Why Some MSP Owners Stay Broke

Sales hires aren’t an expense. They they are a revenue multiplier, and if you’re making your your sales hiring decision based on the budget that you have today, you’re basically planning for that sales hire not to succeed. I had a conversation with an MSP this past week and it made it really obvious to me, and the underlying mistake is one that I I see costing MSPs and businesses their growth over and over and over.

So here’s the situation: this MSP that we’re working with wanted to hire a part-time SDR because the their budget just didn’t allow them to hire a full-time in the local market. Um, they’re a relatively expensive market in the in the US for for hiring. So we said, "Look abroad." If you’re—like we hire, we do recruiting domestically and we do abroad, so we’re indifferent, technically. We said, "Look abroad," that we have a lot of success in in places like South Africa. We’ve got great talent, um, lower rates, you still pay top-of-market for for people. Uh, he didn’t want to do that, and that’s fine.

We went back, we suggested at least reconsidering the part-time idea because part-time reps can work, but the the data isn’t isn’t on your side really. You’ve got a much smaller pool of talent—and I mean qualified talent, not anybody who’s willing to pick up a phone, "Hey they sound nice, they can make phone calls." I mean people who are actually qualified to be an SDR, have resilience, are capable of selling the appointment, everything else. Like I said, that pool is significantly smaller. The the commitment that you get from part-time typically isn’t the same, turnover tends to be higher, and fundamentally, the the math on it says if you, even if they’re successful, then you’re doubling the time it takes to see the ROI because they’re only working part of the time. So you're only getting part of the results and you’re you’re extending the the time period to to see ROI from it.

So even setting the the preference stuff aside, the math is is bad on it. And the thing that really stuck with me wasn’t part-time versus full-time or domestic versus abroad. It was the mindset underneath the decision. We’ve had this on our website at mspsalespartners.com for for a while, and it’s it’s basically sales investments are revenue multipliers, not an expense. And the challenge with this MSP is he’s making a decision based on a zero-sum game. He’s deciding whether he can afford a full-time or part-time hire on the budget that he has today and running the numbers as if getting this person in the seat and them getting results has no impact on the top line, which is—defeats the purpose of hiring the person into a sales-type of role.

That basically means you’re planning for that hire to fail. Because the only way a sales hire becomes an expense on the P&L in today’s budget, on a zero-sum basis, is if they don’t actually contribute to more sales. If they do contribute to selling something, if they grow the pipeline and you’re able to convert that, they grow the pie. The the budget isn’t fixed; like the budget grows, the top line grows, and and the investments that you make have the potential to drive more revenue if you do it right.

It’s the—it’s really like the same concept of fixed mindset versus growth mindset. The the people who believe they can grow, do, and the people who believe their abilities are fixed, don’t. You know, it’s the same thing in business. When I see a business that’s stuck at a a revenue threshold, what I typically find is they’ve reached a level where their aversion to risk has created a a fixed zero-sum mindset. And the mindset starts driving every decision, which is ironic because the decision-making becomes a self-fulfilling prophecy.

Like think about what’s actually happening here. The owner doesn’t really believe the SDR is going to succeed in generating more opportunities, or doesn’t believe that those opportunities are going to drive more revenue. So he makes a hiring decision based on that belief: he goes part-time, he hires cheaper from a smaller pool with a higher turnover, he spends less on on the right tools and training because he’s working only with the budget that exists today, and then those decisions reduce the likelihood of that person getting the return. It is a self-fulfilling prophecy, and mindset creates the decisions, the decisions sabotage that future result, and then the future result confirms the mindset and it creates the spiral—creates this loop.

Again, this isn’t about part-time versus full-time to me; it’s about how business owners, and me included, by the way, how we make decisions about how to allocate capital. And the pattern that I see in the fastest-growing MSPs—every one of those success stories you hear celebrated at the events and the big growth stories and the the the big awards—it—what you find is they were sales-led. They they took a—they made a bet on sales, the bet paid off because they did it the right way, and the pie grew. And, you know, there’s one in in one of the big masterminds that I’m part of, there’s somebody who’s gotten several awards and and very, very popular in the in the area. And people know he didn’t know jack about IT. He went and hired several salespeople; after selling multi-multi-million dollar MSP, still barely knows much about IT, but he built out the sales org and he hired somebody to to do the IT side, but it was a sales-led organization because he made the investments in sales, sales grew the pie, and the rest tells its story.

So when I started MSP Sales Partners—like before I had even a single customer—the first two hires that I made were SDRs. There wasn't—there wasn't even a revenue yet. First two hires were SDRs. Why? Because capturing and generating and and converting demand into sales is what creates the resources to build everything else. I I saw those hires as revenue multipliers, not as expense. And look, I’m—I’m not telling you to spend money you don’t have—like to be fair—but I am telling you to reconsider how you think about investment in sales and marketing. Because if you’re making those decisions from a fixed mindset, zero-sum frame, then what you’re really saying is, "I don’t believe that the investments that I’m making are going to have an impact." And if that’s the case, that’s worth investigating.

You know, examine those fears, examine your aversion to that risk, or examine the strategy that you’re investigating because that mindset, un—if it's left untouched, drives the kind of decision-making that actually ensures the things that you said that you wanted to grow don’t actually grow. You go from looking at the upside and driving towards it early in business to at some point playing defense and getting really defensive and being afraid of losing what you have and making every decision around that. And playing defense is obviously super helpful—don’t lose money, don’t make stupid decisions—but growth comes from going on the offense. You have to put some points on the board, and the investments that you make in sales have the potential if you do them right to grow the pie. So don’t make decisions based on zero-sum mindset; think about when the bet pays off, what that means, and then go into "how do I ensure that this bet pays off." It'll drive better decision-making. Hope it helps. Adios.