MSP Risks And How To Reduce Them

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1) Losing your biggest customer

As the classic saying goes, don’t put all your eggs in one basket. 

Tom Lawrence told a story of a time when he used to work in corporate at an organization that drove 92% of its revenue from Ford.  

Tom and his colleagues used to joke about this reliance on one client by saying, “when Ford got a cold, we got the flu.”  

Another experience Tom Lawrence shared was around providing IT services to a local government client. Elections mean change, and sometimes that change means you’ll be replaced by a more “aligned” IT service provider.

When it comes to mitigating this risk, Tom offered the following tips:

  • Build as big of a client bench as humanly possible (resource: start building a referral program)
  • Diversify your clients and the industries you serve if your business is properly tooled to do so
  • Take note of client relationships that could be challenging if current conditions change and act as if that big fish client is already on their way out (situations may range from internal family drama at a small business to a new administration coming into a local government client)

2) A major security incident

You cannot 100% mitigate security risk; it’s something that all businesses face. That being said, the way you respond to and communicate a major security incident to a client can be the real game-changer when it comes to mitigating cybersecurity risk. 

Both Tom Lawrence and Georg Dauterman offered great color around their experience with responding to a security incident, but Tom Watson really summed it all up by saying:

“Documentation and transparency with the end-user are the best ways to mitigate this type of risk.”

3) Investing in the wrong tools

The dangers of “overtooling” are very real, and the practice comes with some severe side effects as well. From employee confusion to vendor sprawl sucking away precious dollars, the dangers of overtooling are something MSPs owners must be mindful of. 

It’s essential to be mindful of the tools you bring in and ensure that every new tool serves a specific purpose for your business.

Often, MSP owners get stuck in Reddit forms that offer a list of tools that have changed their business for the better, but these tools helped their business; they could be an anchor for yours. Don’t get caught handing over money month after month to a vendor you’re just not using. 

The best way to mitigate this risk is to audit your tools. Tom Watson recommended an audit of all the tools you’re being billed for every six months. If your team hasn’t utilized a tool since purchase, it’s probably time for it to go. 

4) Hiring challenges and employee attrition

Hiring and recruiting, especially salespeople in a technical environment, can be challenging, but waiting too long to hire a sales professional can limit company growth while hiring the wrong salesperson comes with some potential reputational challenges you should be aware of as well. 

Sales professionals represent your company to the community at events, on webinars, and in every sales call they make. They act as the tip of the spear when it comes to your business going to market. 

Tom Lawrence shared his personal experience of hiring a salesperson who had a drinking problem. This issue then negatively impacted his relationships with members of the local chamber of commerce, so the risks are significant. 

Mitigating this risk involves building out better onboarding processes and creating transparent metrics for the salesperson to share with the business leader. 

In our current candidate-centric job market, don’t forget about the risks of a stalled recruitment pipeline and employee burnout due to lacking staff and increased workload. Here are some resources for mitigating employee burnout and attrition: 

  • Build a referral program for recruiting top talent
  • Review average salary data and understand what candidates are prioritizing to present competitive offers 
  • Invest in employee training and certifications 
  • Take proactive steps to prevent and address burnout

It’s risky being a business owner

All entrepreneurs understand that owning a business, large or small, comes with risks. But the best entrepreneurs have implemented tactics and strategies to mitigate this risk putting them ahead of their competitors. 

Andre Schindler

As General Manager EMEA at NinjaOne, André Schindler founded the EMEA office in Berlin and built up both sales and service in Europe. As Vice President Strategic Partnerships, he is responsible for strategic business and technology partnerships including planning and execution of go-to-market strategies.

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