EP254 - How to Avoid Your Biggest Client Taking You Down with Ian Luckett

The reality is that many MSPs grow through referrals and good account management. That, in itself, is not a bad thing, but when the business matures, you can find yourself in a position where a single client represents 30, 40, even 50 percent of your revenue. They may also be one of your most profitable accounts, so the dependency is even greater. If that client gets bought, merges, or decides to build an internal IT team, you are left exposed. Worse still, if they go bust, you’re not only losing revenue but also carrying the burden of licences, subscriptions, and staff wages with no way to cover them. This is the sort of chain reaction that can force redundancies, damage your confidence, and undo years of hard work building your technical team.

It is not only about operational pain either. From a valuation perspective, client concentration is a red flag. Any potential investor or acquirer will be put off if they see that one client represents too much of your turnover. Even if your profitability is strong, your valuation can collapse overnight if this risk is present. That’s why managing concentration is so critical for an MSP that is serious about scaling and building long-term transferable value.

So, what can you do about it? The first step is to track revenue concentration carefully. Aim to keep any single client below 20 to 25 percent of your total turnover. This doesn’t mean you stop growing your large accounts, but it does mean you must actively nurture your smaller ones and bring in new larger clients to redress the balance. You also need to analyse profitability per client. Turnover is misleading if it is not supported by strong margins. A noisy client that consumes excessive service desk time may actually be one of your least profitable accounts, while a quieter one that steadily pays and adopts more of your stack could be a star performer. Break it down across support, subscriptions, projects, and hardware so you have a clear picture of where your profit truly sits.

Building a growth plan around your client base is another powerful move. Upselling, cross-selling, and what’s often called whitespace selling can transform profitability without chasing new business. List your services against each client and see where the gaps are. Many MSPs overlook this because they are too busy firefighting, yet it’s one of the easiest ways to improve efficiency and increase turnover. Selling to people who already trust you will always be more effective than chasing cold prospects.

Marketing plays a huge role here too. You cannot afford to stop and start your Marketing activity whenever you feel the pressure. Consistency is everything. Building a new client runway takes time and energy, and it is the only way to create predictable growth. The credibility, trust, and authority that comes with effective Marketing doesn’t happen overnight, but once the engine is working it gives you resilience when a client leaves. Too many MSPs wait until they are in crisis mode to switch Marketing back on, only to find that it’s far too late to plug the gap. 

Account management also needs to be taken seriously. Strong client relationships not only increase revenue but also help you spot risks early. Assigning account managers means you have people acting as the eyes and ears of the business, looking for new opportunities and changes in client circumstances. Focus your attention on accounts that are profitable and likely to grow. Sometimes the small clients today are the ones that explode tomorrow, and you want to be there when they do. 

Once you start putting these practices into place, the benefits compound. You sleep better at night because you’re no longer reliant on one client to keep the lights on. You build predictable growth because your Marketing engine is consistent, and your client portfolio is balanced. You increase your valuation because you’re spreading risk and demonstrating resilience. Most importantly, you gain the confidence to invest in your people, in automation, and even in acquisitions that can further dilute your concentration risk. 

The message here is simple: don’t let one client hold your business hostage. Analyse your profitability, manage your client concentration, keep your Marketing consistent, and strengthen your account management. When you do this, you protect your business, protect your team, and create the foundation to scale on your terms. This is how you build a business that works for you rather than you for it. 

That’s what this episode of the IT Experts Podcast is all about. It’s not about fear, it’s about taking control. Because the sooner you address this risk, the stronger and more valuable your MSP will become. 

Make sure to check out our Ultimate MSP Growth Guide, a free guide that walks you through a proven process to take your MSP from stuck to scalable, without working even more hours. It’s 44 pages rammed with advice, insights and inspiration to help you decide what support is available to you now if you want to grow and scale your business. Click HERE to get your copy. 

Connect on LinkedIn HERE with Ian and also with Stuart by clicking this LINK 

And when you’re ready to take the next step in growing your MSP, come and take the Scale with Confidence MSP Mastery Quiz. In just three minutes, you’ll get a 360-degree scan of your MSP and identify the one or two tactics that could help you find more time, engage & align your people and generate more leads. 

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Until next time, look after yourself and I’ll catch up with you soon!