These days, it seems more and more tech experts are trying to start an MSP. And it’s not hard to see why: with spending in Unified Communications set to swell to $53.5 billion USD worldwide, it seems obvious that building a managed services business is one of the safest investments in IT.
But as always, the reality of starting an MSP is far more difficult than the dream. SMBs in general are prone to failure, and considering just how many other players are also entering the game, it’s essential to know how to start an MSP business well before you move into the market.
So, what kind of guidance should you be looking for? For starters, here we’ll discuss some of the most important ways to successfully start an MSP, based on the qualities we at Wildix look for when considering a prospective partner.
Check out these MSP tips to make sure your approach to building a managed service provider business is up to par.
MSP Tip #1: Put Services over Solutions
The single most important point to cover in how to start a managed services company is to focus your business around services — not just the UC&C solutions you have in your portfolio.
Yes, of course it’s important that you select good technology that provides value to clients. But nowadays, when businesses can buy software and hardware for cheap directly from vendors, the Managed Services business model must be built around — well — services.
Now that everything else tech-related is easily and cheaply available online, services are central to the entire process of how to become an MSP. Without emphasizing them, your business simply will not have any meaningful market differentiation.
On the other hand, with services — in particular, installations that fit precise business needs, open communication and readily available tech support — you’ll provide unique, differentiated value that businesses will find well worth paying for. It’s these qualities that you must lean into when starting your MSP, not simply a strong lineup of products.
MSP Tip #2: Dig Out Your Niche
On that note, as effective as it is to focus on services, better still is to further specialize within your particular field of services.
With just how much territory “IT” or even “UC&C” covers these days, it’s extraordinarily difficult to manage all parts of the field well. Rather than taking up that monumental effort to cover every single one of those bases, direct your energy productively by specializing your managed services business model in one specific niche.
Specialization isn’t just there to save you from studying all possible components of UC&C, either. In broader business terms, digging a niche allows you to build your Unique Value Proposition: a simple statement that shows customers exactly why they should go to you over your competition. And while prioritizing your services over technology will help distinguish you from technology vendors, specializing in a niche of services will set you apart from fellow MSPs.
So, what niche should you specialize in? Easy: it’s whichever one you’re good at already.
Instead of starting from zero knowledge in a new field, use your current knowledge over technology as your springboard into deeper expertise. Even if you’re a “one man MSP,” it’s better to start from those MSP operations you’re good at and then hire the rest of the team. Becoming a specialist in one particular managed services business model will be that much easier when you’re already knowledgeable about it. By extension, you’ll also have a far easier time proving to customers looking for an MSP that you’re the best option to buy from.
Lean into those existing strengths and make the journey to full-on specialist, and you’ll build your MSP up to have a far stronger start than most of your competition.
MSP Tip #3: Understand Sales
Yes, yes, we know: you’re building a managed services business because you want to be a business owner, not a salesperson. Be that as it may, it’s still critical that you start your MSP with a solid background in sales.
The reason why comes down to preparation. Understanding how to sell your MSP business solutions will better set you up for success: once you know the basic principles behind selling, it becomes far easier to craft a business plan, solution sets, marketing plan and client management that all dovetail into effective sales strategies.
Knowing sales also prepares you to lead a sales team, since you’ll have the expertise necessary to generate good sales results. And yes, you will need a sales team — with how much competition exists in UC&C and how much convincing businesses need to sign a contract with an MSP, you really should have extra hands on deck to win initial clients.
Again, the managed services business model revolves around services, which by nature take a lot of effort to market and sell. For your MSP to be successful, it’s vital that you lead with an understanding of which sales processes generate results.
MSP Tip #4: Develop a Business Plan
Now that you understand your niche and approach to sales, it’s time to evaluate how you’ll approach the specifics of your business. Digging into details will be critical here, and any MSP’s plans should include points such as:
- Service-Level Agreements (SLAs)
- Client management
- Sales procedures
- Pricing plans
- Definition of marketing qualified lead (MQL)
- Definition of sales qualified lead (SQL)
- Technical support processes
This is also where you should look into hiring needs. Don’t hamstring yourself by trying to be a “one man MSP”; to build a managed services business that lasts, you’ll want additional talent on board for sales, tech, marketing, HR and other key MSP operations, all with an understanding of your work in the market.
Recruits across all departments should also be given continual training to catch up on the latest knowledge in their field — this goes especially for sales and tech, given how crucial they’ll be to your success.
In short, lay out as clear and precise of a foundation as you can. Once you’re in the thick of managing your MSP, you’ll be glad you handled it all ahead of time.
MSP Tip #5: Aim for Slow, Steady Growth
Though you’re probably starting an MSP based on the massive growth of the industry, you shouldn’t start out looking for big, easy paydays. Instead, look to grow your MSP business with slow, steady and sustainable revenue.
Paradoxical as it may sound, too much upfront profit will actually hinder you early on. When you’re first building your MSP business, you’ll still be learning the basics of procedures like project management, technical support and client relationships. Taking on too much for any of these projects while starting out will only stretch you and your team to a breaking point, rendering those big initial payouts moot.
Rather than biting off more than you can chew, start out with smaller projects for smaller customers. Steady, stable growth is the name of the game here: your clients should initially need relatively little in terms of MSP business solutions, but then require additional seats and feature sets as their customer base expands. The key is to form relationships that you can nurture over time, from which you can earn consistent revenue month after month.
This consistency separates successful MSPs from failing ones: as satisfying as it may be to land that one big sale, your business is far more likely to survive if you have a predictable forecast of your profits every month.
MSP Tip #6: Use a Channel-Focused Vendor
Of course, a key part of how to become an MSP is having effective UC&C technology. This is where a vendor comes in, but it’s also where things become especially tricky.
As it is in so many other relationships, a good IT partner is hard to find. Many use woefully outdated technology and coast entirely off their established brand reputation; plenty more will promise you an equal partnership, then take over management of your clients and, by extension, of your primary source of income. With so many unworkable or unwinnable scenarios out there, how are you to settle on a vendor that will help you?
The key is to consider what the vendor does for the channel — that is, for small MSPs like the one you’re starting. A solid partnership will be one where your vendor doesn’t sell their products directly to customers, doesn’t handle management or billing of your clients, but does provide support to MSPs by helping with lead generation, providing training in tech and sales, assisting in your marketing efforts and providing OpEx-oriented products.
Basically, search for a vendor that is built to succeed only alongside your own success. A vendor with a history of direct sales and market takeovers is likely to turn on you, but one with a history of supporting the channel will better facilitate your success.
Takeaways for Starting Your MSP
Without question, starting an MSP business in today’s market is difficult. There’s a lot of growth in the UC&C market, sure. But that’s exactly what a huge deal of competitors are also counting on, meaning that you’ll find a crowded field once you enter it.
The best way to get a leg up on your competition is to from the outset build your MSP around a Unique Value Proposition. Digging out a specific niche in this way will not only better help you focus your skills into delivering constant value, you’ll also more clearly communicate your market value to customers.
But what about finding a worthwhile vendor? For one choice, Wildix is specifically built to support the channel and MSPs.
On top of never selling direct, Wildix specifically supports partnering MSPs with ongoing sales and tech training, as well as marketing support, a 24/7 network operations center for product support and no public price lists. Find out more about all the ways Wildix supports MSPs.
Weigh all these MSP tips in relation to your own experience and local market, and you’ll be on a far more stable path to success than your competition.
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