So, you want to launch a successful Managed Service Provider business? You’re certainly in the right place.
This guide will look at everything you need to know, from practically setting up the business, to formulating a strategy, choosing the right technology, and even attracting the right first clients. Ready, set, let’s go!
Setting up an MSP business
In some cases, you might already have a business set up that offers ad-hoc IT services, but you want to make the move to offering an MSP solution. In others, you’ll be starting from scratch, and need to register your business with the local authorities, choose a name, set up a business bank account, and if necessary – find and lease some office space.
One important item on the to-do list before you get started is to create some templates for contracts and SLAs. A common mistake is to create a single contract or a single Service Level Agreement, and expect clients to be one size fits all. In reality, even one customer could have varying needs.
There are two main strategies for MSP customers, break/fix, and managed services. You can think of break/fix like a pay-as-you-go model, while managed services is a more long-term contract.
Here, you will be paid ad-hoc for services as they are needed. This might be something relatively small such as an endpoint that isn’t connecting to the network, or performance issues like slow WiFi, or it could be a large-scale incident such as a cyberattack.
This model doesn’t usually involve any proactive monitoring or maintenance, and usually means you get less stability over your monthly income. Break/fix MSPs often complain about “feast or famine”, where they are either extremely overworked and don’t want to turn down customers in need, or they are twiddling their thumbs worried about keeping the lights on due to lack of incoming work.
While it makes sense to try to move away from this model over time, some of the best hourly rates can be made by offering break/fix services on the fly. Make sure you have a clear rate sheet that explains ad-hoc costs, and the price of services from fixing a printer jam to setting up new servers.
This is usually priced with a flat fee which covers all the support a customer needs in their IT environment. Later on we’ll discuss what items this might cover. One of the benefits of this approach is that it’s very transparent. You know exactly how much money you’re making each month, and with a clear SLA and contract, the customers know what’s covered by their IT services.
You can price managed services:
By device: The customer pays you a set price for every endpoint that you cover. This could be variable depending on the kind of endpoint, for example, you might want to charge more for laptops and PCs than for servers, printers, or mobile phones. Start by working out your own costs for items such as RMM software, antivirus and backup and then add a margin.
By user: If you want to charge per employee, you’ll need to factor in additional endpoints that you’re covering. For example, a business might have <5 employees, but manage a large network of endpoints or devices.
By project: Think about the work that you’re completing for your customers, and charge a value-based amount that you think is reasonable in the market. You could create tiered packages for different service offerings, such as a cloud bundle, or a hardware bundle. As some devices are more complicated than others, and some employees have more than one device – this can be a fairer approach.
Remember, to get true flexibility over how you create contracts, you need to use technology that is pay per technician, rather than pay per device. If every time you add an agent to a new device your own internal costs go up – you have no choice but to pass these costs onto your customers. If however you can manage as many devices as you need for the same monthly price, you can keep your own costs low, and pass on the benefits to your clients.
At this point, you’ll also want to consider how you’ll send invoices, bill clients, and manage payments. At Atera for example, we integrate professional services like contracts and SLAs with QuickBooks and Xero for simple, seamless end-of-the-month billing.
Service Level Agreements
Your service level agreements (SLA) will explain what you expect from your customers, and what they can expect from you. For example, how quickly should you respond to a ticket when they have a problem? At what point does a customer need to replace hardware for it to remain under your monitoring and maintenance agreement?
Without an SLA, you might end up disagreeing with customers, or feeling forced to answer ten minutes to midnight phone calls about relatively unimportant matters. You also could find yourself supporting end-of-life hardware or software that opens your environment up to risk.
Items to include on your SLA include:
A definition of your services: What are you offering? And what is not included? Take a look at the section below called “What MSP services should I offer?” to get some clarity on this one. If your customer has their own third-party agreement for certain solutions, you might want to note that here.
Hours of support: Do you offer 24/7 support, or are you purely 9-5? It might be that you want to allow the customer to reach out during off-hours, but there will be an additional charge incurred. This is where all that detail should be codified for both parties.
System performance/uptime: What guarantees are you making to the customer? Your technology should be able to monitor uptime with a percentage that you can share to show that you are keeping your end of the bargain. You may want to outline other metrics and your goals, such as CPU, memory, or storage.
Response times: Think about what you’re offering in terms of response time and also resolution time. Here you could have tiers of support and response depending on the criticality of the problem. If a user can’t get into their email, you could offer a 24-hour response time and a 72-hour fix, while a system failure would need to be solved much faster, probably within 2-4 hours.
Communication: How should the customer get in touch with you? Telephone, email, ticketing system, smoke signals? A ticketing system is usually the smartest option, keeping all of your communications in one place. Atera’s helpdesk software allows for emails to be automatically turned into tickets, giving customers more flexibility over how they reach out.
Customer responsibilities: Here is where you outline what you want from the customer. When do they need to sunset operating systems or devices? What security protocols do you expect from all of your customers? What is your rule for shadow IT, or employee web browsing? These are all rules to put in place during your SLA conversation.
Data privacy: Today, data privacy needs to be clear on both sides. How are you going to ensure that customer data is kept secure? Outline what data you will store, and where, and how long you will hold this data for, especially if this could outlast the length of the business relationship. In many cases you will be holding the client’s own end-user data, making this even more important in the event of a supply chain attack.
What services should I offer as an MSP?
Before you ever step into a discovery meeting with a potential client, you need to consider what technical services you’re going to offer. This will inform how much you charge, what technology partnerships you need to make, and also who you hire! If you want to keep things simple, you can rely on your own areas of expertise. If you want to extend your services, you may need to hire employees with a specific skill set. Here are some of the most popular options for MSP services.
On-site or remote support
What kind of support are you planning to provide? If you like the hands-on nature of going into customer sites, then this will inform where you look for customers, in your local area. If however, you’re happy to offer remote help, (and even local businesses may have remote working employees) you’ll need to onboard remote access software so that you can troubleshoot and keep endpoints up to date from anywhere.
Niche industry services
Will you offer generalist IT services, or are you looking to niche down? It could be helpful to align yourself with a specific type of business or industry, to promote your expertise or experience. This will inform the services you provide. For example, if you specialize in healthcare, you’ll want expertise in monitoring and maintaining more traditional legacy systems which are common in this industry, as well as healthcare compliance like managing PII. In retail, you may need to understand different devices and solutions, such as Point of Sale systems or eCommerce websites. Other niches could be education, hospitality, defense and government, or manufacturing, all of which will have their own needs.
Remote monitoring and maintenance
System monitoring and maintenance are often the foundation of MSP services. This includes real-time monitoring and alerts to give full visibility into all devices and groups of devices, patch management, and asset and inventory scanning. Your RMM software should eliminate a lot of the manual work, creating opportunities for IT automation, for example, scripts and automation profiles, or Network Discovery that can automatically scan all domains and workgroups for a complete list of all assets. Remote access software can also make RMM easier, minimizing on-site visits and allowing technicians to support attended and unattended devices with regular tasks from defragments and reboots, to updates and troubleshooting.
Today, security is an important part of an MSP offering, as all businesses need to consider data privacy, compliance, and the impact of a cyberattack. Split your security offering into ‘must-haves’ and extras, and then speak to your clients about what they need. Must-haves would include data backups, a strong firewall, anti-virus/anti-malware, and Endpoint Detection and Response. Extras could be specific to a certain type of business or environment, for example, a sensitive industry might need extra compliance tools, or you might decide for a low-tech company to roll out Security Awareness Training across their employees.
How to find MSP clients
By now you will have opened your business, chosen a pricing model, considered building out Service Level Agreements that work for your staffing and industry, and decided what services and technology you’ll be offering. It’s time to find those all-important first clients!
Remember, there is definitely such a thing as the wrong client, and the first alarm bell should sound if they are not happy with any of the decisions you’ve made so far. If a client is not the right fit, they will be unhappy in the long run, and end up costing you a lot more than they can make you in terms of lost time and frustration.
A website is great, as long as it’s up to date. Try to avoid putting dates or seasons on the site, as these could quickly become irrelevant. If for example, you want to offer a discount to attract visitors to your site, call it a “first-time discount” rather than a “summer discount.” You can decide if you want to be transparent about pricing on the site or if you want to encourage prospects to reach out by phone or contact form. Definitely include a list of your services. You might find at first that a simple Google My Business advert on Google is enough for you, and that a website can wait until later in your journey.
A business network can also be very helpful, either on LinkedIn or via an in-person peer group or entrepreneur’s network. Let it be known that you’re open to new clients, and take on ad-hoc work to gain testimonials and case studies until you get your first few managed service leads.
Finally, make sure that you’re partnering with the right technologies and tools that have a proven name in the market. When you can say to a prospect that you utilize Atera for RMM, Malwarebytes for Endpoint Detection, or Acronis for backup, these are signs that they will be working with the best in the business.
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