Whales are pretty cool… but you don’t want to wind up being digested by one.
Many small businesses pop champagne corks when they land a client that is significantly more revenue than the rest of their clients. This is understandable. The owners see dollar signs, the employees see job security, and everyone likes being part of a winning team. However, there is a dark side to landing that “whale” account. Usually, they require far more customization and attention than the rest of your clients on… everything. They want their contract to look different. They want their technology to look different from your standard stack. They want the way they request support to be a little different. Generally speaking, they will dictate the terms of your relationship with them to a much higher degree than your typical client will – and when your company is small, they will usually demand / require YOUR time more than other clients will. They will drain focus and energy directly away from the strategic work required to effectively manage and grow a business. Whales can look great on the books, but taking on a whale can potentially be a deal with the devil.
So, here are some tips for dealing with whales.
You can say no. And sometimes you should. When I had my MSP one of the best decisions we ever made was saying no to a whale, and we probably should have done so more often. The lure of the whale can be a siren song. It will look like the greatest thing that could ever happen to your business, but in reality, they can leave you crashed on the rocks… with a business that has ceased maturing, has traded bottom line profit for top line revenue, and is way over dependent on a single client (or two) that isn’t even a good fit for your core business. But if you do take them on…
Make sure they are profitable. My wise business partner always says “Top line for vanity, Bottom line for sanity”. No amount of volume will make up for lousy margins. If you wouldn’t take a small account you weren’t going to make a healthy profit on, why would you take on an account ten times the size that you will make lousy margins on? Many times, when we analyze our clients’ revenue, we find that many MSPs don’t realize how unprofitable their whale client is. They see a lot of revenue, and they assume that equates to profit. Often, they never do the math to be certain, and they fail to recognize how much all those extra “whale demands” erode the bottom line. Profit allows you to hire the right people, buy the right tools, and not run your business like a captain trying to save a sinking ship. It’s your job to guard the bottom line, for your own sake, and the sake of your business and your employees.
Have the mindset that one day they WILL go away. What state will your business be in when they do? Will you be forced to lay people off and take a significant hit to your personal income? Will it look to your employees like the wheels are coming off? If you take on a whale, you should have the mindset from the beginning that WHEN the whale dies, your business will be significantly more robust and mature than when you brought the whale on. How? Because your best people (including you) aren’t spending more than 20% of their time on the whale account, you’ve continued to scale your team and add processes to your business, and you’ve focused hard on selling other things that are actually in your sweet spot.
Insist on mutual respect. Or walk away. Often big companies hire little companies because they know they can push them around. They can demand the owner’s time and presence. They will try and wipe out key provisions in your contract, like limitations on liability. Stand up for yourself, your people, and your business in a professional way. If the whale doesn’t respect you for it, they are quietly screaming that the relationship is headed nowhere good.
Project poise and confidence to your team at all times. Let them know that while we love our whale, our whale is not our business. They are just a nice account. If and when they go away, we’ll be fine. Talk about it and put in the work to make it so.
So much of effectively running an entrepreneurial business comes down to confidence. In part, this means saying no to perilous opportunities. Having the stones to insist one-sided deals won’t work. The courage to believe that if you turn away the wrong deal, the right one will come along if you work hard enough for it. The tenacity to stick to the plan and walk away from the bag of dirty money. If you are going to bring on a whale, ask yourself the right questions, answer those questions honestly, and then do what is (really) best for your business… which might involve telling the whale to blow it out his hole.