How Coronavirus Impacts MSPs
It's easy to hear the gloom and doom that is reverberating on media outlets around the world, but there are some bright spots on the horizon for IT managed services providers. The dramatic shift towards remote working might create a short-term opportunity for consulting fees, but there are also broader implications for your business. While saying that "business will never be the same" might be a bit sensational, the reality is that some leaders will exit the COVID-19 structured stay-at-home orders and decide that remote work . . . just worked for their company and staff. With this shift and many others on the horizon, how can your MSP position itself well to survive the short-term crisis and prepare to thrive in the future?
Surviving the Coronavirus Epidemic
With some industry experts such as Arlin Sorensen estimating that up to 20% of businesses are cutting back on their IT spending during the COVID-19 pandemic, how can smaller MSPs weather the economic storm? There is no set expiration date on the economic bounceback that is expected, and small to mid-size businesses are likely to struggle -- potentially for several years, as government aid becomes difficult to obtain. This means that MSPs will need to ensure they have the right mindset in place to work through the downturn and find the clients that are able to grow their business during this extended economic shift.
Staying the Course
Here are suggestions from long-time MSP leaders to help you get through the coronavirus crisis:
- Cash is King. Protect your cash, limiting or extending payments as much as possible -- aiming to get at least 90 days of cash in the bank.
- Work with your bank to create or extend a line of credit to give you short-term access to the funds you need to maintain operations.
- Look for short-term ways to generate revenue, such as supporting local businesses that have an immediate need for consulting.
- Take full advantage of the government programs that are being provided for small businesses.
- Vendors and suppliers may offer discounts or other short-term solutions that you can take advantage of, such as deferred interest payments, mortgage payments or reductions in software costs.
- See if there are options to pause certain payments such as your 401(k), in an effort to manage cost containment before looking to reduce staff.
- Review overtime and consider furlough for individuals; evaluating teams to ensure you have the right team members in the right positions.
- Check any outstanding monthly payments, such as monthly subscriptions that can be canceled or reduced.
The real impact of the economic crisis is not expected to hit for several months, as companies are likely to receive a short-term buoy from the government stimulus checks. When these dollars run out, it's unlikely that the country will be fully open for "business as usual", which could dramatically impact your earning potential in the short-term. What's most important for businesses during this time of confusion is that you actively communicate with your landlords, vendors and clients.
Exceptional Opportunities for MSPs
Just as there are challenges with the current situation, there are also some exceptional opportunities that you can find in the community. Now is the time to review your strategies and current offerings, leveraging the most valuable services that generate the greatest revenue across your client base. Instead of trying to support a wide range of new business opportunities, look for ways you can double-down with your best customers and add true value that will help their business thrive as the economy begins the slow upswing. When you add value to your clients during a difficult time, your MSP will be top of mind as your clients shift out of survival mode.
If your company is struggling to find new opportunities, maintaining and even growing your marketing activity -- in the right way -- is what can help your business shift into high gear. Why not take this slow opportunity to retool your operations or consider updating your own website? It's often difficult to focus on improving your own company infrastructure when you are continually focused on your clients. This may be the ideal time to make the changes you've been considering while your business is a bit slower, putting yourself in the perfect situation for growth in the future. When you need additional support for your business and marketing operations, contact the team at Ulistic at {phone} or fill out our quick online form. We work with MSPs to find (and close!) more leads and generate new business.
Check out this great resource on how each state is helping small businesses in the US.
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