December 10th, 2012 by Antonio Piraino, CTO
The biggest concern for stakeholders in any business is whether or not they are improving the valuation of their company. This is especially true for the IT team. IT and Managed Service Providers (MSPs) are always looking for ways to add value back to the business while figuring out how to make their daily work life easier. As IT professionals, we’re all working toward inflating the jingle of cash in your pockets, while figuring out how to make your daily work lives easier; keeping customers off your back, while having prospects desire your services; and leveraging your IT resources in new ways for both efficient operations and creating unique value-adds to our business. All of these day-to-day, nuanced activities culminate in an upward trajectory in value for your company.
So here is the first half of our top 10 ways MSPs can increase their business value.
1. Uniqueness/Value added services
- Client Interface: Have you differentiated the value you provide? Have you made that value clear?
- Resellers: Are you presenting what you do for your customers in unique and differentiated ways? Do you show the additional value that goes into what you do? How well do you show the unique value of what you do for your customers? Are you looking at enabling resellers to create a true indirect channel for your services?
2. Operational Leverage
- Infrastructure freshness, unified platform, predictability/proactive intelligence, modernization cost,
- Incremental headcount attributable per new customer
- Cost of customer acquisition/onboarding
- Average remediation time/cost: How efficient are your operations when it comes to resources, time, costs. Leverage tools and get to the point where you’re so efficient you have an advantage- you can launch and onboard customers faster and drive more value.
- Consolidated Number of Tools for IT management
3. Don’t simply look to exit
- Listen to the market. It may not be a good time to sell or buy. Put money away and keep taking advantage of the business and industry
4. Recognizing Synergies
- When an acquisition happens, the true value of the transaction is not actually accretive – so make sure that it is known what synergistic vale you can bring to the table, e.g., are there operational leases that can be closed out by either side? Look for places to cut costs and streamline.
- What is the EBIDTA contribution to the buyer?
5. Customer Stickiness
- When you have large customers getting close to the end of their contract, this can be a real issue. Are your customer contracts transferable? Make your lawyer close those loopholes.
- How do you show your customers that what you provide they can’t get anywhere else, or it would be too hard to go to someone else?
- Reduced churn: Churn rate is another great metric to look at and improve to increase the value of your business.
Look for another blog post in the next few weeks that covers financials in detail, such as EBIDTA and top line revenue, as well as capital expenditures, and of course 5 more ways to increase your value.