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Many MSPs will tolerate their worst clients, even after clearly identifying who they are. This is due to fear. They are primarily scared of losing revenue. They need to realize that not dealing with bad clients is suffocating to a business. They must take action.
Once you’ve inventoried your clients, the data will probably tell you several things you already knew and a few you didn’t. You’d be shocked how many MSPs are losing money on their busiest clients and have no idea it is happening.
Now it’s time for action.
Merely observing that weeds and weak pumpkins are growing in the garden will not allow a prizewinning pumpkin to flourish. Something has to be done about them. For many, this is about as fun as being stuck in a closet with a serial killer. But if you’re ever trapped in a tight space with Freddy Krueger or Michael Myers, one thing is for sure: You need to act immediately and decisively. It’s time to swing the ax.
Fear Is The Enemy
When we were deciding who to interview for our book, we both agreed that Rebecca Woods was an obvious choice. She is the founder and CEO of Bluebird Leaders, a nonprofit whose mission is empowering women in IT. She also runs a successful firm that provides virtual CIO services to the healthcare industry. In 2023, she received the Advancing Women in Technology Leadership award from CompTIA.
We first met Rebecca when she came to our firm, Encore Strategic, looking for feedback on her startup business. She became a peer-group member and established herself in short order as someone who would hold her (all-male) peers accountable to keep innovating. Often, they were afraid to try things. She wasn’t.
Rebecca is a bold, out-of-the-box thinker who turns ideas into action and treats fear as simply an obstacle that must be overcome. That is why she was the obvious interviewee: most MSP owners won’t eliminate their worst clients, due to fear.
Rebecca said this to us: “I don’t know that I am fearless, but I do look at everything through a different lens. Everything that happens is an opportunity. Then the question becomes ‘How can I turn that into an opportunity for me?’ ”
Rebecca explained that when she was laid off in 2018, she could have seen it as a step backward, or even the end of a dream. Most people would have felt deeply worried and defeated after losing a job. Instead, she used her newfound freedom to regroup. She ran her first marathon, then started her own company. That’s beating back fear and finding opportunity! She didn’t wait for something good to fall from the sky.
Everything is an opportunity?
Losing a job is an opportunity?
Shedding clients and revenue is an opportunity?
It is if you are looking through the right lenses, and Rebecca’s got them. She believed she would succeed, with tenacity and the right ideas.
Do YOU believe that?
For the Pumpkin Plan to work for your business, you must.
As previously stated, most MSPs won’t fire clients who are stifling them, because they’re afraid. Afraid of the lost revenue. Perhaps afraid of emotionally awkward interactions. But not firing those clients keeps doors to better opportunities closed and locked.
The first step to shedding clients who don’t fit is conquering fear. Courage isn’t the absence of fear; it’s being afraid and doing the right thing anyway. Firing your worst clients is 100% the right thing for your business, and for you personally.
Who To Kill First
“Go back to your Assessment Chart and find the client who is the biggest pain in the ass and who, when fired, will have the least financial impact on your business. Fire them first.”
— Mike Michalowicz in The Pumpkin Plan
The best way for an MSP to start weeding the garden is by going up to the biggest, ugliest weed they can find and ending its life. If they were to divide their clients into A List, B List, and C List, then this is the D List. They are the worst offenders on the C List. They are absolutely cheap and a pain in the ass. Their technology is a ticking time bomb, and they don’t treat your team well. They are either not on a flat fee or they are so unprofitable that it would be better if they weren’t. Start with some awful anchor from the D List who won’t be missed when they are gone. Chop their head off. It’s kill or be killed!
This might sound a little harsh. Maybe we should go back to the garden metaphor. If a giant weed is growing in your pumpkin patch, it would be silly to let it continue to live. But you could rationalize the situation. I mean, it’s a plant too. A living thing. It performs photosynthesis. It’s providing oxygen! We might all die of asphyxiation if you pull that weed!
Then some nice gardening coach comes along and says, “What is it you are trying to accomplish in this here garden?”
“Well ma’am, I’m attempting to grow a pumpkin that is larger than a Volkswagen.”
She cocks her head.
“Then what the heck is that weed doing there? It’s draining the life out of your pumpkin. Sucking up its’ water. Stealing its’ nutrients. Yank that sucker posthaste.”
That D List client? Yank that sucker posthaste. Whether you realize it or note, it’s slowly killing your dream.
Adapted from Chapter 7 of The Pumpkin Plan for Managed Service Providers by Dave Cava and Shawn P. Walsh. Read a chapter for free here: https://encorestrategic.io/#form