19 April 2024

Is An MSP A Good Business To Start? (Image by Freepik @whopisdanny)

Starting a Managed Service Provider (MSP) business is a viable opportunity. But, like any venture, there is always a question: Is an MSP a good business to start?

As IT systems grow in complexity, the demand for MSPs rises. Of course, the market means a potentially lucrative business venture for those with expertise in the IT field.

The Business Wire forecast that the global managed services market was valued at $161.37 billion in 2021 and is projected to reach $311.32 billion by 2027, growing at a CAGR of 12.44%​​.

Yes, there’s definitely money to be made. But it’s not a walk in the park. Let’s dig deeper and find out if launching an MSP is the right move for you.

What Are MSPs Business?

An MSP business operates in the IT sector by offering a range of managed services to its clients.

This business model is fundamentally different from traditional IT service providers due to its proactive approach and long-term responsibility for the entirety of the managed IT services it offers.

Unlike one-off project fees, MSPs typically operate on a subscription-based model, providing a steady stream of income through ongoing, contracted services.

Building a successful MSP business is a multifaceted endeavour that requires strategic planning, operational excellence, and a commitment to delivering outstanding IT services. 

For example, you have to think about how you handle client onboarding and troubleshooting, and service delivery should be systematic. This ensures quality, efficiency, and scalability.

Another fundamental variable is calculating the true cost of providing service, which is essential for accurate pricing. Track overhead, employee expenses, tool subscriptions, etc.

Market Analysis for MSPs

The managed services market is experiencing significant growth, propelled by an increased dependency on IT infrastructure across diverse sectors.

As we know, businesses are relying on MSPs more than ever to boost their operational efficiency, minimize downtime, protect against escalating cyber threats, etc.

Therefore, incorporating cybersecurity into MSP services has become essential. Please note that cybersecurity is a fundamental service of your MSP company.

Yes, as cyber threats rise, MSPs are crucial in deploying effective security strategies for their clients.

Then, consider a market consolidation as a show of the trend towards specialization. This consolidation is more like larger entities acquiring smaller MSPs.

The consolidation is functional to tap into specialized expertise and widen MSP’s market footprint. As an example, you could be building an SAP-specialized MSP

Then, you have technological progress to think about. Technology updates are driving changes in service offerings, notably in cloud management and automation, which are distinguishing key players.

MSPs focus on delivering value through innovation and efficiency, positioning themselves as essential strategic partners that aid client growth and digital transformation.

Accenture’s acquisition move to enhance its managed services suite reflects an industry-wide trend of fortifying and diversifying capabilities to meet the evolving demands of digital businesses.

For MSPs in 2024, success will depend on their agility, innovation, and alignment with market needs.

Your MSP company’s future will be determined by the ability to anticipate market trends, leverage technology, and deepen strategic client relationships.

This future will navigate a path filled with both challenges and opportunities.

Benefits of Starting an MSP Business

Venturing into the MSP business landscape offers a unique set of advantages that cater to the burgeoning needs of the digital age.

The following insights delve into the core benefits that make starting an MSP business a potentially lucrative and strategic decision.

These facets collectively forge a compelling case for why stepping into the MSP arena could be a wise entrepreneurial move.

Recurring Revenue Model

One of the primary benefits of starting an MSP is the potential for recurring revenue.

Unlike project-based income, MSPs typically charge a regular fee for ongoing service, providing a stable and predictable income stream.

This model can lead to improved cash flow management and financial stability for your business.

Growing Demand

The demand for MSPs is on the rise, driven by the increasing reliance on IT and the need for specialized IT services.

As more companies look to outsource their IT needs, the market for MSPs continues to expand, offering significant growth opportunities.

The MSP market itself has shown robust growth, with expectations to reach $354 billion by 2026​​.


MSPs offer a scalable business model. As your business grows, you can expand your service offerings and client base without a proportional increase in overhead costs.

This scalability can allow for enhanced profitability and the ability to adapt to changing market conditions.

Expert Positioning

By focusing on managed services, your business can establish itself as an expert in the field.

This positioning can lead to higher client trust, longer-term client relationships, and opportunities for upselling additional services.

Specializing in areas such as cybersecurity or cloud services can further enhance this expert positioning​​.

Challenges and Considerations

Now, with opportunity comes challenges. MSPs will face pivotal hurdles such as acquiring new customers, enhancing staff competencies, and evolving business models to stay competitive.

First things first, MSPs are expected to adopt an ecosystem model, emphasizing collaboration and co-management to optimize customer outcomes.

Furthermore, the integration of generative AI in developing tools and automation processes will become a significant trend.

Moreover, customer behavior dynamics have undergone significant shifts, particularly influenced by the pervasive transition to remote work.

This shift necessitates MSPs to adapt their service offerings, emphasizing the provision of robust, cloud-centric solutions and cybersecurity measures.

The burgeoning cloud migration wave underscores the need for MSPs to adeptly support their clients in leveraging cloud benefits while ensuring data security.

On the flip side, finding skilled technicians is already a problem in the IT landscape. So, building an MSP company means you face the challenge of getting a reliable IT person at a reasonable price. 

Then, as the MSP market gets crowded, expect competition on price. Clients will shop around. You’ll need to be able to deliver value and justify your costs to stay profitable.

Moreover, as competition intensifies, MSPs are urged to focus on strategic marketing, product differentiation, and customer engagement to attract and retain clients.

Developing a deep understanding of client needs, coupled with robust service agreements and innovative solutions, will be crucial for MSPs aiming to capitalize on the growth prospects of 2024​​.

As you consider starting an MSP business, it’s important to be aware of the evolving dynamics and prepare to address the challenges.

At the same time, you must be capitalizing on emerging trends and growth opportunities within the industry.

And, like other entrepreneurs, your success will depend on your ability to innovate, adapt, and strategically align your services with the changing needs and expectations of your clients.

Success Factors and Best Practices

After all, understanding the winning strategies will help you make an informed decision about whether this business path is right for you.

The good news is there are proven practices that set the most thriving MSPs apart.

Marketing and Sales

Modern MSPs need to ramp up their marketing and sales strategies.

Understanding the interplay between marketing and sales is essential to attract and retain clients in a competitive landscape.

Offering value through educational content and employing a consultative approach to sales can help position your MSP as a trusted advisor​​.

Operational and Financial AApproach

Always adopting best practices in finance and administration. You can start investing in solid Master Service Agreements (MSAs) and Service Level Agreements (SLAs).

Then, manage your cash flow effectively and ensure clients are on direct debit. And remember to regularly evaluate and prune your client base.

These best practices stabilize your business financially and also help you focus on the most profitable and strategic relationships​​.

Build your MSP Company (Image by Freepik @veyselkumsanat)

Building Client Relationships

Establishing strong, trust-based relationships with your clients through regular communication and excellent service.

Incorporating new technologies and innovative services that address your clients’ evolving challenges will further solidify these relationships​​.

This client approach can enhance client retention and referrals. On the day, this approach becomes a long-run strategy for your MSP sustainable growth.

Strategic Services Expansion

Offering strategic services that align with clients’ long-term business strategies can set your MSP in a unique bargain positioning.

Let’s say you give digital transformation consulting and compliance audits to clients.

Recognizing the potential of emerging technologies like IoT can also open new revenue streams and differentiate your MSP in the market​​.

Software Optimization

Your choice of software will significantly influence your operational efficiency and service quality.

From IT service management to backup and recovery, selecting the right tools is vital.

Consider software that enhances your ITSM, RMM, PSA, and cybersecurity capabilities to ensure they integrate well with your existing systems and processes​​.

Vendor Partner Selection

The right vendor partnerships are essential for delivering value to your clients.

You must evaluate vendors based on your business needs, their partner programs, financial terms, and the user experience of their products.

Engaging in demos and trials can provide firsthand insights into what each vendor offers, ensuring you choose partners that align with your service standards and business objectives​​.

Utilizing Octobits

Octobits offers an all-in-one IT management dashboard that can significantly streamline the operations of an MSP company.

Its unified platform integrates seamlessly with major IT services and tools like Azure, AWS, Cisco, etc.

For MSP companies, Octobits provides a consolidated view of devices, billing, reports, user and device information, licensing details, and alerts.

This integration simplifies IT service management, enhances operational efficiency, and improves response times to IT issues.

You can try Octobits to optimize your service delivery support system for free until June 2024.

Continuous Improvement and Innovation

Staying ahead in the rapidly evolving MSP industry landscape requires a commitment to continuous learning, innovation, and adaptation.

By staying attuned to technological advancements and market shifts, you can ensure that your MSP remains competitive and responsive to changing client needs​​.

So, Is an MSP a Good Business to Start?

As we reflect on the potential of starting an MSP business in 2024, it’s crucial to weigh the opportunities against the challenges.

The MSP market is on a robust growth trajectory, promising substantial revenue prospects due to increasing IT dependencies across various sectors.

However, stepping into this arena demands more than just recognizing the potential for profit.

It requires a strategic mindset, operational diligence, and a commitment to continuous innovation and client satisfaction.

What makes an MSP business not just viable but potentially thriving in this evolving landscape? It’s about aligning your services with the core needs of businesses today.

Your ability to integrate innovative solutions like Octobits, which can streamline your IT management processes, will also be instrumental in your journey toward establishing a successful MSP business.

Ultimately, is an MSP a good business to start? Launching an MSP in 2024 can be a wise decision if only you’re prepared to navigate its complexities.