Knowing When to Expand Upmarket
An MSP business will naturally reach a point where it must expand in an “upmarket” way. Soon, targeting larger companies will be part and parcel to operations. This will happen organically, in most cases. You don’t want to force it, and here’s why: opportunity cost, in conjunction with actual cost.
If you spend months courting large clients and don’t land one, you’ll spend resources unnecessarily, then won’t be able to pursue other, more lucrative clients in a “local” sense. You’ll spend your substance chasing the moon, and then won’t have any energy to maintain that which is already your responsibility. This will diminish your opportunity to source such large clients organically. Additionally, should you manage to land one, the likelihood is you either won’t have services requisite to their needs, or in order to have such services, you’ll need to sacrifice service delivery to your other clients.
The Difference Between a Lure and a Pull
You chase after a lure and get eaten by a fisherman. But you’re pulled by the current and it takes you to new waters where your business can swim freely. Don’t be lured by competition that’s able to go upmarket before you. Don’t be lured by the potentialities you assume may exist.
Think of it like a pyramid scheme. In a pyramid scheme, or a multi-level marketing scheme, a spider at the top makes a web of salespeople that trickle down to the rubes. Basically, one person sells “product” to another person, who sells it to another rube continuously. How the pyramid scheme makes money isn’t by reaching a target market, but by tricking people into selling other people on being sellers. Commissions then go up the chain, and the theory is that those at the bottom can climb that chain and eventually get off at or near the top. But in practice, this isn’t true, because the product being sold is often useless. As a result, what ends up happening is that those at the bottom spend $200 or more on a monthly basis, and end up barely able to make that much back. They end up continuously treading water until they realize the whole thing’s just a barely-legal scam, and jump off.
Going upmarket before you’re ready is like paying to work for a company in the same way those at the bottom of a pyramid scheme do. They don’t realize the product they sell isn’t the real product of the company— they’re the product. In the same way, competitors and the market itself push companies to move upmarket well before it would be advisable to. You don’t want to be one of the rubes who makes such a poor choice! Again, wait for the pull and don’t follow the lure. Wait until your MSP business naturally gravitates you that direction.
Don’t Hire a High-Powered Sales Team Until Your Product’s Proven
This dovetails off the MSM point. If you don’t have a proven product, then your sales team is essentially selling… nothing. Wait until your product is proven, until sales are regular, and until you can plot out a predictable statistical curve tending toward profit. That’s the time to get a sales team geared at the acquisition of high-powered, upmarket clients.
Land and Expand, Don’t Hunt and Grunt
It’s better for you to put down roots in a steady income stream and expand as the tree of your business starts producing requisite fruit, than to cast seedlings on the wind and hope for the best. Land and expand, don’t hunt and grunt!
In summation, for the greatest success when it comes to the upmarket move, solid tips on making the right decisions include:
- Waiting for organic growth to move
- Don’t be lured, be pulled
- Only hire a high-powered sales team when the time’s right
- Land and expand, don’t hunt and grunt
Your MSP business will grow naturally if you run it right, but if you artificially push growth, you’ll just be shooting yourself in the foot. You can’t run well with a bullet between your toes, can you? Walk until you’ve built the muscles you need to run, then you’ll have the stamina to win the race.