19 April 2024

How to start a managed service provider business (Image by Freepik @Frolopiaton Palm)

This guide will explore how to start a successful Managed Service Provider (MSP) business, focusing on the MSP market’s potential and growth.

The managed services market is currently on a significant upswing, demonstrating the sector’s robustness and long-term potential.

For instance, the 2022 Market Research Report by Fortune Business Insight revealed that the managed services market is expected to grow substantially, with forecasts indicating a rise from $255.86 billion in 2022 to an impressive $671.14 billion by 2030.

This growth reflects a compounded annual growth rate (CAGR) of 13.1%, highlighting the increasing reliance of various industries on MSPs for their IT needs​​.

MSPs are crucial for businesses aiming to optimize their IT operations without the substantial capital investment in in-house IT teams.

These providers offer specialized services that allow businesses to focus on their core competencies while ensuring their IT infrastructure is efficient, secure, and up-to-date.

The demand spans across sectors, from BFSI and healthcare to retail and manufacturing, each with unique needs that MSPs can fulfill, such as compliance, data management, and cybersecurity​​​​.

North America, particularly the United States, is a significant player in the MSP market, leading in adoption and innovation.

The region’s businesses, especially in healthcare, leverage MSPs to manage complex IT infrastructures and comply with stringent regulations​​.

As we delve further into the steps to start an MSP business, remember that this market’s growth is underpinned by the increasing complexity of IT environments and the need for specialized services that MSPs offer.

The opportunity is vast, but success hinges on understanding the market dynamics, identifying your niche, and delivering value that aligns with your clients’ evolving needs.

So, let’s break down the steps together to position your MSP business for success in this burgeoning market.

Things To Do Before Starting a Managed Service Provider Business

Before launching your Managed Service Provider (MSP) business, it’s critical to delve into the foundational steps to set the stage for your success.

Market Research and Analysis

Understanding the MSP landscape is your first port of call. Market research will reveal which sectors are ripe for MSP services and where your opportunities lie.

For example, sectors like healthcare, BFSI (Banking, Financial Services, and Insurance), IT and telecom, and retail are burgeoning markets for MSPs, each with its requirements and regulatory challenges​​​​.

Geographical insights also matter; North America leads in MSP adoption. However, Asia-Pacific is catching up fast in the MSP industry, indicating a varied demand across regions​​.

When analyzing the market, consider how regulatory environments influence MSP services, especially in sensitive sectors like healthcare.

In the US, for instance, healthcare providers leverage MSPs to manage electronic health records, align with regulations like HIPAA, and integrate emerging technologies like IoT for enhanced patient care​​.

Determine MSP Offering

To carve out your niche in the MSP market, you need to identify what services you will offer.

MSP isn’t one-size-fits-all. We need to figure out your flavor. These can range from managed data centers, security, communications, and networks to mobility services. Each category serves a critical function:

  • Full-service IT: Offer a one-stop-shop for IT needs, encompassing everything from hardware and software to networking and security.
  • Specialized IT: If you have a passion or expertise in a particular IT domain like cybersecurity or networking, consider honing in on that specialty. 
  • Cloud services specialist: As more businesses transition to cloud computing, there’s a growing demand for experts who can assist with cloud migration and management.
  • Break-fix plus: Kind of a hybrid. You offer traditional fix-it-when-it-breaks support and proactive maintenance and monitoring to prevent problems.
  • Managed data centers: Vital for businesses looking to enhance their IT infrastructure without significant investments.
  • Managed security: Increasingly crucial with the rise in cyber threats, providing essential protection for client data.
  • Managed communications and network: Ensure reliable and efficient internal and external communication, which is crucial for business operations.
  • Managed infrastructure and mobility: Support businesses in effectively managing and scaling their IT resources.

Consider what fits best with your expertise and market needs, potentially specializing in a sector like healthcare or retail to provide targeted services.

How to Start a Managed Service Provider (Image by Freepik @ fahmiruddinhidayat111198)

Developing a Business Plan

Your business plan is the roadmap that will guide your MSP’s strategic direction and operational framework.

It should detail your market analysis, service offerings, pricing strategies, marketing approaches, and financial projections.

A solid business plan not only aids in securing financing or investment but also helps identify potential challenges and growth strategies.

Moreover, your business plan should consider the competitive landscape, identifying key players and potential partnerships or niche markets you can target.

With the MSP market becoming increasingly crowded, differentiating your offerings and demonstrating clear value to potential clients is crucial.

Determine Pricing Strategy

Consider various pricing models, such as per-device, per-user, value-based, and tiered pricing, each suiting different customer needs and service scopes.

For instance, a per-device model could be straightforward, charging flat rates for different devices managed.

In contrast, a per-user model could cover all devices a particular user uses, offering broader support coverage.

It’s essential to align your pricing with the value you provide, ensuring it covers your costs while remaining competitive and attractive to your target market.

Regularly reviewing and adapting your pricing in response to market dynamics and cost structure is crucial to maintaining relevance and profitability​​​​​​​​.

Building Infrastructure and Technology Stack

Your MSP’s backbone will be its infrastructure and technology stack, which must be robust and scalable.

This infrastructure should support the range of services you plan to offer and be adaptable to evolving technology trends and customer needs.

Choose solutions that integrate well to streamline operations and enhance efficiency.

Your technology stack should enable you to deliver services reliably and efficiently, ensuring client satisfaction and operational scalability.

Investing in automation and advanced management tools can improve service delivery and operational efficiency, setting a solid foundation for your business growth​​​​.

Hiring and Training Staff

Your MSP’s success also hinges on your team’s expertise and professionalism.

It is crucial to hire skilled IT professionals who can deliver high-quality services and adapt to changing technology landscapes.

Training is equally important to ensure your team is proficient in the latest technologies and service methodologies.

Your staff should embody the expertise and customer service excellence that differentiate your MSP in the market.

Consider ongoing training and certifications to keep your team at the forefront of industry developments and ensure they can tackle emerging IT challenges effectively​​.

Launching and Scaling Operations

When launching and scaling your MSP business, focus on operational efficiency and resource management.

Carefully managing resources, including personnel, equipment, and finances, is crucial for handling an increasing client base without overextending your capabilities.

Implement tools like Professional Services Automation (PSA) and Remote Monitoring & Management (RMM) to streamline operations and maintain service quality as you scale.

Utilize billing and accounting applications to keep track of finances, ensuring that your growth is sustainable and profitable​​​​.

Therefore, you could consider Octobits as an all-in-one IT management dashboard that can significantly streamline the operations of an MSP company.

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.

Managing Client Relationships and Retention

Building solid relationships with your clients is fundamental for retention and growth.

Regular communication, responsive service, and tailored solutions help foster trust and loyalty.

Implementing regular check-ins, timely responses to inquiries, and proactive service recommendations can significantly enhance client satisfaction.

Embrace new technologies and continuously train your staff to provide innovative solutions, setting your MSP apart in a competitive market​​.

Ensuring Business Continuity and Succession Planning

For long-term success, it’s vital to establish a solid business continuity plan.

This involves having strategies in place for unexpected challenges, such as data breaches or system failures.

Succession planning ensures your business remains stable and responsive to market changes, even when key personnel leave or roles change.

Develop partnerships with other vendors to expand your service offerings efficiently, and choose partners that complement your expertise and market focus.

This strategic collaboration can provide a broader service portfolio and open new market opportunities, ensuring your MSP’s adaptability and resilience​​​​.


On the whole, the essence of establishing an MSP business lies in understanding market dynamics, aligning services with client needs, meticulous planning, and building a solid operational framework.

Each step we’ve explored is interlinked, shaping a business ready to thrive in the MSP market.

By embracing these steps, we are not just starting a business. Because we are creating a venture poised for growth, resilience, and excellence in service delivery.

So, the time has come to apply the principles for starting a managed service provider business for your future success.