SMB Community Podcast

The episode addressed the heightened challenges MSPs and IT service providers face in client acquisition, with specific reference to a recent Kaseya report indicating that twice as many MSPs describe obtaining new clients as more difficult compared to the previous year. This shift is attributed, in part, to changes in marketing efficacy and the increased reliance on referrals rather than structured marketing strategies. These findings emphasize the need for a consistent, proactive marketing approach—moving beyond informal networks—to counteract periods of slow business and ensure stable revenue.

Discussion highlighted that many MSPs lack a formalized marketing plan and treat the absence of active marketing as a matter of pride, despite clear evidence that consistent marketing activities are essential for growth and resilience. According to James Kernan, "marketing is the oxygen of your business," and its absence correlates directly with reduced new business opportunities. Strategies such as recurring in-person or online engagement with clients, regular assessment of marketing practices, and leveraging written marketing plans were identified as actionable recommendations for sustaining pipeline health.

A secondary focus examined operational risk and opportunity related to "shadow AI"—unauthorized or unmanaged use of AI tools by clients’ staff. Amy Babinchak detailed three core risks: accidental exposure of confidential data, violation of contracts or regulatory requirements, and a lack of auditable records for actions taken by shadow AI tools. The discussion identified practical risk mitigation steps, including staff education, policy development, and implementation of monitoring tools, all of which represent billable opportunities for MSPs while reducing downstream liability in the event of a breach.

For technology service providers and decision-makers, the episode underscores the operational imperative of formal, consistent marketing—even during slow periods—as well as the need for vigilant governance over emerging technology risk vectors such as shadow AI. By proactively engaging clients through both marketing and risk education, MSPs can better protect their businesses while expanding stable, recurring revenue streams rooted in demonstrable expertise and accountable service delivery.

Title:   How do I get more business when it’s slow?

M&A Topic: Why is an elevator pitch for my business important?

Article: Why is finding new clients harder? Double the number of MSPs in Kasaya reported said so. https://www.kaseya.com/blog/msp-growth-challenges-2026/

QBR Talk: Talk to your clients about Shadow AI https://www.thirdtier.net/2026/06/25/speak-to-your-client-about-shadow-ai/

Tales from the field: A fictional tale about the Trunk Slammer from Hell. 

https://www.reddit.com/r/msp/comments/1u82vnh/i_got_obsoleted_by_ai_so_i_wrote_you_all_a_bofh/

UPCOMING CHANNEL EVENTS

Mastermind LIVE in Omaha NEJuly 30-31st

Register: 

https://kernanconsulting-mastermind.mykajabi.com/mastermind-event

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The episode prioritizes the operational and exit-planning risks associated with MSPs lacking formal contracts. According to Amy , approximately half of MSP business owners operate without managed service agreements (MSAs), a decision that frequently results in reduced business valuation during sale negotiations. Both James and Amy emphasized that the absence of documented agreements is commonly flagged by buyers as a significant risk, often resulting in a devaluation of the acquired customer relationships. This exposes small and mid-sized providers to continuity risks, particularly where customer retention and service transferability are not contractually secured.

Further details outlined by Amy indicate that reluctance to implement contracts stems from concerns about client reactions, particularly in longstanding relationships. She observed that auto-renewal clauses and periodic, non-intrusive contract updates can streamline compliance and reduce friction. A personal account highlighted that, out of numerous customers, only one refused to sign an agreement, and this isolated case did not lead to client loss but necessitated risk pricing adjustments. James Kernan advised that contract clarity—covering terms, automated payments, and built-in annual price adjustments—should be positioned as a value to both parties, reinforcing operational stability and predictability.

Adjacent topics addressed contemporary service risks such as the proliferation of shadow AI applications and exposure to business email compromise. Amy reported discovering over 150 unmonitored AI-powered apps at client sites, emphasizing these as vectors for data exfiltration and compliance gaps. The Guards Cybersecurity Statistics report was cited, identifying business email compromise and social engineering as persistent attack methods, while underscoring that modern threat actors often bypass traditional privilege escalation in favor of capturing identity credentials and tokens. The operational focus for MSPs was advised to shift toward email, AI governance, and identity protection rather than legacy device vulnerabilities.

For MSPs and IT service providers, the main takeaways involve reassessment of contractual practices and a heightened approach to governance and risk management. Documented client agreements are necessary not only for valuation at exit but also for protection against operational disruptions and liability. Simultaneously, providers are urged to implement discovery and control mechanisms for AI use and to refresh security postures in line with current attack methods. The importance of establishing relationships with specialized advisors, attorneys, and alternative financing partners was also articulated, illustrating the multi-layered risk landscape that management teams must navigate for business resilience.

Show title: “How to Start a MSP”

1. How to Start a MSP- Resources: www.itspu.com

2.    New article from Third Tier: Taming Shadow IT before it tames you https://www.thirdtier.net/2026/06/21/taming-shadow-ai-before-it-tames-you/

3.    Guardz released a new cyber security statistics report: https://guardz.com/blog/security-awareness-statistics-msps-cant-ignore/

4.    Thoughts about whether an MSA is needed? Send them through the website: www.smbcommunitypodcast.com

5.    Anthropic Partner Program - https://www.anthropic.com/news/services-track-partner-hub

 

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The conversation focused on the practice of providing managed service pricing to customers during an initial meeting. One concept discussed was that MSPs are encountering prospects who increasingly expect immediate, transparent pricing, with many decision-makers opting to make choices after a single round of vendor meetings. The discussion explored how this shift contrasts with traditional industry advice that recommends withholding pricing until after an in-depth assessment and value-building process. Several points were raised, including the observation that coming prepared—with thorough research on the prospect and a clear pricing structure—can facilitate business wins, especially in competitive settings where prospects expect streamlined proposals.

A key theme that emerged was the importance of preparation ahead of initial client meetings. The discussion clarified that researching client backgrounds, conducting preliminary discoveries, and leveraging prior experience with similarly sized environments enable MSPs to present informed, realistic pricing. The conversation addressed that exceptions remain: in complex environments or when the client lacks clear infrastructure visibility, an assessment may still be necessary prior to quoting. However, these situations are reportedly less common, as clients often provide substantial upfront context during pre-meeting calls.

Secondary topics included practical guidance for financing large product orders, navigating out-of-state project requirements, and managing margin compression. The discussion explored options for financing substantial hardware purchases, highlighting leasing through distributors or manufacturers, encouraging clients to handle their own financing where possible, and considering purchase order (PO) financing to reduce resource strain. For out-of-state projects, building a professional network through peer groups or leveraging distributor partner networks was recommended. Regarding margin management, participants suggested standardizing service stacks, packaging recurring solutions, and reviewing contracts to ensure annual rate adjustments. The use of value-added services, such as cybersecurity and compliance, was recommended to offset margin thinning.

The discussion outlined several implications for MSPs and IT leaders. Responsive, transparent pricing aligns with current buyer expectations but requires robust preparation and established pricing models to maintain accountability and ensure fair risk allocation. For hardware procurement, shifting financial responsibility to clients or utilizing external financing tools can preserve operating capital and mitigate margin erosion. Resilient operational models—incorporating peer collaboration, flexible service packaging, and annual price reviews—enable firms to adapt to ongoing industry pressures including rising costs and tightening margins. MSPs are advised to prioritize accountability in client communications, vendor negotiations, and conflict resolution policies to reduce operational risk and protect organizational wellbeing.

Title:       Should you give a proposal at the first meeting?

MSP Question of the week:   Should you give Managed Services pricing to your prospect on the first meeting?

Topics/Events

Apple Price hike is not welcome news:  https://www.linkedin.com/news/story/apple-hikes-prices-we-know-this-is-not-welcome-news-8956946/
https://www.linkedin.com/news/story/apples-price-hikes-reflect-ai-eras-growing-price-tag-8305905/    

20% price increase ipads, macbooks, iMacs – iPhone unchanged

How do you finance larger product orders?   Lease, PO financing w/ distributor – don’t tell mfr

What if you have a project in another state for a current client ?  How do you deliver?

With margins thinning, how can I increase my overall margin?

Tales from the field:  How do you deal with an irate customer?

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The episode’s principal focus is on managing employee compensation requests within MSP operations, specifically addressing scenarios in which employees request significant raises. The discussion highlights the need for MSP leaders to weigh current market rates and organizational financial constraints in response to such requests. Both collaborative problem-solving—engaging employees in discussions regarding revenue generation—and performance-based compensation structures were identified as practical strategies for balancing employee retention with business viability.

Supporting this, the speakers emphasized transparent conversations with employees about the company’s billing structure, the sources of revenue, and the tradeoffs required to increase compensation. Performance-based incentives, such as commissions or bonuses tied to measurable business milestones (e.g., revenue targets, net new business), were noted as effective mechanisms for aligning individual rewards with organizational profitability. The discussion also noted risks when negotiation dynamics become adversarial, underscoring the importance of maintaining professionalism in both management and staff behaviors.

Adjacent topics included the increasing relevance of AI proficiency for workforce retention and the emerging terminology in the sector, such as “Managed Intelligence Provider” (MIP). It was observed that employees lacking AI skills face elevated layoff risks, a factor attributed to shifting operational priorities and the need for continuous learning. While new acronyms like MIP may gain industry attention, participants agreed that most services related to intelligence and data management could be incorporated within the MSP framework, suggesting minimal structural change for service providers.

For MSPs and IT leaders, the session underscores the necessity of clear compensation policies, ongoing staff development—especially in AI—and cautious positioning during merger or acquisition discussions. Risk mitigation includes frank financial communication with staff, investments in workforce upskilling, and careful negotiation to avoid undervaluation during business transitions. Performance incentives and clear cultural alignment are practical steps to balance employee satisfaction with organizational sustainability.

1. MSP Question of the week: My employee wants more money- what should I do?

2. A single decision that triples some workers layoff risk – Tech workers who regularly use artificial intelligence tools are far less likely to be laid off compared to colleagues who use AI less frequently, Bloomberg reports, citing new Gallup research. It puts infrequent users' layoff risk at 18%, tripling the 6% layoff risk for frequent users. Earlier this year, researchers tracked how often 23,000 employed and displaced workers used AI

3. The RISE of the Managed Intelligence Provider

4. M&A: How do I find the right buyer? Amy’s Book: https://amzn.to/4dSYOcR

5. Tales from the Field: Merger conversation – make sure it’s a culture fit and be fair with the price (no lowballing)

 

Mastermind Event – July 30-31st, 2026

Register here: https://portal.kernanconsulting.com/mastermind-event

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A significant regulatory development affecting MSPs was discussed: the US Government ordered the suspension of access to the Fable 5 and Mythos 5 AI models by any foreign national, including those inside and outside the United States, citing national security authorities. As reported in the Anthropic company statement, this directive forced abrupt discontinuation of these AI tools for all customers, regardless of business impact. The decision resulted in the sudden loss of access to custom-built AI applications and business process automation tools that MSPs and their clients had integrated into daily operations. Immediate disruptions included the cessation of SEO and analytics engines, RMM automation, and bespoke backup solutions that relied on the now-restricted AI platforms.

Further clarification showed these suspensions are tied to concerns about potential backdoor access, disputed by Anthropic but acted upon due to US Government findings. Additional context revealed Amazon—the largest investor in Anthropic and a direct competitor—alerted federal authorities to the supposed vulnerability. Stock prices of competitive AI offerings in China reportedly rose by 48% following the announcement, indicating market reactivity to perceived US regulatory risks. The episode underscored that AI model dependencies—whether managed internally by MSPs or by third-party vendors—can introduce sudden continuity hazards if access or legal standing is rapidly altered.

Adjacent discussions evaluated operational models for MSP service offerings. Contrasting perspectives highlighted the tradeoff between providing a single comprehensive managed services plan, designed for streamlined staff training and high-touch customer experience, versus offering a tiered set of plans (“good, better, best”) that, according to shared data, can result in about 70% higher revenue through client segmentation and option-based sales. The choice was framed as fundamentally cultural, influencing both workforce structure and scalability, with differing risk and complexity profiles for technical delivery and sales management.

Key implications for MSPs and IT leaders include the need for explicit risk assessments around reliance on AI platforms and third-party tools. Business continuity planning should contemplate not only technical redundancy but also legal and regulatory exposures to abrupt vendor or governmental action. When building service portfolios, organizations should align plan standardization or diversification with internal capacity, capability for sales-driven growth, and staff training. Establishing clear governance for evaluating the ongoing viability and risk exposure of both internally developed and vendor-supplied technology is critical for operational resilience in an environment of rapid regulatory change.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.