By now, everyone has had time to consider the magnitude of the COVID-19 event and how it may impact your IT/MSP business. And while there is a lot of bad news, there’s also some good news and forward-thinking actions business owners are taking to navigate through this economic fallout.
First, let’s start with the good news. So far, it appears that most IT/MSPs have far weathered this crisis fairly well. This perspective comes primarily from one-on-one discussions I’ve had with various CEOs of IT/MSP firms. All have reported a similar pattern:
- Their business experienced a spike resulting from remote workforce needs. Project and capital spending for projects related to remote readiness were also in play.
- None had furloughed or laid off any employees, stating they are too busy at this time. One CEO was actually seeking to fill eight positions.
- Cash flow concerns were not prominent. Most had cash reserves equal to two-four months of payroll and operating expenses, complemented by lines of credit.
- All had their staff working remotely and staying productive, and in most cases, being more productive.
Now for the bad news. Many IT/MSP business owners are experiencing similar cracks and vulnerabilities within their business.
- All had clients in an industry that was completely decimated as a result of this crisis; hospitality, restaurants, retail, energy, etc.
- All anticipate fallout in collections but have not been able to accurately assess the situation yet. They are waiting for results of their April collections to determine.
- All anticipate a significant drop in project services and product revenue.
- Only one had a plan for when to cut staff if needed.
- Few were being proactive in communicating with their clients, landlords, and vendors.
I am completely empathetic for these business owners as I’ve had my share of managing through catastrophic economic disasters over the past 20+ years. And as in times before, events like this always put us in unchartered territory.
Yet even in unchartered territory, there are specific tried-and-true best practices that IT/MSPs should invoke to best navigate through this crisis. Most that have weathered similar economic crisis events will advise you to:
- Develop a strategy and plan for getting though the crisis. Hope and optimism are good, but it is not a plan. Know where you will cut expenses, and where you will re-invest. Above all, be realistic.
- Staffing is the biggest line-item expense of all IT/MSPs. Be aggressive in reducing staff when your forecast states a loss of revenue. Rank your staff in order of most difficult to replace and know precisely when and where to cut.
- Be proactive in communications with your clients, vendors, and landlord. As bad as it may be, this is not the time to stick your head in the sand. You will receive better market intelligence and an understanding of how best to manage by being active in your communications.
- Lead your company. Your employees need you now more than ever to be clear and realistic about the company’s future and plans moving forward. Galvanize your staff by creating company-wide goals for all to get behind. Employees will rise to the occasion when challenged to do so.
- Lastly, be assertive and decisive about your decisions. This will be a time when you’ll have to make some of the most difficult business decisions you’ve ever faced. Don’t let your equity melt away. Fins up!
I will continue to provide additional insights and best practices for IT/MSPs during this time. Stay tuned to learn more about how your peers are managing through this COVID-19 crisis and what they are doing to not just survive, but to also grow.
Beginning April 22nd, I will also be hosting a three-part webinar series titled “MSP Road to Recovery,” sponsored by SYNNEX Stellr. This series will discuss additional best practices and initiatives for IT/MSPs to adopt during this crisis. I hope to see you there!
Join the webinar here.
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