Performing Quarterly Business Reviews On Your Own Company

We’ve all heard the saying “the cobbler’s son goes barefoot”. Unfortunately, this saying hits close to home for many Managed Service Providers who don’t take the time to consistently assess the health of their own company. Experienced MSP’s generally invest in performing periodic business or technology reviews for their clients but often don’t apply the same disciplines or consistency on themselves. Sure, most MSPs have purchased tools that display service and financial metrics, but the typical MSP isn’t deliberate in prioritizing a monthly or quarterly holistic review of critical key performance indicators “KPI”, metrics, trends and analysis of their own company’s performance.

In 2015, after recognizing that we didn’t have the necessary clarity, visibility and confidence in our own service and financial performance, we decided to schedule quarterly business reviews “QBR” on our own company to gain a better understanding of where we stood operationally. As an MSP focused on serving SMB, local government and education sectors, we knew that we had to mature as a company and as a leadership team to stay competitive and grow a healthy business. At that time, we had limited reporting, weren’t fully confident in the numbers we were looking at, and much of the process of gathering this data was manual. It was a significant investment of time for our Director of Operations and our Accounting Manager to gather this information and put it into a meaningful format for our team to review. We quickly recognized our need for better tools, timely & accurate data entry and the processes and procedures to go along with this. The first QBR meeting we held lasted nearly four hours and was eye-opening as we reviewed our KPI’s and metrics.

As each quarter has passed and we’ve continued to improve our QBR process, our data gathering has become highly automated and efficient, our reporting has become more meaningful, we’ve learned which KPI’s really matter, we’ve invested in tools that help us gather the right information, and we’ve begun setting quarterly goals that align with what our QBR is showing us. Trends have become easier to see, which has enabled us to plan more effectively. We’ve benchmarked and compared our metrics with those from TruMethods, Service Leadership and other industry experts. Our decisions have become influenced by what our QBR is telling us and not just on our “gut feeling”.

Some of the key financial and service metrics and KPI’s we track monthly and/or quarterly are the following:

• Quarterly & YTD Budget vs Actual
• Yearly & Quarterly Revenue Trends by Revenue Category
• Gross Margin percent & EBITDA percent Trends
• Turning Point (where Recurring Revenue covers all COGS & Expenses)
• MRR Tracker (Monthly Adds & Subtracts to MRR)
• Client Ranking by All Recurring Revenue, Price Per Seat, Labor Costs, Total Applied Costs, Labor Loaded Margin
• Average Price Per Seat and Average MRR Agreement Price
• Ticket Count by Type and Resolution Time
• Time Adherence (same day time entry)
• Total & Client Utilization as a percent
• Client Satisfaction Scores
• W2 Multiple & Revenue Per Employee
• Staffing Capacity & Target (aids in helping us know when to hire)

The impact on our business from being disciplined in performing the QBR each quarter for the past five years has been enormous. These QBRs typically last two hours now and the amount of time to prepare for them has dramatically decreased. Having these QBR’s have helped us make informed decisions, our entire team is better educated and aware of our performance, they’ve enabled us to set meaningful goals, have driven efficiency and as a result, our recurring revenue and net profit have more than doubled while our CSAT rating has averaged close to 99 percent in each of the past three years.