The 6-step guide to launching a successful MSP business

Before starting an MSP business, it is important to conduct thorough research into the industry, market trends, and competitive landscape in the region. Identify a specific area to focus on that aligns with your business model and objectives, understand the services you can offer, the clients you want to target, and the resources you need.

Creating a business model canvas (a blueprint) of your business can help you understand the intricacies and details of the venture. For an example, have a look at the sample we have created specifically for a generic MSP business:

Table 1: Business model canvas for a generic managed service provider

The business model canvas is a very important tool to provide a visual representation of the key components of a business model. For budding MSPs, the business model canvas is especially important, as it provides a framework for creating a comprehensive business plan that can be used to attract investors and customers.

Your next step is obtaining the necessary licenses and permits. It is essential for operating your business in compliance with the law. The specific prerequisites may differ depending on your geographical location. Here's a breakdown of some common types of licenses and permits required based on different geographical locations:

Table 2: Licenses and permits required for starting an MSP business

Beyond these, you will need to set up a business account, get insurance to protect your business from potential risks, and get legal and compliance advice from a lawyer and accountant to ensure you haven't missed anything.

The pricing structure for your MSP business should be customized based on the following factors:

• Size of the customer's business: The bigger the business gets, the higher the costs associated with running it. It is crucial to select a pricing model that offers flexibility and scalability.
• Range of the services: The total scope of your services that you're planning to offer is a major factor in deciding the pricing model. If you're offering a lot of services together, you can go with a subscription-based pricing model such as tiered or flat-rate. If you want to offer more affordable options, then you can go with the a la carte, or per-device, or per user pricing model.
• Type of industry: Your choice of industry can be another deciding factor. For instance, for the healthcare industry, you'll need a pricing model that offers fixed and predictable costs, whereas for industries such as retail, you'll need a model that offers more flexibility and is more user focused.
• Geographical location: If you are considering offering your services abroad, you need to factor in the cost of living in different parts of the world and the prices offered by your competitors in your clients' regions when deciding upon pricing models.

It is essential to contemplate the value you bring, what your competitors are offering, and what it takes for you to deliver your services. While there are many MSP pricing models available, we have listed some widely used pricing models and their pros and cons for you to evaluate:

Table 3: MSP pricing models and their pros and cons

The pricing models you choose should meet the requirements of your customers. By utilizing a suitable pricing strategy, you can guarantee that you are delivering the best possible value for your services while also maximizing your profits.

After choosing an apt pricing model, the next step is to create a bundle of service offerings, or a service portfolio. To create your service portfolio, you can categorize your services based on various models that cater to different types of customers. For instance, an MSP service portfolio could include:

1. Core services: Start with essential offerings like IT service desk, endpoint management, and network monitoring.

2. Value-added services: Differentiate yourself with specialized services (like cloud migration, disaster recovery planning, or business continuity strategies).

3. Tiered packages: Offer different service levels (like bronze, silver, gold, and platinum) to cater to diverse customer needs and budgets.

To succeed as an MSP, your workforce is the key. You'll need a team of skilled technicians to provide quality IT support to your customers. If you're looking to start small, you can start with hiring just two to three techs and scale as you grow. For instance, if you're simply looking to offer help desk and service desk support, two to three techs will easily be able to handle customers with the right set of tools. However, some services may be more frequently used and would require a slightly bigger team to deal with the same number of customers.

Hiring a team

Hiring employees or outsourcing services are both viable options for building a team. On average, MSP help desk technicians earn around $55K annually, so it's important to make sure personnel are paid well to reduce attrition, which is getting quite high (40-50%) in start-ups. Alternatively, if you're looking to start your MSP business as a partnership with a group of people (minimum of three) with knowledge in different facets of this industry, you may be able to start without hiring any technicians in the initial stage.

Making customer service a priority

It is essential for technicians to be properly trained and possess the required skills to complete their assigned tasks and projects. Clear direction and expectations should be provided as well as feedback and recognition for a job well done. Additionally, having the right tools and resources available is critical to ensure technicians can complete their tasks on time and avoid SLA violations. Above all, a workforce that prioritizes customer service is crucial for achieving success as an MSP.

You'll need to invest in the right tools and technology to manage your business and provide services to your clients. Your MSP tech ecosystem needs to be comprised of the right combination of software and hardware tools (see images 5 and 6) in their arsenal.

Image 5: Software arsenal for MSPs

Image 6: Hardware arsenal for MSPs

However, choosing the right solutions can be overwhelming with the vast array of options available. To help you navigate this process, here are some key things you need to keep in mind:

Evaluate your requirements and budget

Before building your MSP tech stack, it's important to evaluate your requirements and budget. This involves focusing on your niche and determining your target client base and its specific needs, such as cybersecurity, cloud services, and network monitoring. These considerations will guide your technology choices. Additionally, it's important to prioritize core functionalities, such as PSA, ticketing, remote monitoring, patching, and reporting. Start with affordable, essential solutions and scale up as your business grows. When budgeting, consider both upfront costs and ongoing subscriptions.

Make investments in essential tools

When starting out as an MSP, it's crucial to prioritize the most essential tools. Here are some commonly required tools for MSPs to effectively kick-start their businesses:

• Professional service automation (PSA): Manage accounts and resources, track projects, automate billing and invoicing, generate reports, and more.
• Service desk solution: Streamline service delivery, ticketing, and changes and releases; keep up on client-specific knowledge bases; and oversee IT and non-IT assets, among other ITSM processes.
• Service desk solution: Streamline service delivery, ticketing, and changes and releases; keep up on client-specific knowledge bases; and oversee IT and non-IT assets, among other ITSM processes.
• Endpoint management and security: Secure client devices with antivirus solutions, anti-malware solutions, firewall solutions, and more.
• Backup and disaster recovery: Protect data from accidental loss or cyberattacks.

...and don't forget

When choosing tools for your business, remember to consider security, scalability, integration, and training and support. Give priority to tools with robust security measures and the ability to adapt and expand with your client base. Additionally, select solutions that seamlessly integrate with each other and your current systems, and allocate resources for training your team to ensure a successful implementation.