Growth is exciting, but it works best when it is grounded in a clear plan.
For MSPs, that plan needs to go beyond a revenue target. Strong growth depends on secure recurring revenue, realistic project planning, healthy margins, labor capacity, and cash flow that can support the next move.
In this Stride Live conversation, Casey Seaborn sat down with Matt Kerrigan to talk through how MSPs can use forecasting as a practical tool for growth. Together, they explored what makes a forecast different from a budget, how to evaluate the reliability of revenue, why project profitability deserves closer attention, and how cash flow should guide decision-making when a business is planning for aggressive growth.
The goal is not to predict the future perfectly. It is to give your leadership team a clearer view of where the business is headed, what may need to change, and how to make confident decisions along the way.
1. A Budget Gives You the Plan. A Forecast Keeps the Plan Current.
A budget and a forecast are often mentioned together, but they serve different roles.
A budget is usually created at the beginning of the year. It gives the business a baseline to measure performance against. A forecast, on the other hand, should evolve as the business changes. It uses the latest information to show where the company is likely headed.
That distinction matters because MSPs rarely move through a year exactly as planned. A new client may come in. A project may be delayed. A customer may offboard. A technician may need to shift from project work to support. Each of those changes affects the financial picture.
Matt explained it simply: the budget is a point-in-time plan, while the forecast should be updated whenever new information changes what you expect to happen.
For MSPs that are trying to grow, this is especially important. The forecast should not be something you revisit once or twice a year. It should become part of how your leadership team stays aligned and makes decisions with confidence.
2. Start With the Sales Target, Then Pressure-Test the Plan Behind It.
When Matt builds a forecast with clients, he starts with the top line: the sales target.
That number sets the tone for the rest of the plan. A business aiming for 3 to 5 percent growth will need a very different approach than one aiming for 10 to 20 percent growth. More aggressive growth usually requires more investment, more capacity, and a closer look at how the business will deliver on the additional revenue.
But the sales target is only the starting point.
Once the revenue goal is set, the next question is: what does the business need in order to reach that number profitably?
That includes the cost of service delivery, expected gross margin, staffing needs, overhead, tools, systems, and the cash required to support growth before the payoff is fully realized.
This is where forecasting becomes useful. It connects the goal to the decisions behind the goal.
Tip: Do not stop at “we want to grow by X percent.” Ask what that growth requires from your team, your margins, your systems, and your cash flow.
A strong forecast helps leadership see whether the plan is realistic and what actions need to happen first.
3. Build Your Forecast Around the Revenue You Can Count On.
For MSPs, recurring revenue is the strongest foundation for planning.
Monthly recurring revenue gives the business a clearer view of what is coming in, what overhead can be supported, and how much room there is to invest in growth. Project revenue can be valuable, and often profitable, but it usually carries more uncertainty.
Matt described project work as “trench warfare.” You may win a project, deliver it well, and earn strong profit from it, but then you still have to go win the next one. Recurring revenue is different because it creates a more stable base for the business.
That does not mean project work should be minimized. Many MSPs use projects to deepen client relationships, open doors to recurring services, or provide specialized support around compliance, infrastructure, cloud work, or security. The key is to forecast it with the right level of certainty.
If a project is contracted and expected to repeat, it may be reasonable to treat it more like recurring revenue. If it is a true one-time project, it should be planned more conservatively.
A helpful way to think about this is to ask: can our recurring revenue cover the core costs of the business? If so, project profit can become a growth accelerator rather than something the business depends on to stay steady.
4. Give Major Projects Their Own Budget.
Large projects can make a forecast look strong, but revenue alone does not tell the full story.
A $200,000 project may be profitable, or it may quietly consume more labor, contractor support, and management time than expected. Without a project-level budget, it is hard to know which one is happening until after the work is done.
Matt recommended treating significant projects like their own mini-forecast. Before the project begins, estimate the resources required to deliver it. That includes personnel time, outside contractor costs, materials, and any other expenses tied directly to the work. Then track progress throughout the project, not just at the end.
This gives MSP leaders a clearer view of profitability while there is still time to act.
It also helps with scope creep. If the work starts to move beyond the original agreement, the team can identify that early, communicate with the client, and adjust pricing when needed.
Tip: For large projects, do not just forecast the revenue. Forecast the delivery effort too.
That small shift can make project work more predictable, more profitable, and easier to manage.
5. Protect Gross Margin by Understanding Where Labor Is Going.
Gross margin is one of the most important numbers in an MSP forecast, but it is only meaningful if labor is being allocated correctly.
If service delivery labor is not included in cost of goods sold, the business may think margins are stronger than they really are. That can make pricing, hiring, and growth decisions harder to evaluate.
Matt explained that the best approach is to use time tracking so the business can see where team members are spending their time. Work tied to service delivery should be reflected in cost of goods sold. Administrative or overhead work should be treated separately.
For MSPs that are still building this discipline, a simple allocation model can be a helpful starting point. For example, if someone spends about half of their time on service delivery and half on administrative work, that split can be reflected in the financials until more detailed time tracking is in place.
The point is not perfection on day one. The point is creating a clearer picture over time.
6. Use Utilization to Make Smarter Capacity Decisions.
When an MSP is growing, hiring often becomes one of the first questions.
Do we need another technician? Can the current team handle more clients? Is project work pulling people away from support? Is leadership still too involved in delivery?
A forecast can help answer these questions, but only if it is connected to utilization.
Matt shared the example of an engineer who splits time between project work and the help desk. On paper, that person may be expected to spend most of their time on billable project work. In reality, support tickets may be pulling them away. If leadership is not tracking that, the business may misread the problem.
The solution may not always be to hire immediately. It could be better ticket routing, clearer roles, improved systems, automation, or a process change that frees up the right people to focus on the right work.
This is especially important for MSP owners and senior leaders. If leadership is doing billable work, that time should be understood and accounted for. Otherwise, profitability may look better than it really is, and the business may not have a clear view of what delivery truly costs.
Tip: Before adding headcount, look at how your current team’s time is being used. Better utilization can often create capacity before additional hiring is needed.
7. Keep Cash Flow at the Center of the Growth Plan.
Revenue growth and profit are important, but cash flow is what determines whether the business can support the plan.
Aggressive growth often requires investment before the return fully shows up. You may need to hire ahead of revenue, increase onboarding capacity, invest in tools, improve systems, or carry timing gaps between delivery and collection.
That is why Matt emphasized cash flow as the number one metric for growth planning. If the business cannot fund the growth, the forecast will not hold up in practice. MSPs need to understand whether growth can be funded internally or whether outside support, such as a line of credit or additional investment, may be needed.
This is where forecasting provides real clarity.
It helps leadership see what growth will require, when cash may tighten, and what decisions need to happen before the business feels pressure.
Final Thoughts
Forecasting isn’t about making a perfect prediction. It’s about creating a clearer operating rhythm for the business, one that helps leadership stay grounded in what’s actually happening instead of relying only on the original plan.
For MSPs pursuing growth, a strong forecast connects revenue goals to the realities behind them: delivery capacity, staffing needs, project profitability, gross margin, recurring revenue, and cash flow. It gives leaders a practical way to understand what’s changed, what needs attention, and what decisions should happen next.
That clarity matters because growth creates movement across the entire business. New clients may require more onboarding capacity. Larger projects may require more labor than expected. A strong sales pipeline may create the need for hiring, better systems, or additional cash reserves. Without a current forecast, those decisions can feel reactive. With one, they’re easier to evaluate and act on.
That’s the real value of forecasting. It turns growth from a goal into a working plan. It helps MSPs see what supports the next stage of the business, where constraints may appear, and how to move forward with more confidence.
Watch the Replay
Want to hear the full conversation?
Watch the Stride Live replay here:https://www.linkedin.com/events/stridelive-forecasting-actionsf7443030761307553792/theater/
About Stride Services
This Stride Live Webinar is hosted by Stride Services. Stride is a comprehensive financial solutions provider specializing in outsourced bookkeeping, accounting, tax, and advisory services for Managed Service Providers.
Learn more at: https://stride.services
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