MSP Fails, and How to Avoid Them!

“All happy successful MSPs are alike—each MSP fail is a fail in its own way.” That IT spin on the Anna Karenina principle pretty much sums up what we’ll cover here (but keep reading, it’s good stuff!). There are so many things that can go wrong, and what derails one MSP won’t necessarily be what another MSP struggles with. That said, we can all learn from the mistakes of others, so let’s dive into our list of nine MSP fails to avoid.

1. Lack of differentiation

One of the biggest MSP fails is simply not standing out from the crowd. There are a lot of MSPs out there, and it’s easy for yours to become another name on a long list. When that happens, you’re dangerously close to just competing based on price which often becomes a race to the bottom that hurts profitability.

To avoid that race to the bottom, your MSP needs the right combination of services and marketing. The key is not overlooking that “marketing” component. It’s one thing to be the best IT MSP for small offices in your region, it’s another to make that message clear to potential customers in a world of limited attention spans.

Social proof like case studies and stats to back your claims of value delivery can go a long way here. So can a presence in the right physical (like MSP conferences and industry events) and virtual (like Reddit, Spiceworks, and other social media platforms) communities.

2. Getting specialization wrong

An obvious way to differentiate yourself is to specialize in something to stand out from your competition. The tricky part—and another potential MSP fail—is avoiding over-specialization and under-specialization.

As an MSP, over-specialization makes it difficult to acquire new customers. To give an extreme example: it’s great to be the best installer of HDMI over CAT5e extenders in your county, but that leaves you with a narrow market of potential customers and limits growth.

Conversely, under-specialization can spread your resources too thin. Every MSP wants to be able to “do it all”, but it’s not practical for small and medium-sized MSPs to be expert-level in every aspect of IT.

It usually makes sense to start with the Pareto Principle: focus on the 20% of things that will deliver 80% of value. Then, once you start seeing diminishing returns there, layer in another area of expertise.

Consider the education IT space. If you’re an MSP in that industry, you might want to focus on tech like Meraki equipment, Chromebooks, and Office365 before making your team WordPress experts.

3. Overlooking SPF

Sender Policy Framework is important, but that’s not the MSP fails we’re referring to here. An MSPs single point of failure (SPF) can be catastrophic. Often when we think of SPFs, we think from a tech perspective. That’s where redundant power supplies, N+1 architecture, and WAN failover can all help mitigate the risk of common tech SPFs.

However, business-level SPFs are where many MSPs have unmitigated risks. The textbook example is having a “bus factor of one” for key business workflows. In English—a single technical expert, usually the owner in the case of small MSPs, is the sole dependency for many day-to-day operations.

Knowledge sharing and quality documentation can help. For your business as a whole, examine your SPFs from a technical and business perspective, and implement mitigations to avoid this MSP fail.

4. Not keeping hard skills sharp

This MSP fail is simple. Tech moves fast and what worked yesterday might not work today. Just look at how many SMBs have moved from on-prem Exchange to Office365 for email as an example.

If you’re not keeping pace with the tech landscape, eventually you’ll lose customers to MSPs that are. You don’t need to stack a bunch of certs to stay relevant, but you and your team should always know enough to be trusted advisors and skilled technical pros your customers can depend on.

5. Not keeping soft skills sharp

Solid tech skills are only one ingredient in the successful MSP recipe. You also need to nail the human side of running a business too. The obvious examples here are customer service and communication. Most MSPs understand the importance of customer-facing soft skills. What’s easier to overlook are the soft skills within your team.

Some of us tech people are notorious for our tact filters. With all the stress of running a business, it’s easy to become even less tactful with our colleagues. That can create a fairly insidious cycle that goes something like this:

1. MSP managers or owners don’t communicate and collaborate effectively
2. Staff starts to feel mistreated or unappreciated
3. Morale dips
4. Performance dips due to low morale
5. Customers complain
6. Managers and owners hear the complaints and the cycle repeats

In a tight job market and a potential recession, MSPs need to focus on employee retention. Spend some time sharpening your soft skills to help ensure you’re leading a high-performing team.

6. Failure to delegate

These MSP fails are common for those that begin with a single owner/operator or a small team. As the business grows, it’s a mental roadblock to delegate to others who might do things differently than you. As a result, many MSP leaders opt to “do it themselves” or micromanage their techs.

The problem is the energy spent on day-to-day tactical work is energy not spent on strategic work to grow your business. Successful MSPs that grow learn to delegate and trust techs to get the job done.

Of course, we know that’s easier said than done, so here are three tips to help make it easier to delegate technical tasks:

• Train well. Make sure your team gets the training they need to provide competent technical support. Expecting them to figure it out on the fly isn’t reasonable.
• Document well. On tech teams, a lot of knowledge only exists in senior employees’ brains. Get it out of their heads and into a shared knowledge repository to empower the people you delegate to.
• Communicate well. Mistakes will be made. People will still need your help. Create a collaborative environment that embraces continuous improvement and blameless post-mortems. You might be surprised how far this can take you.

7. Not tracking the right business KPIs

Peter Drucker’s “what gets measured gets done” quote applies to both the business and tech side of an MSP. Not tracking your performance can be one of your biggest MSP fails.

From a tech perspective, you need to track uptime and performance metrics to stay on top of issues in production and plan for the future. From a business perspective, you also need to measure the right KPIs to ensure your business is healthy and customers are happy.

There’s no one-size-fits-all bucket of KPIs that work for every MSP in every industry, so find what works for you. The key is finding the metrics that keep you on top of financial, service, and infrastructure performance. We presented a webinar on KPIs MSPs should be tracking, and you can see the list right here.

8. Poor sales tactics and strategies

“If you build it, they will come” might be true for baseball fields, but it isn’t true for MSP businesses. Selling MSP services is a unique challenge and there are plenty of ways things can go wrong.

Common mistakes include selling customers tech they don’t need in an attempt to standardize (one size doesn’t fit all), poor sales incentive and commission structures, and difficult-to-navigate pricing tiers for service options.

Our team has put together a list of MSP sale processes you can use, based on real-life experiences from our clients, on how to help reset and refocus your sales pipeline.

9. Being too reactive

IT MSPs are on the hook to resolve incidents to maintain SLAs. That often leads to MSP techs jumping from one incident to another in a reactive way. Constant firefighting wastes time on service that isn’t adding new value for you or your customers, it’s just restoring existing service.

While failures might give you an opportunity to upsell, ultimately your goal should be to shift to a proactive approach to infrastructure management. Leveraging tools like RMMs and MSP network monitoring platforms that enable deep visibility and automated responses to common problems goes a long way here.

For a deeper dive into becoming a proactive MSP, check out Think You’re a Proactive MSP? Think Again! Getting Proactive with TruMethods’ Gary Pica.

Tech as an enabler

Successful MSPs avoid MSP fails with a mix of strategy, hard work, and the right tech. Worded differently, tech alone won’t make you a success, but it can help you succeed.

That’s why tech like RMMs, PSAs, ticketing systems, and network monitoring tools are staples at MSPs of all sizes. In a world where connectivity drives productivity, network monitoring is an important part of an MSP’s toolbox. And that’s where we come in.

At Auvik, it’s no secret we love MSPs and being the “network RMM” that so many MSPs trust. We have our roots in the MSP world and offer features purpose-built to help MSPs delight their customers and improve visibility across multiple sites. Don’t take my word for it, check out our MSP case studies to see what other MSP think about Auvik, or to try Auvik yourself, sign up for a free trial today.