14 Ways Your MSP is Losing Money Without Realising It

I think we can agree that unfortunately, we all live in an age where we all feel the pinch. For many MSP owners, too, that means having to cut back on resources, expenditures, and even setting up with new vendors. So your MSP might be losing money.

And for all you might be making some broad cuts to your business spending, you might still notice that you’re struggling to keep your head above water.

You’re not alone. The truly shocking fact is that businesses in the UK that are currently in ‘critical’ financial distress have increased by more than 50%, quarter on quarter. That’s covering all businesses across all industries – but many MSPs are certainly part of that number.

The answer isn’t that your customers simply don’t exist, or that there isn’t a market for what you have to offer. It’s that you need to think a little more creatively about how you’re marketing and developing your services while the world around us changes.

As a business owner myself, I know that things can fluctuate – and that, unfortunately, there are always some sneaky areas where you might be leaking money and not even realise it.

This article is a little bit like holding a mirror up so that you can take stock of what’s happening behind the scenes and to try and tighten up your cash flow to endure months ahead. Lean times are all around us.

But believe it or not, there are ways in which you can ride out financial storms just by making a few simple changes.

So, I’ve brought together 14 potential ways that your MSP could be losing money without realising it. Remember, however, that not all of these ways will apply to you, but do use them as food for thought to help inspire a bounce back.

You never know – there could be some hidden costs and expenses buried in this list that might just give you a lightbulb moment!

So, without further ado, let’s dive straight into 15 reasons why your MSP could be losing money and how you can plug that hole, fast.

1. You’re Charging too Little 

If you don’t seem to have many problems finding or keeping clients, but still seem to be losing money – or, at least, keeping your head above water – it might well be that you’re just not charging enough for your services.

It’s tempting to low-ball clients and customers simply because the competition is fierce. However, it’s important to know your worth and to start planning for calculated risks.

The best thing you can do with regard to pricing is to regularly assess the market. What are other MSPs in your niche offering, and at what rates? What’s the average consultation cost? Could you potentially price your unique selling proposition as a high ticket offer?

Take stock of your current base of clients. Is there room for you to take risks, such as to increase rates for new customers, while keeping current clients on board?

Above all, you should be balancing your expenses and your income regularly; it’s just basic business sense. But don’t be afraid to actually charge what you’re worth. You’ll be surprised at what people are willing to pay for high-quality support.

2. Your Vendors Aren’t Offering you Transferrable Value

It’s easy to leap into vendor partnerships because you like the brand or because they’re a well-known name that you feel could be advantageous from a marketing perspective. 

However, if you’re barely seeing any custom roll in because people want to take advantage of this partnership, or your relationship isn’t providing much knock-on value to existing clients, it might be time for a re-think.

Specifically, it’s worth breaking down the vendors you’re partnered with and working out the value and revenue they generate for you. This doesn’t have to be ‘hard cash’ right away. Just having expertise in a niche area on side can help to make your services more appealing to wider audiences, for example.

Essentially, I recommend balancing the costs of working with your vendors alongside the revenue and value they’re offering you.

It can be hard to call time on vendor relationships, so by no means take any big decisions lightly. However, there’s simply no point clinging on for the sake of sunk cost, so audit and spring clean your vendor list to make sure your MSP’s not losing money.

3. Your Sales Pitches are out of Whack

Ok, whether or not you like sales, it’s a crucial facet for business growth. Only the luckiest among us manage to grow and thrive on word of mouth alone, which means pitching and marketing are going to need to keep you afloat.

If you’re finding you get fewer and fewer connections from your current pitching strategy, it’s time to change it up!

Start by asking for feedback from happy clients. What was it about the way you approached them that made them want to do business with you? Are there areas of your sales strategy that could be refined?

Could you refine your sales approach with automation and delegation? Perhaps by making room for a freelance salesperson if expenses allow?

Above all, look at your rivals’ messaging, too. I can’t stress enough how important it is to keep your fingers on the pulse so you can make a breakthrough!

That said, you’re not the same as your competitors – so always try to keep your messaging and branding as unique as possible, while learning from what others do well.

4. Your USP Needs Refreshing

Finding your unique selling proposition is tricky in and of itself. However, the scary and very real fact is that, over time, people’s needs – and technological demands – evolve.

With the rise of AI and automation over the past few years, for example, some companies that once thrived on offering more basic support may have found themselves priced out of the market.

In which case, it’s time to go back to the drawing board. You don’t have to completely reinvent yourself, of course, just think carefully about any features or add-ons you could slide into your offerings that could increase profitability.

Once again, check out the competition, and ask your clients for feedback. Where could you add extra value to your offerings that could make the price people pay more appealing? 

You don’t have to be the next Steve Jobs and invent something ground-breaking. Just listen to people and focus on what they need, with a view to designing a scalable package that can endure the unexpected over the years to come.

Remember, it’s important to try and keep your unique personal brand in focus, but change up what you offer as your most appealing products or facets.

5. There are Gaps in Your Business Knowledge

Fair warning: I’m not being mean, here! Not all of us start businesses knowing exactly how to keep them running, how to make sales, or how to sustain revenue during periods of economic uncertainty. It might be that there are gaps in your knowledge of how to run an MSP that’s losing money without you realising.

Whether or not you have formal training or education in how to run a business, there is never any harm in getting some top-up knowledge, especially if you are concerned about where money may be going in times of uncertainty. 

You could look into taking on some extra education, network with other MSP owners, or dive into some of the Tubblog and TubbTalk archives for more inspiration!

Personally, I think it’s great to get fresh perspectives on running businesses, regardless of your operation and niche. There could be some tricks and techniques you’re missing out on to start harnessing your spending and bring revenue back in.

6. Your Billing System Just isn’t Working

As business owners, we all try to make sure numbers crunch and everything lines up as we expect it to. However, when you’re just trying to run a business from day to day, it can get tricky trying to balance all those spreadsheets and financial streams.

Many of us have accountants who can take care of the trickier side of financial admin for us. However, some MSP owners prefer to try and balance the books themselves.

This can be worthwhile if you have a head for figures, but it can leave you open to missing areas where your MSP is losing money without realising it.

In which case, now is also a great time to check your billing process and to ensure that your accounting makes sense. Check your invoicing, receipts, expense records, and tax returns.

And enlist the help of an accountant, even for just a one-off project, to comb through your finances and see if there are any weaknesses in the books.

7. You’re not Selling or Tracking add-on Work

Again, not everyone likes sales, and especially not the hard sell. However, in a world where add-on services and modular subscription models are increasingly the norm, you could be missing out on some serious revenue, or even losing money because your packages aren’t offering enough value (or temptation!).

Consider ways in which you can enhance your services with add-on packages and perks that your rivals are selling elsewhere. And, if you’re already doing add-on jobs for your clients, make sure to bill for them!

Be explicit on the work you’re doing for clients, too. If you are doing work pro bono, make sure it’s firmly established in a contract. Otherwise you might find that you’re out of pocket on freebies that just keep stacking up.

Try and rein in the generosity wherever possible and value your time and effort. That goes for the team, too!

8. You’re not Tracking Time Effectively

If you’re completing work that’s billable by the hour, you should certainly keep a tight rein on how much time you’re putting into client projects.

You might, however, find that you occasionally round up or down, meaning there are going to be some gaps where you’re simply not being paid for the work you have legitimately done.

Much like how I mentioned that you should always consider your worth (and that of your team), it’s crucial to keep track of any time you put into projects, too. Otherwise, all that lost time, even if it’s just a few minutes here and there, will start adding up. That can all equate to lost business and revenue.

So, try making a few positive changes to the way you manage your time and workloads. For example, you could introduce time tracking software and applications such as Toggl, which help you to accurately record time spent on projects so you can bill more efficiently.

This type of software can also be an asset when breaking down project management statistics and even proving your worth to vendors and clients!

9. You’ve got Tons of Unnecessary Licences

It’s probably tempting to kit out your technology stack with as many different functions and features as possible. After all, you want to be prepared for every eventuality, and to offer your clients the best value service possible.

However, that all becomes poor value for you, when you’re paying out for software licences that you’re simply not using.

There could be a few hidden tools behind the scenes that just aren’t serving any kind of purpose. Consider tracking how much you use certain programmes and software to try and measure their worth.

Apple devices, for example, have screen time tracking, which helps you to break down where much of your productivity is going.

With this data, dive in and weed out any software in your stack that is either barely being used or isn’t even getting opened.

Or, be more ruthless and consider which licenses aren’t driving value for your firm (as in, they’re simply not helping you be productive with the most lucrative projects).

You might be surprised at which programmes have escaped your sight over the past few months and how much you could save over the next year just by scaling them down.

10. You’re not Upselling Clients

This is similar to my point about not adding add-on services. The clients you work with likely want you to do a very specific job over a certain period of time.

But are there ways you can add extra value to their project at the start? Or at the end of a project or working period, you might find there are opportunities where you can give your customers more value and tempt them to keep working with you.

Your MSP could be losing money if you’re just doing the bare minimum, most of the time, and your clients go elsewhere for add-on services and extra support once they’ve finished with you.

Make life easier for them, and build more revenue for yourself, by checking in throughout your work with them and finding areas where they could save money when they work with you in the future.

Not everyone is so comfortable with upselling right away, but it’s a valuable exercise for capturing additional revenue, especially if you’re finding that income is starting to wane.

11. You Don’t Have a Referral programme

It’s easy to assume that you can just keep getting business from your regular clients through word of mouth, but that isn’t always the case. With a strong referral programme in place, you could find a whole new passive stream of income.

Referral programmes are great for harnessing the power of client relationships and finding other customers that come recommended by those you’ve worked with for some time. You’re essentially letting your clients warm up future customers for you.

Try to make your referral programs appealing to your clients and customers, too. Offer a discount off future services, for example, or add in an extra service or perk that you can easily cost.

Ultimately, you want to offer rewards that are easily paid for with the income you’ll get from referred clients.

12. Your Solutions are Becoming Overly Complex

It’s easy to lose customers and even to deter others just because your processes aren’t as cut and dried as they seem. Many firms just want to get from A to B with as minimal fuss as possible, and in many cases, they’re willing to pay a little extra for the privilege.

You could be losing repeat custom or even failing to complete projects because clients are getting confused or overwhelmed by the programs you use or the processes you follow.

With that in mind, it’s always healthy to take a good look over your processes and to lay everything out flat, systematically, so you know where to trim fat and potentially save money in the process.

Think of your business processes as flowcharts. How do you get from A to B? What steps do you typically take, and are there any you can cut completely to help make things simpler or more affordable?

The simpler the process, the fewer headaches you and your customers are likely to have.

13. You’re Hiring People Unnecessarily

This can be a bit of a doozy. It’s always good to ask for help, and in areas such as administration, technical support, and accounting, it’s wise to have trained experts on hand who can take care of the more intricate or complex concerns you have across the running of your MSP.

That said, it can be easy to hire too many people, or to bring on board experts where there really is no need. This isn’t just overstuffing and overcomplicating your team roster, it’s also driving up your expenses unnecessarily.

Instead of setting up recruitment drive after recruitment drive, take a good look across your workforce and see if there are any opportunities for you to upskill or retrain in areas where you need more support.

One of the best ways to canvas for this is to build training feedback into personal development plans. For example, you could ask individuals in your team if there are any areas they’d like to develop in, and if there are any opportunities they’d like to take in-house if given the chance.

With this information, you can align responses with your operational needs and save money on recruiting new people outright.

That’s not only going to save you money, but also time on onboarding and training from scratch, and you’re also likely to retain talented people who just want to be valued with various development opportunities.

Check out what Richard and Uptime Solutions’ Jason Kemsley have to say about the power of outsourcing via Tubbtalk.

14. You’re Wasting Money on in-House Resources

Lastly, this point ties in a little with the one above. You might be wasting money on employing full teams of experts in areas where you don’t really need so much time applying.

For example, if you have a full web design team and your site needs minimal oversight, you might be wasting money just paying salaries and benefits to people who are sitting idle.

Instead, think about avoiding blanket salaries and fees for entire teams and consider where you might be able to outsource to individual experts.

Outsourcing has become more acceptable and accessible for MSPs and other businesses as a result of the remote working boom, meaning there are more avenues and opportunities available in this regard than ever before.

The difficult side to this, unfortunately, is restructuring your company if you already employ large teams and want to trim some financial fat.

That could mean laying off some staff, unless you focus on upskilling instead – which is a great way to retain people and avoid some awkward conversations.

Conclusion

No matter the size, scope, or niche that your MSP works in, there might always be some scenarios where you are losing money without realising it.

However, that doesn’t mean you have to continue leaking money or missing out on opportunities. And as you can see, there are plenty of ways to rethink strategies and to stay profitable even through uncertain times.

What do you think? Has this given you some food for thought on how you approach your MSP business finances? Let us know in the comments!

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