When the unexpected hits, how do you respond? For Matt Strippelhoff, partner and CEO of Red Hawk Technologies, it wasn’t just one call that changed everything—it was three. In January 2017, during a foggy drive along the Ohio River, Matt experienced what he described as his first panic attack. His top three clients, who accounted for the majority of his company’s revenue, informed him that they were canceling or scaling back their projects due to mergers and strategic shifts.
"I thought I was having a panic attack for the first time in my life," Matt recalls. With the weight of layoffs looming and the survival of his business at stake, Matt was at a crossroads.
In this article, we explore how moments of crisis can lead to pivotal innovation and share valuable lessons from Matt’s journey to recovery and growth.
The Reality of Client Concentration Risks
Many entrepreneurs face client concentration risks in the early stages of their business. It’s common to rely on a few key clients for the bulk of revenue, but as Matt’s experience shows, this can be a dangerous strategy. In 2017, Red Hawk Technologies had been in business for eight years but hadn’t diversified its client base enough to buffer against large-scale losses.
"We knew we had client concentration risks, which happens with a lot of entrepreneurs as they start their business," Matt explains.
The sudden loss of key clients led to a harsh reality: layoffs and a complete reevaluation of the business model. For Matt, this moment wasn’t just a challenge; it was a wake-up call.
Turning Pain into Progress
As devastating as the situation was, it became the catalyst for significant change. The loss forced Matt and his team to take a hard look at their approach to software engineering and client engagement.
"Until you go through some level of pain and suffering, you may not truly innovate," he reflects. The crisis prompted them to ask deeper questions: How could they avoid this scenario in the future? What value were they truly offering their clients?
Through conversations with clients and internal analysis, Red Hawk Technologies identified a key issue in their market: mid-market clients often lacked the internal expertise to maximize value from traditional staff augmentation models.
Reframing Software Development as an Asset
One of the biggest breakthroughs was shifting the narrative around custom software projects. Instead of framing them as short-term projects with a clear beginning and end, Matt reframed them as long-term business assets requiring ongoing support and maintenance.
This reframing changed how clients viewed their investment.
"If you’re going to invest in a custom software solution that’s expensive and risky, you need to recognize it’s not a project. You’re developing an asset for your business," Matt explains.
Red Hawk introduced a fixed monthly fee model that provided clients with predictability and stability. This model gave mid-market companies access to continuous support without needing to build an in-house development team.
The Power of Support and Community
One of Matt’s key takeaways from his experience was the importance of having a support network. Running a business can feel isolating, especially during crises. Matt found solace and guidance in the Entrepreneurs Organization, a global community of business leaders.
"Spending time with people who’ve been through challenges like this before is extremely helpful," Matt emphasizes.
Peers who had weathered similar storms provided valuable advice and reassurance, reminding Matt that resilience is a shared experience among entrepreneurs.
Innovating with Purpose
By 2019, Red Hawk Technologies had not only recovered but had positioned itself as a leader in the software consultancy space. The company’s new approach led to exponential growth and recognition as one of the top 5,000 fastest-growing private companies in the United States.
The introduction of their Tech Innovation Workshop further distinguished their brand. This workshop helps clients determine whether their software concepts are worth pursuing, empowering businesses to make strategic decisions.
Matt explains, "If your purchase decision is based purely on cost, nothing’s worth investing in because all you see is pure cost." The workshop provides a structured way to evaluate potential return on investment and avoid costly mistakes.
Key Takeaways for Entrepreneurs
Matt’s story offers several lessons for business owners navigating uncertainty:
Diversify Your Revenue Streams: Avoid over-reliance on a few key clients to minimize risk.
Embrace Crisis as a Catalyst for Change: Innovation often stems from difficult experiences.
Reframe Your Offerings: Position your services as long-term investments rather than one-off projects.
Build a Support Network: Surround yourself with peers who can offer guidance and perspective.
Focus on Value, Not Just Cost: Help clients see the strategic value of their investment beyond the price tag.
Looking Ahead
Matt’s journey from crisis to innovation underscores the importance of resilience, adaptability, and purposeful innovation. By shifting their mindset and approach, Red Hawk Technologies not only weathered the storm but emerged stronger and more impactful.
If you’re interested in learning more about their approach or accessing Red Hawk’s strategic tools, visit redhawk-tech.com for resources such as the Tech Innovation Workshop and ROI workbooks designed to support your business growth.
Whether you’re navigating your own business challenges or seeking inspiration for your next big move, remember that setbacks can be the starting point for something extraordinary.
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