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Buying a business for MSPs. Chapter 4. Fixing.

In order to make your acquisition work, at some point you’ll need to either add value to it, cut costs or both. If you manage to acquire the company at below market value, create wealth straight away. Even if that is the case, it’s still important to look for ways to either add value or cut expenses or both. Whilst this book is primarily about marketing, there are lots of other ways to increase the value of a business.

Operationally or financially, the scope of improvements are outside this text, but when you look at a business to acquire, you should at least have some kind of basic checklist to see where you or your existing organisation or portfolio can add value. Here are some ways to add value to a business. Improve marketing. Increase customers and referrals (upsell, cross-sell, down-sell), identify USPs, closer alignment with clients’ needs, and reward loyalty.

You can improve services: innovation, quality, convenience, simplicity, speed, customer experience, fun, friendliness, variety, expertise, packaging, design, communication, functionality, or after-sales. You can improve better staffing, train better or hire better, continual development, or be a better leader. You can improve operation through identifying ways to increase value along the value chain, better financing through raised prices or making payments easy and offer choices and terms. Or strategic ventures. Improve synergies with other businesses, especially ones you own, in terms of customers, suppliers, staff, sales, marketing, operations, logistics or admin.

Here are some ways to cut costs from a business. Deduplication, for example, by sharing a single bookkeeper or premises with the existing company. Consider all the cost centres that can be deduplicated. Sharing software or other resources with another business, where legal, can be advantageous. Remove, replace unnecessary or underperforming management, consultants and staff. Consider paying management, staff, consultants or suppliers based on performance. Sack bad clients, poor payers, time consumers, whingers.

Make a judgement call. The same can be said for bad suppliers. Remove ones which are unreliable, inflexible, overly expensive or provide too little value for their cost. Consider outsourcing some operations to interns or freelancers or oversea workers. Pay for the job done rather than the time taken. Staff monitoring. Track attendance at work, output, personal calls, social media, e-mail, sick days, meetings, timekeeping, lunch breaks, and so on.

Reduce overtime or extra or unnecessary hours. Consider the freebies. Be vigilant for theft, fraud, inflated expenses, plagiarism or nepotism. Virtualisation. Work from home or cheaper premises for yourself and key people. You could consider leveraging dead space, charge for storage and desking. Consider using second-hand equipment, check auctions and try borrowing things. Buy in bulk, consider joint venturing with others for discounts, even your competitors. Optimise marketing costs and continually improve them. Look at sponsorships, get your suppliers to contribute towards marketing costs. Consider grants, check to see whether there are grants or other funding available. and tax, be as ruthless as possible whilst remaining legal. Get the best advice.

Reduce your debts where possible and financially sensible to do so. Continually prune or renegotiate contracts or terms for utilities, rents, supplies, stocks and services. Set aside a regular time slot to review your expenses. Streamline your operations, use technology, automate and systemise. Leverage online for sales, marketing, payments, purchasing, meetings, communications both internal and external, and/or processes. Bartering. Pay supplies with stuff you can get cheap, effectively giving you a discount. And payments in, strive to have your invoice paid faster, or better still, immediately. And payments out, consider paying your bills later, or negotiate discounts for early payments. Reward staff when they identify ways to save costs while maintaining quality.

MSP marketing in bite-sized bits. It’s easier than you think with MKLINK. To get more of MKLINK’s MSP MBA marketing and IT training resources, make sure that you’ve registered for your account for free now at www.mklink.org.