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Choosing the Wrong Vendor Strategy Can Be Fatal to Your MSP Business—PART 2

What’s the Best Way to Approach Your Vendor Relationships?

In my previous blog article, I discussed the first vendor strategy I employed when I ran my successful MSP business. We’ll cover the second strategy here.

To recap, in 2004 I started my own IT Services company. We delivered business continuity solutions that helped organizations navigate through any threat to their business. Over a 9 year period, we built a very successful and profitable organization which we eventually sold to j2 Global’s KeepItSafe cloud backup division.

There were many reasons why my company was successful, but one key area we optimized was vendor management. We not only chose our vendor partners very carefully, but we leveraged them properly as well. The first vendor strategy we used was to choose the very best vendor in each product/service segment, and partner with that vendor only. The second vendor strategy we used was…

Vendor Strategy #2: Embrace Your Partners, Fully Engage With Them, and Treat Them Like a Trusted Member of Your Team

Many IT resellers are very guarded with their business, and some I would even describe as extremely over-protective and secretive. These extreme resellers operate in a closed environment, insisting on doing things themselves, with their own people, processes and procedures. With respect to their vendor partners, they maintain an adversarial relationship at all times. They treat them more like suppliers, to be called in for favors when needed, always trying to leverage the lowest price, and to limit information exchange on sales deals for fear that corporate secrets or customer identities would get leaked.

My company had a different philosophy. We were very open with our vendors, and we accepted all the help we could get from anyone that was willing to invest in us (and I don’t mean financially invest, I mean invest their time and energy). After all, it was Isaac Newton that famously said “If I have seen further than others, it is by standing upon the shoulders of giants.” Why would anyone refuse help?

Now don’t get me wrong, my company was proud of the business we built; we had exceptional people and methodologies which we were protective of. However, we also understood that we didn’t have all the answers, and we were a small team. If a vendor partner was prepared to share resources with us to propel our business, we always accepted the help. This help came in different forms, including sales assistance, technical knowledge, marketing support, access to high level executives within their organization, and financial support for various customer initiatives.

Why were they so generous with their investment? Because we treated them with complete respect. We ensured that our lines of communication were always open, we constantly provided proactive updates on sales deals and other company initiatives, and we never lied to them nor hid any information from them. In fact, we made sure most of them had direct access to our customers if they deemed it necessary.

Some people may criticize this philosophy as being “too trusting”, but in 9 full years I can proudly say we never had a single breach of trust. We always knew that if a vendor were to abuse our trust even just one time, we would terminate our relationship immediately. Luckily, we never had to.

To summarize our vendor partner approach: We carefully chose the vendors we worked with, and we dove into the deep end with them – sink or swim.

If you can’t completely trust your vendor partners with sensitive information, you have the wrong partners. It’s that simple.

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