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Profitability: The Scorecard
 For an owner of an IT Solutions company, once cash flow is well under control, the next major area of interest has to be profitability. After all, the ultimate justification for a business is that it creates more value than it consumes. And this can only be measured by profits. Simplified, there are three main components for profitability: Revenues, Cost of Goods Sold (COGS, sometimes called ‘Cost of Revenues’), and Operational Costs.
With ConnectWise PSA, you will have the tools to pay attention to these three components. Our business automation solution helps you manage your revenue growth opportunities, know and manage cost of goods sold in both products and direct resources, and keep your operational costs of delivering as low as possible. ConnectWise PSA will propel you to a higher profitability than even industry average.
How Do You Know If You Have Profitability Problems?
Take a look at the following list of questions. Answering as indicated on several of them may suggest a need to focus your attention on specific measures to improve your profitability:
- Do you have a low client retention rate? Do you even know your retention rate?
- Do you know the profitability of individual clients? Do you know if it costs you more to serve individual clients than the revenue you bring in from them?
- Do you know the profitability of each of your services and products?
- Do you know the cost to acquire new clients? If yes, are you satisfied with the average cost to acquire new clients?
- Do you know the cost to serve your existing clients? If you do know, can you explain why the difference between clients?
- Do you know your COGS as compared with industry averages? Do you know your COGS for each of your main offerings?
- Do you know your gross margin, and how it has changed over time? Do you know if it has it gone up or down, and why?
- Do you know your number one revenue driver measure? Are you able to closely manage it?
- Do you know your number one COGS driver by product/service? Are you able to closely manage it?
- Do you know your number one indirect driver for operational costs? Are you able to closely manage it?
Causes & Cures For Your Profitability Problems
Management of your IT Solutions company can be boiled down to a need to focus on the three key areas that matter: Knowing, Doing, and Measuring. These are described in the Overview of Management & Workflow Problems. It is important for you to create long term solutions to your challenges, and not just quick fixes. ConnectWise PSA was built on industry best practices (ITIL Standards) and is continually honed to give you a business automation solution that meets your needs now and in the future. By attending to these three key areas, ConnectWise PSA helps you set up a ‘virtuous cycle’ that permits you to continually achieve success for your business.
| Key Areas |
Cause |
Cure |
Knowing
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- You don’t have a business strategy and instead are trying to ‘be all things to all people’
- You have not positioned yourself uniquely in your client’s eyes
- You don’t know your main drivers for Revenues, COGS and operational costs
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- Determine which clients and which products or services are most profitable. Use that information to develop strategy and execution plan.
- Use your P&L to know the 3 drivers are, then actively manage them
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Doing
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- You are not delivering on what you say is unique about your offerings
- You do not target clients that are the best prospects for your products and service capabilities
- You have poor customer service as defined by your clients
- You do not have SLAs or you do not have SLAs that matter to your clients
- You do not deliver on SLAs
- You do not actively manage your revenue and cost drivers
- You do not focus on post-sales value add that lead to loyalty
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- Once you have an execution plan for your business strategy, know what processes deliver on it, and execute flawlessly on those
- Use lead generation marketing, and plan for a series of communications and not a single shot message – your goal is a relevant conversation
- Target your marketing messages to client segments most closely matched to what is most profitable and where you have most competencies
- Marketing messages should reflect what your unique offering is to your clients
- Know what is important to your clients, then regularly randomly survey them to make sure you are delivering on what they define as important
- Manage performance of your SLAs delivered through your processes
- Manage your drivers for revenue, COGS and operational costs
- Develop specific programs to introduce existing clients to other products and service, then execute on those programs
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Measuring
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- You do not measure your revenue and cost drivers even if you actively manage them
- You do not watch your retention rate
- You do not watch your acquisition rate
- You do not watch your acquistion costs
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- Measure your performance on key processes that deliver your unique value
- Measure key drivers for Revenue, COGS, and operational costs and know your trends
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ConnectWise PSA Helps You Solve Profitability Problems
ConnectWise PSA makes it almost unavoidable to drive higher profitability. Some of the major functionality that helps you accomplish this includes:
- Service companies see their highest costs in labor, and ConnectWise PSA forces these costs down by providing powerful tools for high billable employee utilization.
- Manual process automation lowers the administrative burden on all employees, billable or not, which will bring your labor costs down.
- The ConnectWise PSA Workflow Engine acts like a manager but doesn’t cost anything, which keeps your labor costs low and your service and project delivery quality high.
- Custom designed surveys can be automatically triggered, so you can keep a pulse on performance factors that matter to your clients.
- Opportunities identified by functions other than sales are easily flagged and managed to drive an increase in up-sell and cross-sell.
- Marketing Manager functionality allows you to send a single or series of emails based on activity, time or events, to develop a relevant conversation with important clients.
- Segmentation of your prospects and/or clients for custom messaging through Marketing Manager.
- Powerful opportunity and sales management tools help you manage your pipeline for higher revenues, faster closes and improved win/loss rates.
- Easy-to-read reports so you can analyze and manage in real time the gross margin of clients, services, products, divisions and individual employees to keep your COGS as low as possible.
From this representative list, you can get a sense that ConnectWise PSA can help you increase your profitability. Our solution provides specific functionality you need to help you increase revenues, lower COGs and minimize operational costs.
ConnectWise PSA: The Total Business Automation Solution for IT Solutions Companies
ConnectWise PSA is a complete suite of modules that automate and integrate every process in your IT business: Find & Win Opportunities; Capture, Plan & Schedule Won Deals; Manage Projects & Services; Track, Approve & Invoice; Analyze & Report; Integrate to Internal & External Applications. ConnectWise PSA is offered both as premise based or hosted (subscription based) solution.
Learn more. See all ConnectWise PSA Product Module Features.
The sole purpose of ConnectWise PSA is to give you transparency into and control over your business, a faster and higher cash flow, more revenues, greater profits and higher levels of client satisfaction.
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