MSPs: Increase Your Profitability & Business Skills With a Peer Group

MSPs: Increase Your Profitability & Business Skills With a Peer Group

March 20

MSP owners: are you satisfied with the growth and profitability of your business?

Most likely you answered, “No,” because what business owner doesn’t want to see more growth or greater profitability? But maybe you’re not sure the best steps to take to improve these areas or don’t know the amount of progress you should expect over a given period of time.

Hope of investor concept

What is an MSP Peer Group?

An MSP “peer group” may be just what you need. Imagine joining, say, 10 MSP leaders from around the country who services customers similar to yours and have comparable business goals. You meet up once a quarter in a non-competitive environment to discuss management topics like leadership and team creation, compare notes on your progress, and set up business goals that you plan to achieve by the time you guys meet up again.

Arlin Sorensen, the founder of HTG Peer Groups, created his first peer group back in 2000 to help him with his own business challenges. I spoke to Arlin a few weeks ago, and he recounted its inception:

We were coming through Y2K, and my IT company was struggling some with what was going on in the marketplace. One of my employees said, “Why don’t we call other dealers in the area experiencing the same kind of stuff and get together?”

So we called one of our Iowa resellers and asked if they’d spend half a day [with us and] compare notes. We met, started sharing, learned a lot from each other, and decided that we should continue to get together. Over the next five years, this group slowly grew. We didn’t intend for it to turn into a business as it is today. We just wanted to learn from peers and see what we could take away from one another.

Providing a Framework—and Peer Pressure

Today HTG oversees 25 groups made up of 10-to-12 members each. According to Arlin, each group is intentionally separated by geography within the same industry so that no direct competitors in the same market are placed in the same group. A typical HTG peer group consists of one IT company leader each from, say, Omaha, San Francisco, New York City, Orlando, Phoenix, and so forth. Every quarter this group meets in a neutral location to discuss and improve business skills.

“The majority of IT company owners came up through the technical side. They were never really trained or equipped to run a business. HTG helps provide a framework to help them become a business leader,” Arlin said.

Perhaps the greatest benefit of peer groups is that members are accountable to one another, particularly when setting goals.

Explained Arlin:

Members set goals they know they ought to do, and they come back having accomplished most of them because nobody wants to get up in front of the room and say they didn’t do what they said they were going to do! It’s no different from being on the kindergarten playground and the way peer pressure works there. People perform at a different level than they would if they were just setting goals in a vacuum.

Special Features of HTG Peer Groups

Although you could certainly start your own peer group much as Arlin did back in the day, HTG-sponsored groups offer some additional benefits beyond its basic framework. Most notably, HTG benchmarks the financials of everybody against one another in a peer group.

Said Arlin:

One challenge of running an MSP is that you don’t really know what “good” is. We’re able to tell you through our benchmarking. We benchmark everybody’s financials using the same system, so it gives granular data we can then use to teach them business principles.

According to Arlin, the growth of the MSPs run by members in HTG Peer Group were almost 10% higher and overall profitability was almost double to that of the industry at large between 2011 and 2013.