Written by: Daniel Haurey on 11/07/16

Lots of our fellow New York and New Jersey managed IT services providers (MSP) these days are emphasizing long-term client relationships. That’s essential to the business model, because instead of getting paid all at once for the costs of onboarding and supporting a new client, they’re spreading that cost out over the length of a contract. Long-term IT service provider-client relationships really are a win-win for both sides, because they also make a business’ IT costs predictable while ensuring their provider has a stake in their success.

Making all that work requires that the solution provider be financially sound. It’s risky to tie up the care and feeding of your entire IT infrastructure with an IT company that may not make the distance.

As part of their due diligence, smart companies vet critical partners such as managed IT services providers to confirm that they have the operational and financial capabilities to grow and maintain a healthy business.

But that can be tough to do. Most managed services providers are closely held, with revenues under $10 million and no public filings to check out. Clients of Dun & Bradstreet may be able to access some financial info, but for the most part, potential MSP clients need to use other proxies to make their assessment of the financial health of an IT services provider. These include:

  1. Ask them. Few potential clients ever ask directly for financial statements, but that makes it 100% sure you won’t get them. If they can’t provide those, ask what they can provide to assure you of their financial solvency.
  2. Determine how long they have been in business. An 18-year-old business has found a way to sustain itself. A two-year-old company may still be running on start-up money. According to the Small Business Association, about two-thirds of businesses with employees survive at least two years and about half survive at least five years. After the first few relatively volatile years, survival rates flatten out.
  3. Speak to references. Try to get more than two or three, because those top names usually represent their biggest fans. Find out how long they have done business together – you want clients with long term experience.
  4. Check the staff size. Companies with more than a handful of workers are much more likely to have embraced a business model that sustains the cost of their salaries and benefits.
  5. Visit. Touring the offices and meeting the staff provides all sorts of visual and behavioral cues to indicate whether this is a healthy business or a struggling one. See this blog post for more on the importance of visits.
  6. Employers regularly run credit checks on potential new hires, because many feel personal financial responsibility translates well into competency on the job. Hiring a business partner – particularly one that holds your network in their hands – is no different. Making sure they are financially sound is an essential step in vetting your next managed services or IT provider.


Managed IT Services