Join Chris Timm, author, MSP owner, and expert on all things PSA, as he explains how to leverage your PSA tool to build a profitable MSP.
We’ve already established that PSA is more than just a ticketing system—it is the foundation upon which your process framework is built. The underpinning that holds your operations together. The sine qua non of your MSP.
But that’s not all.
A well-implemented PSA not only pays for itself but also generates ROI for your business.
PSA in the profitability equation
A finance solution can assess the revenue generated and revenue lost. Accounting software records your financial transactions and renders insightful reports on where you are financially. Your project management solution helps you manage and allocate resources for maximum efficiency, and ultimately, profitability.
PSA does all these and then some.
PSA software brings a wealth of business knowledge from your finance, project, accounting, and CRM solutions to put in perspective the past, current, and future state of your business in terms of profitability.
The ability to track the projects that are going on, the expenses involved in delivering these projects, and the returns they will bring in make PSA the ultimate go-to for MSP leaders to form a farsighted picture of their business and make course corrections in real-time.
“The success of your business depends heavily on being able to constantly remain profitable. This impacts whether you stay in business or not.”
Cash inflow and cash outflow in perspective
In a nutshell, revenue generated minus cost incurred is your total profit. No matter how much revenue you are making, if your costs are too high or too low or even zero, your business sustainability will be in doubt. Costs to your company may include burden rates, products you sell as one-offs, and services you sell monthly or in a similar recurring fashion.
Burden rates indicate how much your engineers (billable resources) actually cost the business. It is important to measure burden rates because it is directly proportional to the profits you make. If your company does one hour of work at $100 and the engineer costs you $20, your profit is $80. It’s a nail-on-the-head reflection on how much the work is worth.
With a single pane of glass view to visualize the money entering and leaving your business, you gain complete control over the financial health of your organization. For instance, you can assess how long your business will stay afloat if you continue to take up projects in the same cadence with the resources at hand. Disjointed teams may prioritize projects that have low returns, allocate too many or too few resources, and overpromise results which may skew business vision.
MSP businesses make revenue out of the projects they deliver. Work in the MSP realm long enough and you will know that not all projects are equally successful. Some of your projects may be profitable, and others, not so much. You need to hit the brakes or shift gears early in the project so you catch the drift before the mistake becomes costly. By tracking the time, resources, and money that go into a project, you can conclude whether the cost incurred will break even with the revenue generated, whether the project is financially viable, and whether the project is worth the time and effort in the first place.
With a bird’s eye view of what's happening, you can prioritize one project over the other, allocate the right resources, and pull the plug on what won’t work.
Time can be a deal-breaker
As we know, what keeps small businesses afloat is the cost that elapses between the money you put in and draw from the services you provide. Take this instance. If you’re offering n projects for n clients and your ability to pay your engineers completely banks on the revenue from your clients, you must collect your revenue consistently and on time so you can keep going.
Timely logging of timesheets, timely invoicing, and timely following up on payments are insanely important in companies prioritizing financial discipline.
Billing inaccuracies are fairly common as many MSPs rely on their memory to create timesheets. They don’t put a premium on penalizing late payments. Nor do they have a solution that scales.
A PSA, however, can make a huge difference in the way you bill your clients. It enables a repeatable billing mechanism by integrating your accounting and payment tools and automating your invoicing cycles.
There is more
Often overlooked as a mere service desk, a PSA is rarely looked at through the lens of profitability. Chris Timm, or Mr. PSA as he’s fondly called, has a lot to say about implementing PSA for maximum profitability. Unwrap the complete version in the webinar below.