If you’re looking to start a successful managed service provider (MSP) business, you’re in the right place! This guide will look at how to set up and scale a managed services business, including the process of getting started, how to level up fast in the MSP world, and the technology, tools, and strategy that could help 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 huge potential as a growth industry. To get your slice 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 chops to hardware prowess. Outside of IT itself, what other skills do you or your partners have that will make setting up a business easier? We’re talking about 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 niche up early, choosing a particular industry or segment that they will focus on for their client base. Others like to keep their options open, looking for 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 be able to establish yourself as experts in that industry. If not, then your expertise will be linked to your IT and technical skills alone.
Don’t forget to think about the size of the businesses that you want to go after. It might feel amazing to snag a huge client, but will you have time to diversify and avoid having all of 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 with raising initial funds, setting fair prices for your services, and deciding how and when to scale.
When it comes to initial costs, many MSPs are bootstrapped from the beginning, slowly building up the hardware and the people they need as they start bringing in clients, so don’t be afraid if you don’t have a large amount of initial money to put into the business. However, there are a few initial costs that you will need to factor in, depending on how you’re going to run your business. Think about 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 what your costs are, it’s time to think about how you’re going to charge your clients. There are a number of 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 were the trailblazers of the per-technician pricing model, the first to offer our RMM and PSA solution per-technician, no matter how many endpoints that technician was serving. Our opinion was, and always will be, that an MSP shouldn’t be punished for their own success!
At the start, MSPs are often pushed to drop their pricing to get new clients, and with expensive software requirements, this can be impossible to sustain. Of course, you should remember that as an MSP, you are being paid for your expertise and insight, and this is a high-value service on the table, so don’t undervalue yourself! However, we have seen how the per-technician pricing that we offer can help our MSPs to hit the ground running towards a profit.
It’s also important to think about a pricing model that gives you 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 be finding your first clients? Down the road, you probably hope that word of mouth and client referrals 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 pounded the pavement with flyers, used cold calls and emails, set up websites or Google ad campaigns, or utilized 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 who you can offer discounted prices to, 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? Here are 3 things that we think help to tell 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 heavily related to moving away from break/fix. Talk to your clients about the proactive nature of a managed service approach, where you can get into a good schedule with them in terms of updates, patching and maintenance, fixing problems ahead of time. This is vastly preferable to the ‘fire-fighter’ approach that means their business needs to grind to a halt every time something goes wrong.
Lastly, a common thread that we’ve seen running across all master MSPs is their use of automation.
Automation will work on your behalf, helping you to make smarter use of your time, or to upskill other members of 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, getting you ready 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 automation example, and can help you to 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
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 is focused on changing the game for MSPs and IT professionals, offering everything you need to get started strong under the same roof.
Are you our next success story? Start your free trial, now.