Information technology has evolved from a side industry to a cornerstone of global trade since the advent of the computer era in the mid-20th century. The obligations put on organizations to manage their IT systems increase in tandem with the complexity of those systems.
Managed service providers (MSPs) play a crucial role in today’s dynamic digital environment by offering a variety of network management, security, and optimization services to businesses. Aspiring company owners with IT expertise can find that starting an MSP business is an excellent opportunity to put their skills to use.
The fact that the managed service business is projected to expand at a compound annual growth rate of 7.9% through 2026 demonstrates the tremendous potential it has as a growing industry.
Here are the top MSP best practices you should use right now to increase your chances of success and secure a larger share of the market.
Recognize Your Competencies
As a managed service provider, what do you provide that others don’t? What sets you apart from the other new MSPs, the vast majority of whom come from IT or a related field? This might include knowledge of data science, cloud engineering, cybersecurity, or hardware.
What additional expertise do you or your partners have that can help with company setup outside of IT? When we talk about “business knowledge,” we’re referring to areas like accounting, finance, marketing, and sales. All of them will be really helpful, particularly when you first begin.
Focus on a Particular Niche
Some MSPs find it beneficial to specialize in a subset of the market from the get-go. Others like to leave their choices open and hunt for customers from a diverse variety of industries while building their client base. There is no definitive solution, and both approaches can result in profitable business models, but it’s important to think about this early on.
If you decide to specialize, you’ll need to demonstrate your mastery in your chosen field. If this is not the case, then your knowledge will be limited to your IT and technical abilities.
Think About Your Initial Investment
The single most important piece of advice is to know your expenses and be ready for them ahead of time. You can use it to determine when it is the best time to grow, what pricing to charge for your services, and how to get early capital.
Don’t worry if you don’t have a lot of money to invest in the business at the outset. Many MSPs are bootstrapped from the beginning, acquiring the necessary equipment and personnel as they bring in customers. However, depending on how you want to operate, there are certain startup expenses you’ll need to consider. Here are some questions to take into consideration:
- Do you plan on becoming a completely mobile MSP, or do you also plan on hiring an office space?
- Have you considered getting insurance in case anything goes wrong?
- What equipment do you plan to stock up on, and will you be working with any other vendors?
- How are you promoting your MSP, and can you afford to do it on a large scale?
- What foundational technology/tools, such as RMM and PSA, remote access, or cybersecurity, should you have in place, and what are their associated costs?
- Is it just you, or do you have to think about (and pay for) other people as well?
Determine Your Pricing Strategy
Knowing your expenses can help you choose how much to charge customers. There are numerous pricing models you’ll need to consider, such as per device, per user, per technician, tiered bundles for various services, and a break-fix model.
Due to the high cost of necessary software, newly managed service providers might feel pressured to provide discounts in the beginning in order to attract customers. Don’t forget that you’re an MSP because of your knowledge and insights; this is a high-priced offer, so don’t lowball yourself.
Spread the News About Your MSP Service
While you might believe that repeat customers and recommendations from satisfied customers will bring in new revenue in the long run, getting that first customer might be challenging at first. Once again, there is no definitive solution.
The first step is to be upfront about what you do and to create an effective sales pitch and email that demonstrate your value. It’s impossible to predict who could become a valuable contact or advocate for you.
With these pointers in hand, start looking for customers. Establish a strong online presence in order to raise awareness among potential clients about your company. Once you’ve attracted some customers, successfully onboarded them, and gotten your MSP off the ground, you can ask them for recommendations to build up your client base. Good luck!