Over the past few weeks, the IT community as a whole has been stepping up and committing tremendous resources to ensure businesses and individuals can carry on their work and provide vital education and communications. Most are realizing that as a people and industry, we are all in this together. The best way to help clients, employees, and others make it through a global pandemic is through direct communications, prudent planning, and a strong commitment to excellence.
Your customers need you now more than ever before. Due to circumstances out of their control, as well as yours, many of these businesses are being negatively impacted on a financial and a structural perspective. Most non-essential organizations are closed or operating far below their standard capacity. Employees may be working from home or in different onsite locations to meet state and local health department guidelines. Some businesses are furloughing or eliminating employees to stave off long-term cash flow issues, while others maintain the status quo and hope for a quick resolution.
The reality is that relatively few companies will be in the black when the dust settles. Other than those currently making or delivering life-sustaining products and services, many organizations will be cash flow deficient, at least for the short-term, with much uncertainty surrounding their financial standing once things return to ‘normal.’
Government stimulus and supplier options may cushion or even erase the financial pain for some of your clients, but MSPs must prepare themselves for tough discussions regardless of duration. Before you begin those discussions, it’s essential to take a step back and assess your company’s current situation, and then start mapping out strategies to put your business and your clients in the best possible financial position in a post-pandemic world.
As that old saying goes, ‘the best offense is a good defense.’ No matter how great your revenue streams are at present, every MSP should be developing fluid plans with various options to address all the actual and potential short-term scenarios. A proactive approach will help protect your financial situation and ensure your firm is fully capable of supporting your clients when the dust settles.
Start with a strategic view. Have you had one-on-one conversations with each client’s decision-makers to assess their operational and financial health? One goal should be to determine how long those businesses can maintain their current level of activity without reducing their workforce (if they haven’t already) or having to close their doors.
Now is the time for an honest dialog between entrepreneurs. In some cases, you may be able to share management best practices or COVID-19-related banking or government resources that can benefit both parties (more on that later). Listen and show empathy for their situation, since they may be experiencing similar problems, and remind them that you’re in this together.
The channel experts suggest MSPs hold firm on pricing and services. Support your clients as much as possible, especially those that significantly shifted their workforce. Consider options such as delayed billing, with extended repayment plans, or temporarily cutting services or trimming the unused seats from furloughs and layoffs. Avoid price reductions and contract negotiations as much as possible and suggest putting off those discussions for 90 days or more (if possible). You can be empathetic without negatively impacting your MSP’s long-term cash flow.
Don’t let COVID-19 reshape your financial model
Technology and innovation, two of the bright spots to come from this pandemic, are your value proposition, and MSPs should be careful not to undervalue their services in light of what some may view as a ‘buyer’s market.’ Most business owners have real concerns about revenue shortages and cash flow fluctuations, but some will leverage the situation to get price discounts and free services from their suppliers.
Are your current clients truly suffering financially? Many organizations, including managed services providers, are actually growing during the pandemic. Some essential businesses are busier now than ever before (i.e., grocers, cleaning services, delivery companies), and others are relying as much, if not more, on IT services to run and secure their operations.
That’s not an easy thing to gauge, and few business owners are going to willingly share accounting data to back up claims of lost revenue or increased expenses to cope with the pandemic. As with any relationship built on trust, MSPs must take their clients at their word and help them resolve any payment issues that arise over the coming weeks and months.
If businesses are asking your team to drop seat counts or cut back on services, it’s usually a sign that things are not going well. However, in the current situation, the leadership team may simply be conserving resources and altering its emergency business plan to position the company for a healthy return after the pandemic restrictions lift.
With all the available government funding and loan options, organizational strategies and options are plentiful, even for those companies that are furloughing employees or otherwise reducing their workforce. Don’t assume your clients don’t have a viable financial plan. Be confident and supportive in those discussions and realize that now is the perfect time to talk regularly with key decision-makers. These ‘executive to executive’ conversations can, if done well, strengthen your relationships and create a more open dialog with these clients. Check-in and ask what they need to make it through the current crisis.
Use caution. Some savvy business owners will use the situation to renegotiate contracts with suppliers, including those that provide and support the very IT infrastructure that is keeping them operational during the crisis. Hold firm and remind your clients of all the valued services your team continues to deliver and only discuss discounts on a case-by-case basis. Avoid making across-the-board pricing decisions and manage the exceptions.
In those limited cases, provide temporary adjustments with set expiration dates, and be sure to get it in writing ‒ with your attorney’s approval. As mentioned previously, the best offense is a strong defense. Protect your company’s long-term interest by developing a solid (yet fair) strategy for dealing with contract renegotiation and price reduction requests. Develop a plan that allows your team to show empathy without compromising your cash flow.
Be sure to remind your clients of the value you bring to the table. If your business has to cut back to make up for pricing discounts or a significant increase in A/R, it will be harder to protect and support their business. You are all in this together.
Share stimulus resources
Technology is just one area where MSPs can help their clients (and other businesses). Some tend to forget that B2B is about building more than sales relationships with other owners, but personal connections that can benefit both organizations. In uncertain times, most everyone is looking for the latest information about government and lending programs, as well as tips and best practices for navigating through the endless red tape.
If you’ve spent any time deciphering the details in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, or have a personal relationship with an expert on that topic, discuss those resources with other entrepreneurs. Collaboration and information sharing is vital in times of emergency. Discussing the stimulus options available to small businesses may be just as valuable as stopping a significant cybersecurity threat today.
After all, those financial incentives can help ensure your clients can cover their payroll expenses the next couple of months and keep most, if not all, of their seat licenses intact. That’s a win-win opportunity for MSPs.
Resources such as are not only invaluable for providers, but that same information can be just as advantageous for the businesses you support. Why not set up a webinar or teleconference for your clients with a CPA who has a firm handle on the current stimulus options? Using social media and newsletters, your firm can distribute similar resources and best practices to a broader business audience and make introductions to local experts who can help them navigate through the various grant and loan applications.
Now is the time to be proactive and creative. What else can you do to support your clients and community and give people a hand up in this time of crisis? After the dust settles, you can worry about lesser things and refocus sales and marketing efforts, but for now, the best support you may be able to offer some clients is empathy and information. Help them weather the storm and develop even stronger relationships. In the end, with a sound financial plan and effective communications, your standing with clients will be higher, and revenue streams and cash flow will return.