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Sales & Marketing


Five Common Mistakes That Kill Small Businesses

  • Written by Joe Panettieri 1
  • July 8, 2008

You’re a managed service provider and you’re seeking to take your business from good to great. Here are five key mistakes you’ll need to avoid while building your start-up business.

1. Hiring Legacy Talent: You worked with John Doe 10 years ago and he was the best Novell NetWare guru you knew. Plus, he has a great, engaging personality. He’s a perfect cultural fit for your company. Only trouble is: John’s technical skills are stuck in the 1990s, and he doesn’t have a clue about Web 2.0 and managed services. Before you make a hire — especially a hire involving old friends — make sure they’ve kept their skills current.

2. Failing to Line Up Credit: My dad always said “establish a line of credit before you need it.” After all, when you’re really desperate for money, lenders are less apt to write you a check. So, go establish that line of credit during your strong business periods — when lenders are more inclined to take your call.

3. Surrounding Yourself With Infrastructure: You’re leasing lots of office space. You’re buying network infrastructure. But you and your business partners should be out on the road meeting with customers. Constantly. You still need a “place” to get your work done. But increasingly, well-designed home offices, Hotel conference rooms, trade shows and other locations are just fine to get your business going.

4. Failing to Have a Hierarchy: Flat organizations can be wonderful. Everyone can talk to everyone. But who reports to whom? And who holds everyone accountable for doing a good job? Clear job descriptions, performance reviews and an organization chart are must-haves even for small managed service providers.

5. Doing What You Know, Ignoring What You Don’t: This is somewhat related to point 1 (hiring legacy talent). As a matter of habit, we all tend to focus on business areas we already understand. That’s dangerous. Should you target a shrinking market you understand, or push ahead into a growing market where you still have a lot to learn?

Just when you’ve learned something new, you can’t afford to rest on your laurels. MSPs must continually push beyond traditional managed services (storage, security). I believe savvy MSPs will become the digital gatekeepers for small businesses, managing voice, video, telepresence and other services for customers.

What fatal mistakes have you seen small businesses make? Share them, and I’ll be sure to keep them in mind as we build our own business.

Update 7/9/08: I just stumbled upon these two related blog posts. Great reads:

  • What Not to Do: 17 Most Common Startup Mistakes (Entrepreneur Mag)
  • Startup Lessons Everyone Should Read (Instigator Blog)
Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Leadership Sales & Marketing Strategy

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4 comments

  1. Avatar Khalid August 18, 2008 @ 9:40 pm
    Reply

    Hi Joe,
    Great concise tips. Thanks for this.
    What would be the minimum org structure for mamanged service startup for Oracle.
    BR….Khalid

  2. Avatar Joe Panettieri August 18, 2008 @ 10:26 pm
    Reply

    Khalid: Thanks for reading MSPmentor. Can you expand on your question for me? Are you looking to offer managed services built around Oracle applications or Oracle consulting? Something else? I suspect the best next step would be to put you in touch with some Oracle sources and I’d be happy to do so. Looking forward to your thoughts.

  3. Avatar Anthony Blando September 15, 2008 @ 5:23 pm
    Reply

    I see this all of the time. Small business owners also do not understand the demand. You may have a good idea but if no one wants it then you are stuck.

  4. Avatar Joe Panettieri September 15, 2008 @ 7:32 pm
    Reply

    Anthony: Good ideas typically die because of poor execution. Or no execution.

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