Managed services, your business plan and you

Learn why a business plan is an essential part of any reseller's successful managed services business. Discover how to use a business plan as the impetus for refining your marketing strategy, locating sources of revenue and sizing up the competition.

By Erick Simpson, MCP, SBSC

Many resellers recognize that there's money to be made in managed IT services, but in their haste to adopt a new business model they forget a step vital to the success of any new business venture: the business plan. Before you take the plunge into managed services, take the time to update your company's business plan. An effective business plan will help you confirm the viability of your venture, set realistic goals based upon the market research that you conduct, and provide a roadmap to your success while minimizing risk.

More on managed IT services for resellers 
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A managed IT services business plan requires special attention to areas that may differ from traditional business plans, such as your marketing strategy and financial projections. If you already have an existing business plan in place, it can make a good template that you can modify to address the managed services-specific sections in your plan.

A well-researched and organized business plan need not be lengthy to be effective. As long as your business plan contains the essential components necessary to realize its desired outcome, the more concise and easy to assimilate it is, the better. Your plan may serve many purposes, from defining your company's vision, mission and goals, to identifying your marketing strategy, sources of revenue, competition and more. Some business plans are written specifically to attract investment opportunities, or to seek business financing.

The managed IT services business plan

Your business plan should begin with an executive summary, which describes the intent of the business plan, as well as contains brief overviews of your company's history, its management team, its uniqueness in the industry and current financial position.

Subsequent sections of your business plan should address your vision, mission and goals, as well as a company overview, including a legal business description of your company, your Board of Directors and company Officers, and any notable clientele that you may have.

Your marketing strategy is a critical component of your business plan, and will need to address the results of the competitive analysis you conduct and include in your business plan. Your marketing strategy and message need to clearly define your organization's proactive deliverables as the answer to your target market's specific pain points; and illustrate your ability to reduce costs, increase productivity and minimize business risk for your clients.

Your competitive analysis will reflect the research you have performed against your top competitors regarding their services, marketing and pricing strategies. Because of the relatively small number of "pure" managed services providers in existence today, it may be a challenge to identify your direct competitors in your target market. In this case you will need to include other, non-managed service providers in your competitive analysis, and demonstrate what makes your services unique in the space, influencing clients to choose you over your competition and justifying your financial projections.

It's a good idea to incorporate a description of strategic vendor relationships and other key alliances that you will leverage in executing your business plan and marketing strategy.

The final required component of your business plan will be your financial projections over the next five years, and should include a breakdown of your current P&L, if available. Your financial projections should reflect the exponential growth you will experience as a result of selling annuity-based service agreements, which will continue to pay predictable dividends month after month, year after year.

Whether you use your business plan as a strategic roadmap to transition your organization to deliver managed IT services, or as a vehicle to attract financing opportunities for business startup or growth, the benefits you will reap as a result of its creation will far exceed its intended purpose, as it will help you analyze your business opportunity with your bottom line squarely in mind.

About the author
Erick Simpson, MCP, SBSC, is vice president and CIO of Intelligent Enterprise Inc., and Managed Services Provider University Inc., a Gold Certified Microsoft Partner in Garden Grove, Calif., where he oversees all technical aspects of the organization and helps develop new managed services training and fulfillment services for Intelligent Enterprise's Partner Channel. Intelligent Enterprise Inc. specializes in providing managed services training, help desk, and sales and marketing services to IT service providers nationwide through their Managed Services University at www.mspu.us.

This was first published in June 2007

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