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There are several common traps that will keep an MSP from healthy scaling, and avoiding them requires intentionality. These include the business revolving around the owner, becoming over-dependent on one employee, and trading time for money.

Both of us were in peer groups for most of the time we had our MSPs, and we’ve both facilitated them for almost as long. We’ve been able to observe a LOT of MSPs. In most groups, you see three kinds of people:

Today, we can quickly tell which companies are stuck and which have broken through business plateaus or are positioned to do so. 

On the surface, all MSPs are in the same business, doing a lot of the same things, or at least it would seem so at a casual glance. So why are they getting different results?

We see a lot of businesses that have been around for a long time, sometimes 25 years or more, and have never really taken off. These folks go to conferences and hear all the mergers and acquisitions talk, but they worry no one would want their company. At least not for the kind of money that allows them to retire into the sunset, a cold drink in hand, feet in the sand.

They also know that the only acquisitions they could do to bolster their own company would be buying companies that are smaller and less mature than theirs. They are still fighting the same battles they were years ago. Battles with clients and vendors…technology problems…struggling to get new sales. Some of them think that’s all this business is, because that’s all it is for them, and that’s all it’s ever been.

In their peer groups, they consistently bring up tactical matters: a new client, a new sales opportunity, a new product. Maybe it’s an employee problem or some other technical challenge. They rarely ask about strategy. They are usually head down, locked in on the challenge of the moment, rarely pausing to consider the big picture.

They are running hard on what we term “the hamster wheel”, and that is where they are focused. They are just trying to find the next step on the wheel. Working ever harder just to get a little further ahead. Their frustrated families are used to them working while on vacation. Their business is a time-stealer, not a time-giver. Their business always demands of them but rarely blesses them.

Some of them still believe that the promised land is just around the corner. That they’ll finally break through if they can just sell one or two big accounts or find that technical wizard who can take all the work off of them. In other cases, they’ve given up on genuine success. They’ve forgotten what it looks like, if they ever recognized it in the first place. They’re just trying to stay afloat and pay the bills.

We believe that entrepreneurial success is prospering to the point where you have control over your time and are in a position to give back. This is the point of becoming an entrepreneur. Becoming enslaved to your own business instead of someone else’s business is NOT the point of becoming an entrepreneur.

The Hamster Wheel Defined
For years, neither of us were on the road to entrepreneurial freedom. We were on a hamster wheel. In our efforts to change that, we identified six characteristics of the MSP hamster wheel.

Hamster Wheel Trait #1: Revolving Around The Owner
This dynamic is painfully obvious in most Hamster Wheel MSPs. Not much of importance happens without the owner’s direct involvement. The early days of Dave’s MSP were a clear example of this. In many MSPs there is a massive failure to hire, develop, and unleash leaders. By the time the problem is finally addressed, it is hard to undo the organization’s codependent relationship with its owner(s).

The owner wants their life back, but they don’t know how to let go of key roles and tasks, and the rest of the staff is hesitant to step up and take control of important functions, lest they get chastised for overstepping or “doing it wrong.” When others are brought in to positions of leadership, the staff is sometimes resentful and doesn’t trust that their authority is real. To compound matters, owners often put the wrong person in the right seat. They figure their best engineer has earned the role and are afraid of bruising their ego or losing them or creating conflict. Or they just don’t know what to look for in leaders when hiring.

All of this makes it very hard for the newly appointed leaders to succeed, which perpetuates the problem of the owner being the focal point of the business. In this scenario, that owner can become the greatest obstacle to the MSP’s growth, because inevitably they will burn out and/or bottleneck the daily operations of the business.

Hamster Wheel Trait #2: Trading Time For Money
In simple terms, this means that the amount a given client is billed is directly tied to the amount of time the MSP spends working on that client during that month. In many cases, the owner is one of those people billing their time to clients, and the business could not survive if they weren’t doing so. That makes it really hard for that owner to be focused on building a thriving, growing business. It also means that the healthiest, quietest clients—the ones whose technology “just works” and whose employees don’t complain all the time—aren’t necessarily very lucrative. It can actually create a scenario where noisy clients are bad, and quiet clients are even worse.

Hamster Wheel Trait #3: Dependence On Elusive Rock-Star Employees
Trading time for money means these businesses cannot scale revenue faster than they scale their team. A lot of their revenue comes from selling hours, and the only way to get more inventory (hours) to sell is for either the owner to work more or to hire more people. As soon as profits increase, that money gets plowed back into hiring another body. The owner doesn’t have time to nurture and train new employees or to codify best practices. This forces those people to come in already knowing what they are doing, and they bring their baggage with them. 

When the owner (finally) lands someone who is a really strong engineer, that person often winds up being the only one who knows how to do a lot of key things. We’ve seen many instances where over time it gets to that point where technical rock-star is in position to hold the owner hostage. They keep asking for more money, and in some cases, even equity in the company. The owner gives it to them because they are terrified of not being able to service clients effectively if rock-star were to leave. Instead of teaching others what they know and improving everyone around them, they horde knowledge, leaving slim documentation and creating a caste system within the ranks of technical employees.

If somebody’s face immediately popped into your head after reading this, we sorry to say that you’ve got a problem that won’t go away by doing nothing.

Hamster Wheel Trait #4: Billing Is A Hot Mess
When MSPs trade time for money, work gets billed weeks or even months after it is performed. An extensive cleanup of time entries is required, and that process is often done by the owner. Usually while drinking gin and Fresca at 10 p.m. (not that we know anybody who did that).

When the client receives the bill, sometimes they pay it quickly…and sometimes they don’t. Sometimes they don’t want to pay it at all, because they think the bill is too high due to the MSP’s inefficiency or incompetence. Trading time for money creates extra work. It limits profit and leads to getting paid slowly. It guarantees that cash flow will be a recurring headache for the business.

We recently had someone skip their peer group meeting because they had a “billing emergency.” That’s a phrase you should never have to use.

Hamster Wheel Trait #5: The AFAB Mentality
AFAB stands for “anything for a buck.” It means that if there is any opportunity to capture revenue, you chase it. No matter what it is—application development, websites, cleaning up gorilla feces, whatever.

Many moons ago, Dave had a customer ask if he’d be willing to inventory equipment in a warehouse. The client was reticent to approach him about it because he was a tech guy and thought he might be insulted or offended. 

Dave’s response: “As long as you’re paying my rate, I’ll paint your deck.”
Yes, I am a recovering technology prostitute. AFAB.

This approach is how MSPs wind up with clients of all sizes, dissimilar verticals, and varied technology stacks, and often the services provided are customized exclusively to them. Whatever they want to buy, the MSP will sell it to them. Some of these clients are really difficult to work with, but it’s tolerated. Some of them are probably unprofitable—but their money is still green, and the owner believes they need to pick up every dime they find on the ground, so…AFAB. It’s hard for these MSPs to excel at anything, because they are trying to do everything, which means not much can be systemized. 

Hamster Wheel Trait #6: Urgent Crushes Important Every Time
When we’re sweating on the hamster wheel, the precious asset of time is rarely invested efficiently. Instead, it’s spent on putting out fires and trading time for money. The owner’s business card might say “President” or even “CEO,” but if they are spending their days fixing technical issues, reviewing time sheets, answering phones, and reviewing resumes, that business card is not really accurate. Presidents and CEOs don’t do those things.

Charles Hummel, formerly the president of Barrington College in Rhode Island, labeled this trap “The Tyranny of the Urgent.” He breaks it down well in his classic 1967 essay of the same name.

The things we do all day can be broken down into four categories:

The key is how much time is spent on the middle two categories above. Hamster Wheel MSPs and their harried owners are continually spending time doing things that are urgent, but in the grand scheme of things are not very important.

These owners struggle to get around to the things that are important but will never be urgent. They spend their precious time on tickets and projects and time sheets—all while the vital business of mentoring employees, creating repeatable processes, knowing their numbers, and being strategic about driving profit goes undone.


Does any of this hit dangerously close to home? Years ago our MSPs embodied everything on this list, and we still meet MSPs all the time that fit this profile well. In fact, we’d say it’s the most natural path for a small, owner-led MSP to go down. 

So how does one get off the dreaded hamster wheel?

To get the full prescription, you’ll have to keep checking back on this blog series, but briefly:

  1. The owner must learn to delegate and “shed hats”. They must, in the famed words of Michael Gerber, commit to “working on the business, not in the business”.
  2. Sell true managed services. Get your offering right. Right package, right price. And sell nothing else.
  3. Avoid the rock-star trap. You should have a Service Manager before getting to ten employees, and it should not be someone who does engineering work, much less your best engineer. 
  4. Have the confidence to say NO to opportunities that don’t fit. AFAB  Hamster Wheel. Simple equation.
  5. Commit to controlling your time. If you allow yourself to be pulled by whatever is most urgent at the moment day in and day out, that’s exactly what will continually happen. Schedule “important but not urgent tasks”, and make sure that bumping those items for some pressing matter is a rare exception.

It takes a lot of energy to stay on a hamster wheel day after day. That’s energy that could and should be used to build your business, invest in your family, and enjoy life. You CAN get off the hamster wheel. And what better day to start than today.

Adapted from Chapter 3 of The Pumpkin Plan for Managed Service Providers by Dave Cava and Shawn P. Walsh. Read a chapter for free here: