TLDR Preview: There are two things that often prevent MSPs from blossoming in their sweet spot: whale clients and shiny objects. Whale clients can be a lot of revenue, but often they are a resource suck, and not very profitable. The most common shiny object for MSPs is new software tools. Every MSP should have a current stack, but continual re-evaluation of every tool bogs a business down.
Killer Whales
Whale clients have prevented many MSPs from growing a giant pumpkin. The allure of the whale is financial gain and business growth. But if these clients are far afield of your sweet spot, they can damage or even destroy your business.
We see it all the time. A disproportionately large opportunity comes along for an MSP, but it’s not what they typically do. The MSP sees what the prospect is about and know intuitively that they’re not really a fit, but they ignore their Spidey sense. The prospect wants a different kind of service than the MSP typically delivers. They want contract changes. They reject some of the MSP’s standard tools. They run on a different technology stack. They want a lot of the owner’s attention, and not just in the sales process. They want discounts.
Even half of these conditions should be a giant orange (as in yellow to red) flag. The MSP owner sees dollar signs and fruity drinks and palm trees in the future. But it’s a mirage. The reality will be a giant time suck, damage to the bottom line of the profit and loss (P&L) statement, and the sabotage of the establishment of solid processes for the MSP. Often clients that are a ton of revenue are low-to-no profit and a waste of your most valuable resources (including you).
Beware the whale.
Shiny Object Syndrome
We also need to say no to things that are interesting from a technology perspective, but distracting from a business perspective. “Shiny object syndrome” is a real issue in the MSP world. Some owners spend an inordinate amount of time continually evaluating new tools and services. That’s kind of like building a new deck every year or repainting the interior of your home every three months. At some point, it’s just time to use the deck and live in the house. To not do so would be a mark of insanity.
An MSP can’t have a tool set or a security bundle that’s obsolete. But every time they switch products, there is an actual cost to the business. The cost of the product is the least of it. There is the cost of continuing to run the tool that is being replaced in parallel during the transition, which always takes longer than expected. But the real cost comes in the time spent researching, learning, deploying, and getting used to the new thing. The MSP absorbs those costs, which come directly off the bottom line.
And worse, that time is taken away from business development, servicing clients, mentoring employees, and working on the business.
At some point, it’s time to stop tweaking the engine and just drive the car for a while. The business will let you know when your toolset or your software platform needs an upgrade. If your car is running fine, it’s not a good idea to spend too much time hanging out at car dealerships.
Like a Laser
MSPs need what Mike Michalowicz calls “maniacal focus.” We know a lot of MSP owners whose daily schedule is determined by whatever pulls at them that day. Pressing technical issues. A steady stream of emails. Technicians and engineers who don’t have a manager or aren’t empowered to make decisions. Software vendors wanting to make a sale. All of these things are tactical, not strategic.
When you know your sweet spot, everything changes.
You start to focus on building a culture and a system that will deliver exactly what your best clients want, and marketing becomes simple. You’re no longer yelling into the wind about the things you know or what your MSP is capable of. You’re explaining to your ideal prospects what you can do for them, and how the experience they have with your company will be different.
Lay off the whales you know in your heart will only take you off-course. And let those shiny objects be. Build the machine that will leave your best clients thrilled and lead you to others like them. You’ll be your way to a blue-ribbon pumpkin in no time.
Adapted from Chapter 4 of The Pumpkin Plan for Managed Service Providers by Dave Cava and Shawn P. Walsh. Read a chapter for free here