Key gaps that hold back IT consultancies and MSP’s

Running an IT consultancy or MSP at the £1m to £8m mark is a balancing act. You’ve proven the model works, contracts are rolling in, the team has grown to 10–50 people, and clients rely on you for mission-critical services.

But here’s the catch: what got you here won’t get you there.

Scaling profitably requires a shift from entrepreneurial hustle (winning deals, fixing problems, keeping plates spinning) to entrepreneurial architecture (building systems, structures, and financial clarity that sustain growth without chaos).

Most founders are brilliant at vision, resilience, and sales. However, there are additional skills needed for scaling. Here are the key gaps that hold back IT consultancies & MSPs, and what to do about them.

Financial & Commercial Acumen

It’s no longer just about revenue growth. The big question: Which contracts are actually profitable?

• Contribution margin on each retainer or project

• Customer acquisition cost (CAC) vs lifetime value (LTV)

• Break-even points and utilisation rates

Too many MSPs rely on “cost-plus” pricing. The winners move to value-based models (security packages, premium SLAs, or tiered subscription bundles).

Cash is king, and for MSPs, it’s often under siege. Clients pay in 30–60 days, but staff and suppliers need paying weekly. Without cashflow forecasting, growth can kill as easily as stagnation.

Systems Thinking & Process Design

Scaling means designing processes that work without you in the room. Ticket handling, onboarding and renewals must all be documented, measurable, and repeatable.

You advise clients on efficiency, but is your own finance, CRM, or reporting still running on spreadsheets? Automation and AI tools cut costs and give the founder visibility.

That scrappy Xero + ad-hoc reports combo worked at £1m. At £5m+, you need enterprise-grade dashboards and management reporting that keep pace with your growth.

People & Leadership Skills

Your wage bill is 60–70% of costs. The key is building a team of A-players, not just warm bodies. Train them, grow them, and stop firefighting every client issue yourself.

If you’re still the rainmaker, the troubleshooter, and the strategist, you’re the bottleneck. Scaling requires trusting managers and creating accountability frameworks.

At 20–30 staff, informal hierarchies collapse. Clear roles, reporting lines, and decision rights stop confusion and protect margins.

Strategic & Market Growth Skills

Gut instinct got you started. Scaling demands KPI dashboards: MRR vs projects, contract profitability, churn, and pipeline coverage.

The shift: from “taking what comes” to a structured go-to-market playbook (vertical focus, referrals, partner channels).

The fastest-growing MSPs don’t just sell harder, they partner smarter. Alliances with vendors, distributors, or even other MSPs expand reach without huge overheads.

Risk & Governance Competence

Growth brings new risks: data security, vendor dependencies, and regulatory obligations. Ignoring these erodes trust, and valuation.

Even without investors, having a non-exec advisor or board-lite structure brings discipline and insight.

What happens if you lose a top client? Or if your biggest engineer walks? Building contingency plans keeps growth resilient.

In Summary

Most IT consultancy and MSP founders excel at vision, sales, and hustle. But to scale profitably, you also need:

• Financial fluency → unit economics, pricing, and cashflow forecasting.

• Systems/process design → documented, automated, scalable workflows.

• Leadership that scales beyond self → empower managers, build culture.

• Data-driven strategy → dashboards, market playbooks, and scenario planning.

In short: scaling is about moving from being the business, to building the business.

At Shadwell Associates, we help IT consultancies & MSPs bridge that gap with financial clarity, growth systems, and exit-ready strategy.