10 Tips To Starting Your Own MSP in 2024

Published 43 days ago5 min readSources of MSP Revenue...

I am going to discuss the top ten tips on starting your own MSP in no particular order. Having started my own MSP from scratch in 2004 before selling 12 years later I am often asked about some of the life lessons I have learnt and what I would have done differently.

Out of the group of business owners that I know and socialized with during that time, I definitely got out a little too early as they had similar trajectories as I did and yet most of them are around the 100+ staff size today. I mistakenly believed that the advent of Office365 was the writing on the wall along with a difficult period in my life at the same period that saw me turn my back on owning an MSP.

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Lack Business Experience Or Have Plenty Of It

There is not much room in between these two extremes. You need to be unaware of how much work and effort it is going to take to reach the point of being successful after starting an MSP.

Alternatively you need to have ideally failed once or twice in the past and have the experience and technical knowledge that will allow you to achieve the goals you set out. So working smarter rather than harder.

That long bit in between where you have the knowledge or ability without the enthusiasm that ignorance brings, that is the area where even though you may have more experience than others, that experience brings with it the knowledge of how much effort is required to overcome all of the hurdles you will face along the way.

Start Small And Stay Small For As Long As Possible

I made the big mistake of going through money like it was going out of fashion. I needed the office close to the CBD and later on moved into the CBD where rents were high, I invested in pointless things like $1200 help desk chairs, custom built support desk tables not to mention spending 70K on Kaseya VSA software along with Kaseya security software that never actually worked.

At one point I was spending 35K per month just to open the doors and really had no clue what I was doing.

None of that is needed when you start and learn from my mistake here. You are far better off having a couple of small loyal clients who pay bills on time than a bunch of larger clients that are major headaches who never pay their bills on time and are always hunting for discounts.

Spending big dollars on the class leading applications is not always wise either. I have this mindset that twice the price means twice as good and yet time and time again I see that is such a bad way to think.

There are plenty of open source MSP applications that will do a good enough job in the early years. Keep your costs as low as possible for as long as possible.

Focus On Client Quality

Bad clients can send you to the wall so easily either through late or non-payment or their penchant for taking their service providers to court via legal action at the drop of the hat, a bad client is far worse than no client at all.

Write an MSP business plan down for yourself and give yourself a good 3 year hunting period if possible where you spend time attempting to obtain an arbitrary number of new clients. It could be 20 or 25, the number does not matter so much as does the quality.

Go to sales meetings with the idea of interviewing clients. The biggest problem I had was attending sales meetings as if the client was a god. I would be happy if they would throw a few crumbs my way.

Do not do that, go in with confidence. Confidence is not arrogance, go in there with confidence and make it clear to them that you are interviewing them as much as they are interviewing you.

They don’t have a managed backup? Why not, how long have they not had one and do they not value that type of service? If it is clear they do not value the cost of a good backup solution then thank them for their time and walk away.

You are searching for clients that will value your skillset and will demonstrate loyalty towards you. Client quality means taking on some clients over a short period before either keeping them or eliminating them.

Slow payers, poor communicators, clients that continually devalue tasks like good documentation procedures will often not be recognized in a single sales meeting, however take them on-board on a trial basis and if they exhibit bad behavior, cut them loose immediately as you will not change them.

Find a Niche

In today's technology market you need a niche, things have gotten out of control. I have worked with companies that outsource their level 1 and 2 support desk to the Philippines and while some are terrible, I have worked with a number that write better English than we can, have got the American accent down so well they train for specific regions, their work ethic exceeds ours by a significant margin all while doing it for quarter the price.

They integrate so well with the service provider that there is actually no discernible difference between who is an internal employee and who is outsourced overseas help.

So tell me, how are you going to compete as a generic MSP service company in that environment? You will find it hard to do so my advice is do not directly compete. Find a niche, it could be something as narrow as Excel spreadsheet expertise where you and your staff know every single trick in the book when it comes to Excel.

Focusing on a niche like that opens up the door to offer your other services and that is the best way to operate. Business is built on relationships so you establish that beach head with your niche before rolling out the reinforcements.

Have Clients Sign Agreements

I heard someone say the other day that they do not make their clients sign agreements and they were saying it as if it was some type of badge of honor.

The signed agreements are where the value of your business is and without having them, your clients can easily walk away at a moment's notice all while you carry an enormous amount of risk.

Beyond that though, a client agreement details to both parties exactly what is expected of them, how they are to engage with each other and how the parties work towards rectifying issues in the event of a communication breakdown.

Always have a service agreement signed and always invest in a specialist tech lawyer to look over the wording of your service agreements to ensure they are valid for the state you live in as well as the state the client lives in.

Risk Minimization

I am talking about cyber insurance policies as well as other risk minimization. Always have an upsell or whatever service you are offering. So as an example, if you offer server hardware then always have a better performing piece of hardware that could be purchased for a higher amount.

If you supply hard disk drives then offer high end SSDs as an option, not because you think the client will purchase them, it is to reduce your risk by offering a solution that would have solved whatever problem your client is blaming you for.

If you are taken to court because the consulting service or hardware failed for some reason then demonstrating that you had offered an option that would have prevented the issue occurring can help minimize your responsibility.

Newsletters are another great risk minimization, if you regularly update your clients with advice through a newsletter then it is a demonstration of you imparting advice that the client has had access to and decided not to take.

Documentation Framework Early On

Be careful early on signing on to the big guns like IT Glue. I really like the product however I am disgusted by the business practices of the parent company who will try to lock businesses into unfair contracts and seemingly randomly invoice them.

It is easy for a midsize business to carry 5 or 10K in unauthorized billing to their credit cards as they know once they dispute it, it will eventually be returned. If you have just started up, that sort of money could send you broke or at the least cause a lot of pain.

Start putting in a documentation strategy early on and make sure that you keep it consistent even if it is just you using it. Have in the back of your mind that you will eventually want to move your home grown system to a commercially available documentation platform such as Hudu though.

Employ Staff Slowly

Taking on another staff member beyond yourself is a whole different beast than running a one man show and I strongly recommend that you have at least some leadership experience prior to undertaking it.

I do not mean management experience, anyone can manage others, I am talking about getting that discretionary effort out of people where they want to do extra work for you because they like you.

I would go so far as to say that you probably need to be a naturally good leader to have a chance at growing a successful business. This is a time to really analyze how you are viewed by others. Some people tend to offend everyone they meet, if that is you then perhaps running a business that requires getting the most out of staff is not the best option.

Most people think leadership is the exact opposite of what it actually is. It is about patience, humility, kindness, sacrifice but not just those qualities, executing those qualities at the right time in the right order and knowing when to bare your teeth so you do not get walked over while also making sure you do not foster secret resentment in your staff.

I think everyone as they get older knows if they have good leadership skills or not. If you are below 30, you are likely at that point in life where you believe you are capable of anything. All I can recommend is putting some effort into understanding what defines a leader and comparing it to your current attributes, perhaps do a few courses on leadership and you may find that it is a hidden quality that you always had.

Sales Ability

I think this is closely entwined with leadership. You need to be able to explain to non technical people why your complex and expensive product or service is something that they need to have in their life to make their own business run more efficiently with less headaches.

I highly recommend doing some sales courses and even spending a few months or a year working in a sales only environment where you rely on commissions only. Doing something like that for a year will turn almost anyone into a gun salesman.

Any job from telephone sales or cold calling for a year and you will have undertaken an apprenticeship in sales and given you a solid foundation with which to grow your business.

Know When To Quit

This sounds so negative but I have to say it. There are some stubborn people out there that will spend their lives bumping along the bottom struggling to pay their staff and putting more than 3 times as many hours into running their business than if they worked as an employee while earning barely enough to feed themselves.

If you get to the 5 year mark and you are not earning at least twice the amount as someone with your experience and qualifications would as an employee then it is time to re-evaluate things. MSP businesses do not sell for huge multiples of their earnings, in many cases it is a one to one sale price.

If you are struggling to run the business then it is likely that business requires you to function meaning the actual sale price of the business is worth even less and in many cases you are selling a customer list only.

Ask yourself at the 5 year mark, is it worth the current effort and worry? Be honest and if it is not, get out. Move on to something that will make you a living and is worth the amount of hours you are putting into it.

Conclusion

Some of these may be not what you want to hear but I think there is just way too much toxic positivity for want of a better word out there today.

There is nothing wrong with a realistic view of the hurdles that you are likely to face as a new service provider but I will say do not let anyone talk you out of it if you believe you have what it takes.

There are way to many successful MSPs out there raking in a fortune telling others who are looking to start their own MSP that they are irresponsible, do not have the right experience or qualifications to do it and really go out of their way to mock those who are at the same place they were 30 years ago.

I guarantee you most of the guys puffing on their cigars telling the newcomers they have no right to start an MSP or that there needs to be regulations to prevent people starting their own service provider because they lack the ability to service other businesses, they started in their own bedroom while living with their parents with a single computer and a single client.

If they did not then where else did they come from? A group of guys with a bunch of cash? How are they any more positioned to determine who can and cannot join the party?

We have a number of other Managed consulting related articles listed below that will provide you with more detailed information on a number of related topics:

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