As the owner of a Managed Service Provider (MSP) you are great at the technical stuff. However, growing an MSP can be challenging and you have probably had some ups and downs along the way.
The thing most owners don’t realize is that what worked to get your MSP started, and to $3.0 - $5.0 million in annual revenues, won’t get you to $10.0+ million. The MSP needs to evolve and so does your staff and you as the owner.
When we start working with new MSPs many of the owners tell us that they make decisions to hire staff based on their bank account balance. Unfortunately, they do not have an annual plan or 3-month forecast, and their financial statements typically do not provide any help. For most owners their financial statements are just for filing their taxes, not managing their MSP month-to-month.
We can provide you with the ability to see how your MSP is really performing and what you need to do to maximize the Net Income and Value. It starts with good, clean financials.
Why is this important?
You should be able to use your financial statements to run your MSP. They will tell you where you are making money, and where you need to fix pricing or costs because you should be making more money from certain offerings. The amount of Net Income your MSP generates is also how it will be valued in the future, Value is a multiple of your Net Income. Even if you are not considering selling your MSP today you need to manage it to maximize Net Income. You deserve to make more money, as much as possible, don’t you.
To get to the next level your MSP needs to evolve and begin using key financial processes.
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Clean, repeatable accounting processes generating timely financial statements
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Annual Budgets and Planning
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Forecasting revenues and expenses
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Cash Flow management
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Key financial metrics
SFM will provide the road map and processes to help you build your income and Value. We just don’t tell you what to do. SFM will set up and complete the initial work. If you want to take it internally once it is implemented, we are happy to make that happen. Many of our clients let SFM continue to oversee and update their information because we can do it quicker, more accurately and cheaper than they can internally. That’s why we use an MSP to manage all our computers at SFM.
SERVICES
IMPROVING FINANACIAL STATEMENTS
Use your financial statements to run your business, not just filing your taxes.
IMPROVING ACCOUNTING POLICIES & PROCEDURES
The basis of generating accurate and useful financial statements is accurate monthly revenue and expense data.
COMPENSATION
ALLOCATION
Your staff costs are the largest piece of your Cost of Goods Sold. You can't calculate Gross Margins by Line-of-Business without allocating compensation accurately.
PLANNING
You need to know where you are going, when you will need to hire more staff and the critical pricing & expense decisions. Then track results against the plan monthly to keep on track.
FORECASTING
The business environment changes. Given your current sales pipeline and actual results year-to-date, what does the full year look like?
BUILDING VALUE
Long-term value is bassed on good Gross Margins, good EBITDA, repeatable growth & clean financials. Fix Gross Margins before trying to grow.
BALANCE SHEET CLEAN-UP
Most MSPs have been in business for 15-20+ years and haven't focused on the financial aspects of the business. If you plan to sell at some point, it is critical that your balance sheet is not hiding issues that could impact your value.
SELLING YOUR BUSINESS
For most it is a once in a lifetime process and to get the most value it takes time. You want to be profitable and growing when the time comes. Even if you are not looking to sell today, preparing to sell will ensure your value is growing.
ACQUIRING A COMPANY
Some MSPs grow by acquiring smaller MSPs owned by individuals looking to retire. The due diligence to ensure you know what you are acquiring, and your are not overpaying is critical
Who We Work With
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MSP’s
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Typically, 15-20+ year old business
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$3.0-$10.0 million in Revenues
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Growth has stalled, or revenues are growing, but profits are not
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Owner wants to grow the business’ value for a future sale
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Owner is very good at what he does, but it does not include planning and the financial aspects of the business
Why Work With SFM
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You didn't get to this point with your business overnight. Like most MSP owners you have been at this for 15-20+ years. The question is - Are you happy with where you are today? Are you generating the profit you think you should, and have you created the value you expected.
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Most MSP owners answer these questions with “Not Really”. The reason for most is that they are really good at what they do, the technical stuff, but not so good at understanding how a business grows and how to maximize profits and therefore value.
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We use an MSP because we don’t know technology. Our clients retain us because we know how to grow MSP profits and valuation.
GETTING STARTED
EVALUATE
We start by looking at your current financial statements to understand what information is currently available to you to manage the business. This typically involves looking at 3 years of monthly data.
Service Name
IDENTIFY
Based on the financial review we will schedule time to review our findings, what is available and what information you currently do not have access to. We will show you where you are currently profitable, and where you can increase profits.
IMPLEMENT
Depending on the specific needs identified we will provide a detailed path to generating the information needed to grow your business’ profits and value. We will not only show what needs to be done, we’ll do it for you.
ABOUT
Core Beliefs
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You can’t be financially healthy if your business isn’t financially healthy.
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Your business is your most valuable asset—your income, your equity, and your retirement plan.
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Maximizing net income increases value now and creates smarter opportunities to reduce taxes.
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You don’t need endless revenue growth to dramatically increase profit and business value.
We Focus on Three Sets of Numbers
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The Annual Plan
Development of an annual plan that supports the owner’s goal and covers:
Revenue mix, Pricing, Gross Margin targets, Staffing levels, Expense targets & Net Income target
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Actual Results
Clean, usable financials:
Structured by Line-of-Business & Delivered timely to be useful in managing the business
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The Current Forecast
At the end of each month forecast the remainder of the year based on actual results to date and updated projections based on all currently available information including sales pipeline.
Kevin Sheridan
Managing Partner
After starting his business career at Booz, Allen & Hamilton, he founded Marketing Data Systems in 1988, a database marketing services firm that he successfully sold nine years later. He next joined the executive team of a software company which they grew and sold to a private equity firm and has completed a rollup of companies in the pet products industry, successfully growing the combined companies which were then acquired by a private equity firm. He also held the position of CIO for ACTV and was involved in the company’s interactive television activities with Liberty Livewire, Turner Broadcasting and TV Land.
Kevin brings a management philosophy based upon instituting controls, forecasts and cost management while empowering staff to meet cash flow requirements and future objectives.
Additionally, Kevin believes in building and leveraging relationships to reach key market segments quickly and cost effectively.
He received his undergraduate degree from Lafayette College and his MBA from Fairleigh Dickenson University and has been involved in the growth and subsequent sale of several businesses, primarily in technology. He has held various positions in the past including CEO, CFO and COO, as well as Vice President of Sales and Marketing.
Kevin Sheridan is an experienced executive with 35+ years of experience working with startup and growth companies and has managed companies through all phases of transitions including defining the business, planning, funding, growth and the eventual sale of the business. In each case the objective has been to realize the goal of turning ideas and underperforming assets into profitable businesses.
Kevin has focused on assisting the owners of MSP’s for over 10 years and has worked with them to reach new levels of profitability and value with several of his clients being acquired.
