How to Start an MSP Business

If you’re looking to start a successful managed service provider (MSP) business, you’re in the right place! This guide will explore how to set up and scale a managed services business, including the process of getting started, how to grow quickly in the MSP world, and the technology, tools, and strategies that could make all the difference when you’re starting out.

How to set up a managed services business

The managed service industry is set to grow by a CAGR of 11.7% through 2025, showing its significant potential as a growth industry. To get your piece of the pie, here are some of the first items on your to-do list.

#1. Understand your skill set

What are you bringing to the table as a Managed Services Provider? Most new MSPs have a background in IT and technology, so what are your differentiators? This could be anything from data science to cloud engineering or from cybersecurity expertise to hardware skills. Beyond IT, what other abilities do you or your partners have that will make setting up a business easier? Consider the more business-oriented know-how, such as accounting and finance, or marketing and sales. These will all be invaluable, especially as you get started.

#2: Think about Niche

Some MSPs prefer to specialize early, choosing a particular industry or segment to focus on for their client base. Others keep their options open, seeking clients from a wide range of business types. There’s no right answer, and both can create successful business models, but it’s definitely worth having the conversation at the start.

If you choose to focus on a specific niche, you will want to establish yourself as an expert in that industry. If not, then your expertise will be linked to your IT and technical skills alone.

Don’t forget to consider the size of the businesses you want to target. While it might feel great to secure a large client, will you have time to diversify and avoid putting all your eggs in one basket with this approach? It might make more sense to look for a few smaller clients, especially at the start.

#3: Consider start-up costs

Knowing your costs and preparing for them in advance might be the single most important piece of advice. It will help you raise initial funds, set fair prices for your services, and decide how and when to scale.

When it comes to initial costs, many MSPs start with minimal resources, slowly building up the hardware and the people they need as they begin bringing in clients, so don’t worry if you don’t have a large amount of initial money to invest in the business. However, there are a few initial costs that you will need to factor in, depending on how you plan to run your business. Consider the following questions:

• Are you going to be working remotely as a mobile MSP, or will you have to consider renting an office?
• Do you need any particular kind of insurance to cover you in case something goes wrong?
• What equipment do you want to stock up on, or will you create arrangements with third-party resellers for hardware?
• How are you marketing your MSP business, and do you have the budget to do this at scale?
• What initial technology/tools should you have in place, from RMM and PSA, to remote access or cybersecurity, and what are the costs of these?
• Are you a one-man-band, or do you have added staff to consider (and pay for)?

#4: Once you have the answers… decide on a pricing model

Now that you know your costs, it’s time to think about how you’re going to charge your clients. There are several different methods for this, from per-device pricing, per-user pricing, per-technician pricing, tiered pricing bundles for different services, or a break/fix model where each item will cost a different amount depending on what the customer needs.

At Atera, we pioneered the per-technician pricing model, offering our RMM and PSA solution per technician, regardless of how many endpoints that technician was serving. Our belief was, and always will be, that an MSP shouldn’t be penalized for their own success!offering our RMM and PSA solution per technician, regardless of how many endpoints that technician was serving. Our belief was, and always will be, that an MSP shouldn’t be penalized for their own success!

At the start, MSPs are often pressured to drop their pricing to attract new clients, but with expensive software requirements, this can be difficult to sustain. Remember that as an MSP, you are being paid for your expertise and insight, and this is a high-value service, so don’t undervalue yourself! However, we have seen how the per-technician pricing that we offer can help our MSPs start strong on the path to profitability.

It’s also important to think about a pricing model that offers transparency and stability. If you can get your clients onto a fixed monthly retainer cost, this will always be easier to forecast than a break/fix model, for example.

#5: Spread the word about your MSP business

How will you find your first clients? Down the road, you’ll probably hope that word of mouth and client referrals will help you source new business, but at the start – it can be hard to get that all-important first bite. Again, there is no ‘one right answer’ here.

We have MSP customers who distributed flyers, used cold calls and emails, set up websites or Google ad campaigns, or leveraged LinkedIn and other social media. It can help to join a local business owners’ group or even a specific MSP peer group of other early stage MSPs. Consider reaching out to a not-for-profit or a charity where you can offer discounted prices in return for a strong testimonial.

Create a powerful elevator pitch and an email that clearly explains your value, and make sure to talk to people openly about what you do. You never know who could become a great connection or could pass on your name.

How to become a successful MSP

Once you have your first clients, now you need to take the next step, and shift from being a run of the mill managed service provider, to being a successful MSP. But what’s the difference? But what’s the difference? Here are 3 key factors that we think set these two groups apart.

Great vendor relationships:

Your services will only be as good as the software you use. Start-up essentials are:

• Professional services automation: This will include helpdesk software and ticketing so you can quickly serve your customers when they need help
• Remote monitoring and maintenance: Here you can establish rules for patching and software updates, and troubleshoot problems when they occur.
• Remote access: Especially in today’s remote working landscape, make sure you can easily access user machines and take control where necessary.
• Cybersecurity: This may start with antivirus, but today this is just step one. Think about web security, cloud controls, access management, back-up, and more.
• Documentation: If everything is in your own head, you’ve become a single point of failure for your business. The best documentation, warranty and password tools can make everyone the expert.
• Accounting: Of course, you want to be able to easily bill and invoice for your work, with straightforward reporting and breakdowns so your customers can see everything at a glance.

Proactive rather than reactive:

The best MSPs are ahead of the game.

This is closely related to moving away from break/fix. Talk to your clients about the proactive nature of a managed service approach, where you can establish a good schedule with them for updates, patching, and maintenance, addressing issues before they become problems. This is far preferable to the ‘fire-fighter’ approach, which means their business needs to grind to a halt every time something goes wrong.

Automation opportunities:

Lastly, a common thread we’ve seen across all successful MSPs is their use of automation.

Automation works on your behalf, helping you make smarter use of your time, or to upskill other members of your staff. Network discovery is one great example. The Network Discovery tool from Atera runs in the background, generating a complete list of hardware and software in your client environments, preparing you for your quarterly business meetings, and even suggesting potential upsell opportunities that are already on the table, alongside a financial value for those tasks.

A robust script library is another great example of automation and can help you set up time-savers such as automatic patch management, software installs and updates, and much more.

A single vendor relationship makes starting an MSP business simple

Starting an MSP business involves careful planning, understanding your unique strengths, and making strategic decisions from the outset. By focusing on your niche, managing start-up costs effectively, choosing the right pricing model, and spreading the word about your services, you can set a strong foundation for success. As you grow, building solid vendor relationships, adopting a proactive approach, and leveraging automation tools. Remember, with the right tools and strategy, your MSP business can not only survive but thrive in this competitive industry.

At Atera, we have years of experience helping businesses move from start-up hopefuls to fully-fledged MSP success stories. Our per-technician pricing and feature-rich platform are designed to change the game for MSPs and IT professionals, offering everything you need to start strong, all under one roof.

Are you our next success story? Start your free trial, now.