a 4 (larger) for a total of 6 additional points of burden, leaving you 9 left before you are fully burdened. 

As you repeat this process month after month, you will have suspects that did not make it into the prospect pool, and prospects that did not make it into the customer pool.  Those prospects are still valuable, and should recycled into the prospect pool after a period of time (maybe 6 months), to be contacted again.

Suspects are a little more challenging.  Sometimes they are rejected because they simply don’t fit your business model, and likely never will.  Those you should flush out of the funnel, but keep the contact information somewhere, as you might have an offering that is a better fit somewhere down the road.  Others will not qualify as a prospect because they demonstrate no current need.  Those should go back into the suspects funnel after a resting period (6 months to a year).