3 Reasons MSPs Make Mistakes with the Business of Backups
Like any service offering, the practice of providing backups to your customers needs to be organized, well-defined, predictable, and profitable. So, why isn’t yours?
Unless you’re running a rather large MSP, it’s likely that your skillset is far closer to IT experts than it is a businessperson. You get the idea that every service you offer needs to cover service costs and include a margin of profit. But that’s not a business; if backups are to be a business, it needs to be a well-oiled service machine where you know what’s going to work, how much will it cost, and what the outcome is. In other words, predictable.
So, why do MSPs see backups as a service and not a business?
You Let Your Customers Dictate Your Service
Many MSPs inherit a customer environment, complete with all its existing hardware, software, and idiosyncrasies. It’s conceivable that customers may not see the value in you – in essence – ripping out anything backup-related and starting over. And so they force you into using what they already have. Big mistake. Your backup service – as you define it – needs to be the only way you provide the service. Otherwise, you’re asking for the responsibility of your customer’s recoverability using tools that aren’t yours with little control over whether you can or can’t.
You Underestimated the Costs
Ask any IT pro what’s needed to backup an IT environment – the general answer will be software and storage. Plenty of software and cloud providers offer MSP-centric pricing to simplify the “cost” equation. But there are a lot of other cost factors that aren’t included – so many that the end result is you’ve priced your offering too low to make any material profit. Technology is only one part of the service cost. And, if you don’t have a handle on the costs, there’s no profit and – thus – it’s not a business.
Further reading MSP Pricing Guide
- The components of a strong BaaS offering
- The importance of including local backups and advantages of cloud backups
- Guide to advanced recovery options
Backups Aren’t a Business to You
If you aren’t thinking about the service of backups as a path to increase your foothold within a customer, a means to get new customers, or even a way to introduce and sell additional services to existing customers, backups aren’t a business to you – they’re a one-off service. Conversations with customers around backups help crystalize what applications, data, and systems are important to them – which is the basis for nearly every other service you’d offer including RMM, maintenance, security, disaster recovery, etc. Every service – including backups – should be seen as both its own source of profit and a gateway to every other service you offer to underpin every part of your business.
Turning Backups into a Business
A recurring theme on the show Shark Tank is the idea that “you don’t have a business, you have a hobby.” And, while providing backups is definitely making you money until you have it running in such a way that you can see it growing, running consistently, and producing a profit, it’s just a service. By changing your way of thinking about the service, how it should be run, what its’ goals should be, and the need to calculate the true cost, you’ll see this service transition into a thriving business that adds value to your customer relationships and your business’ bottom line.