Subscription-based services are growing in popularity, and the IT industry is certainly no exception. With the managed services provider (MSP) market projected to be worth $282 billion by 2023, you’re not alone if you’ve been contemplating jumping on the subscription or managed-service bandwagon.
Like any serious business venture worth your time, starting an MSP isn’t as simple as flicking a switch and declaring that you’re open for business. Becoming an MSP requires careful planning and hard work. Fortunately, plenty of advice and pointers exist to help new market entrants get up and running.
5 Steps for Starting an MSP
#1. Define your business plan
This first tip is arguably the most important. Any successful business requires a well-thought-out plan. More specifically, new MSPs should make sure they have the following three areas covered:
- Unique value proposition (UVP)
- Sales process
- Pricing plan
Start with your unique value proposition (UVP). What is your MSP offering that sets it apart from competitors? What customer problems are you claiming to solve, and how exactly will you solve them? The answers to these questions will form the foundation of your business plan.
A best practice for new MSPs is to start out with a small solutions stack. Once your business has committed clients and is generating revenue, you can diversify your product offerings with additional solutions.
Once your UVP is established, outline your sales process. A repeatable set of steps is critical to ensuring that your business is sustainable. It will also help your new MSP operate as efficiently as possible, whereas utilizing a different process for each customer will undoubtedly create bottlenecks that slow you down.
An invaluable best practice for setting up your sales process is to document everything. Keeping a record of how your MSP presents itself to clients and initiates sales conversations will make it easier for you to repeat the steps. It will also help you to train new salespeople when the time comes to do so.
Next, build your pricing plan. There are several different models a new MSP can use; remember to consider your break-even cost as well as the total cost of delivery for your MSPs services. Regardless of the model you choose, it’s imperative that your pricing model make sense for your business and provide value to your clients.
#2. Find a partner
It’s extremely rare for any business, project, or initiative to be successful without at least a little bit of help. In order to realize growth, MSPs need a reliable source of new products and value-added services that they can eventually add to their portfolio of offerings. In this regard, the value of a great partnership should not be underestimated.
Enter an expert cloud services provider (CSP)—Sherweb, for example. By aligning with a larger partner that has a wide range of existing products, MSPs can resell to clients in a way that simplifies their business growth; when your business is ready for a more complex solutions stack, it’s easy to source products to make it happen.
An indirect CSP such as Sherweb also provides partners with a number of invaluable tools and resources to help drive your success. And there are plenty of benefits to becoming a partner. For one, MSPs that partner with Sherweb get access to marketing assets such as campaigns-in-a-box and prepared social media posts, pre-sales support for complex client scenarios, and much more.
#3. Find clients
Client acquisition is a big part of an MSP’s growth and sustainability. According to Datto’s 2019 State of the MSP Report, about 80% of MSPs predict adding between one and 10 new clients within the next year. This means that whether your MSP is brand new or well established, growing your customer base should always be a top priority.
Your marketing and brand awareness plan should be at the forefront when sourcing and securing clients. When drafting a business plan, MSPs should pay close attention to how they present their services to potential customers. You can have the greatest solution stack on the market, but it will count for nothing if no one knows about it.
With that said, an attractive, user-friendly website is a must. Make sure your products, services, and price points are clearly outlined. If you need them, ready-to-use marketing assets and expert assistance are another area where a partner can help.
New MSPs should also invest in a good CRM to help generate leads, nurture prospects, and automate certain marketing activities. Once you launch your business, prospecting and following up on leads will routinely occupy a significant portion of your workday unless you start automating those tasks.
Networking is another worthwhile activity for client acquisition. Hand out those business cards, ask existing clients for referrals, and seek help when you need it.
#4. Start selling
While a thorough business plan is definitely necessary, be wary of planning your business into an early grave. If you’ve adequately outlined your product offerings, sales process, and pricing plan, you’re ready to start selling.
Consistently pitch your products and services to prospects and potential clients. The more people you reach out to, the more likely you are to succeed. This is where investing in a CRM system and good website will pay off: Both will fill your sales funnel with more qualified leads than, for example, cold calling alone.
Once your business is closing deals and providing services to clients, it’s important to keep the relationship positive and professional. Do your best to impress customers with your base-level offerings. They will be more likely to stick with you and accept additional product offers in the future.
#5. Diversify your product offerings
Fortunately, by starting your business off with a limited selection of product offerings, you leave plenty of room for your new MSP to grow. Consider adding managed services that all customers should have in terms of an IT department. Security, data protection, and recovery and business productivity apps are all examples of areas where an MSP can explore expanded service offerings.
Your partner or CSP can help you with this final step in starting a successful MSP. Frequently touch base about available products they might have for resale, keeping in mind which tools would benefit your clients the most. Remember: The right partner will be prepared and enthusiastic to help your MSP meet its growth targets.
Interested in learning more about what a collaborative partner network looks like? Take a look at Sherweb’s partner infokit for ways that a leading CSP can help your MSP start, grow, and succeed.